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<1. Introduction> The federal government supports the charitable sector by providing charitable organizations and donors with favorable tax treatment. A primary source of support is allowing a tax deduction for charitable contributions made by individuals who itemize deductions, by estates, and by corporations. For charitable organizations, earnings on funds held by such organizations are exempt from the federal income tax. The tax revision enacted in late 2017, popularly known as the Tax Cuts and Jobs Act ( P.L. 115-97 ), made some temporary changes that, while not specifically aimed at charitable deductions, reduced the scope of the tax benefit for charitable giving. These changes have caused more individuals to take the standard deduction, rather than itemizing deductions, and exempted more estates from the estate tax, eliminating the benefit of deducting charitable contributions in these cases. These changes are expected to lead to a reduction in charitable giving. There were other more minor changes, some enhancing the charitable deduction and some imposing more taxes on charitable organizations. The report begins with a description of the charitable sector and tax provisions affecting the sector. The following sections discuss the magnitude of charitable deductions, including sources and beneficiaries, with historical data. The report then discusses the incentive effects of the deductions and the consequences for charitable giving, including potential effects of the 2017 tax revision. The report concludes with a discussion of policy options. <2. The Charitable Sector> <2.1. Definitions and Overview> The focus of this report is the charitable sector . Charities are one type of tax-exempt organization. Specifically, they are organizations with 501(c)(3) public charity status. As illustrated in Figure 1 , most 501(c) organizations are 501(c)(3) "religious, charitable, and similar organizations." Charitable organizations fall within the broader nonprofit sector . In public policy discussions, the term nonprofit sector is often intended to include all organizations with federal tax-exempt status. The Internal Revenue Code (IRC) describes approximately 30 types of tax-exempt organizations. Other types of tax-exempt organizations, in addition to charities, include social welfare organizations, labor unions, trade associations, chambers of commerce, fraternal societies, and political organizations. Within the nonprofit tax-exempt sector, the bulk of organizations are exempt from tax under IRC Section 501(c)(3) (they are "religious, charitable, or similar organizations"). Most of the tax-exempt sector's financial activity also takes place in 501(c)(3) organizations. Every 501(c)(3) organization is classified as either a "public charity" or "private foundation." Public charities have broad public support and tend to provide charitable services directly to the intended beneficiaries. Private foundations often are tightly controlled, receive significant portions of their funds from a small number of donors or a single source, and make grants to other organizations rather than directly carry out charitable activities. 501(c)(3) organizations are presumed to be private foundations unless they qualify for public charity status based on support and control tests. <2.1.1. IRS Filing Requirements for 501(c)(3) Charities and Foundations> In 2015, there were 1,088,447 registered 501(c)(3) public charities. Of this total, 314,744 were reporting public charities, and filed a Form 990. Form 990 collects information about the organization's finances, assets, and activities. Organizations with gross receipts of $50,000 or more are generally required to file a Form 990 or Form 990-EZ. Private foundations file a Form 990-PF. Smaller organizations are not required to file an annual return, but may be required to file an annual electronic notice, the "e-postcard." Churches and other qualifying religious organizations are exempt from the annual information-reporting requirements. The informational returns (i.e., Form 990s) of exempt organizations are public, unlike individual and corporate income tax returns. In addition to the information return, there are situations when tax-exempt organizations must file an income tax return. For example, tax-exempt organizations are subject to tax on income from business activities unrelated to their exempt purpose. Organizations subject to this tax, known as the unrelated business income tax (UBIT), must file a tax return using the Form 990-T. Two recent changes to UBIT became effective in 2018 (see the shaded box "UBIT Changes for 2018" below). Additionally, tax-exempt organizations must generally pay the same employment taxes (i.e., withhold income and payroll taxes of their employees) as for-profit employers. Finally, an organization's activities might require it to file other returns, such as an excise tax return. <2.2. Current Tax Treatment> Federal statute includes multiple tax preferences for nonprofit and charitable organizations. Donations to charitable organizations may be tax deductible, which subsidizes charitable giving. Additionally, nonprofit and charitable organizations are generally exempt from tax on most income, including investment income. Some of the tax benefits are considered "tax expenditures" by the Joint Committee on Taxation (JCT), meaning the JCT provides an estimate of the amount of forgone revenue associated with the provision. Other tax benefits confer financial benefits to the sector, although the value of those benefits is not regularly estimated by the JCT. In addition to the federal tax benefits discussed here, there may also be state and local tax benefits associated with nonprofit or charitable status. For example, in addition to income tax benefits that mirror federal income tax benefits, state and local governments may provide property or sales tax exemptions. <2.2.1. The Tax Deduction for Charitable Contributions> The primary tax expenditure for charities is the charitable deduction. Individual taxpayers who itemize their deductions can subject to certain limitations deduct charitable donations to qualifying organizations. The JCT estimated that in 2019, approximately 13% of taxpayers will itemize deductions. Corporations may also be able to deduct charitable contributions. Organizations qualified to receive tax-deductible charitable contributions include public charities and private foundations; federal, state, or local governments; and other less common types of qualifying organizations. Contributions to civic leagues, labor unions, most foreign organizations, lobbying organizations, political contributions, and contributions directly made to individuals are not deductible as charitable contributions. There are limits on the deduction for charitable contributions for both individuals and corporations. For individuals, the deduction for gifts of cash or short-term capital gain property given to a public charity; private operating foundation; or federal, state, or local government is 60% of the taxpayer's adjusted gross income (AGI) (these limitations are summarized in Table 1 ). Gifts of cash or short-term capital gain property to private nonoperating foundations or certain other qualifying organizations are generally limited to 30% of AGI. The contribution of appreciated assets has particularly beneficial treatment, as the value of most appreciated assets can be deducted without including the capital gains in income that would be subject to tax. Thus, gifts of appreciated property are generally subject to lower deduction limits. Donations of long-term capital gain property to public charities; private operating foundations; or federal, state, or local government are limited to 30% of AGI, while contributions to private nonoperating foundations or certain other qualifying organizations are generally limited to 20% of AGI. Individuals are allowed to carry forward charitable contributions that exceed the percentage limits for up to five years. Corporate charitable contributions are generally limited to 10% of a corporation's taxable income. For a corporation, transfer of property to a charity might qualify as a deductible charitable contribution or a deductible business expense, but cannot be both. Like individuals, corporations are allowed to carry forward charitable contributions that exceed the percentage limits for up to five years. <2.2.1.1. Valuation Rules for Charitable Contributions> There are several rules related to the valuation of charitable contributions (also summarized in Table 1 ). For cash contributions, the value is simply the amount donated. However, when property is donated, the charitable deduction may be limited to the fair market value of the property, the taxpayer's tax basis in the property, or some other amount. Generally, as noted above, taxpayers can deduct the full fair market value of long-term capital gain property. Taxpayers may also be able to deduct the full fair market value of tangible personal property donated to a charity whose use of the property is related to their tax-exempt purpose. In some cases, the amount that can be deducted is limited to the donor's tax basis in the property. Specifically, deductions for contributions of property may be limited to basis for contributions of inventory or short-term capital gain property, contributions of tangible personal property that are used by a recipient organization for a purpose unrelated to the recipient's exempt purpose, or contributions to private foundations (other than certain private operating foundations). Donations of appreciated stock to private nonoperating foundations are not subject to this limit, and may be deducted using fair market value. Contributions of patents or other intellectual property may also be limited to the donor's basis in the property. Deductions are generally limited to the fair market value of the donated property, if the fair market value is less than the tax basis. <2.2.1.2. Special Rules for Certain Types of Contributions> There are a number of special rules related to donations of certain types of property, not all of which are discussed here. Special rules provide an enhanced deduction for C corporations contributing inventory to 501(c)(3) organizations for the care of the ill, the needy, or infants. There is also an enhanced deduction for businesses' contributions of food inventory. There are special rules associated with donations of vehicles, intellectual property, and clothing and household items. Another special provision allows for tax-free distributions from individual retirement accounts (IRAs) for charitable purposes. The IRA distribution provision is especially beneficial to nonitemizers because it excludes the distribution from income, which is equivalent to receiving the distribution and making a charitable deduction. Generally, a charitable deduction can be claimed only if the donor transfers their full interest in the property to a qualified recipient organization. This partial interest rule generally prohibits charitable deductions for contributions of income interests, remainder interest, or rights to use property. There is an exception to the partial interest rule for conservation contributions. Conservation contributions allow for charitable donations of conservation easements, where land, natural habitats, open space, or historically important sites are protected from development without the owner having to give up ownership of the property. Additionally, special rules increase the limit for appreciated property contributed for conservation purposes to 50% of AGI for individuals. For farmers and ranchers, including individuals and corporations that are not publicly traded, the limit is increased to 100% of income. Conservation contributions that exceed the 50% or 100% of income giving limits can be carried forward for 15 years, instead of the usual 5 years. Individuals can take a deduction for donations of property in the future with rights to the income stream for themselves or others, through a charitable remainder trust. In a charitable remainder trust, assets are transferred to a trust and a deduction taken for the present value of the future donation. The donor or other designated individual can receive a stream of income from the trust, for example, until death. Appreciated assets can be donated to the trust, which is tax exempt and pays no tax on the gain from the sale of assets. <2.2.2. Recent Changes to Charitable Giving Tax Incentives> Due to the 2017 tax revision (TCJA), the tax expenditure associated with the charitable deduction has fallen. Under TCJA, however, there were limited direct changes in tax policies affecting charities. The one change to the charitable deduction expanded the deduction, raising the AGI limit for individual cash contributions to public charities from 50% to 60% through 2025. However, other changes that reduced the number of itemizers, such as the expanded standard deduction and the limit on state and local tax deductions, reduced the number of itemizers and reduced the marginal incentive to give to charity for many taxpayers. At times, Congress had passed legislation eliminating the percentage of AGI limit for charitable contributions made for disaster relief purposes. Recently, the Disaster Tax Relief and Airport and Airway Extension Act of 2017 ( P.L. 115-63 ) eliminated the limit for charitable contributions of cash for Hurricane Harvey, Irma, or Maria disaster relief. The Bipartisan Budget Act of 2018 ( P.L. 115-123 ) eliminated the limit for charitable contributions of cash associated with the 2017 California wildfires. <2.2.3. Charitable Tax Expenditures> JCT's tax expenditure budget includes several charitable tax expenditures: the deduction for charitable giving, tax expenditures for certain tax-exempt bonds, and the exclusion for ministers housing allowance. The JCT provides charitable deduction tax expenditure estimates separately for contributions to 501(c)(3) educational institutions and health organizations. In FY2019, the tax expenditure for charitable deductions associated with giving to organizations other than education institutions or health organizations was $32.6 billion, while the tax expenditures for giving to educational institutions and health organizations were $8.2 billion and $4.3 billion, respectively (see Table 2 ). Tax expenditures for the charitable deduction have recently declined. For FY2019, it is estimated that the charitable deduction will be associated with $45.1 billion in forgone revenue (see Figure 2 ). This is down from the estimated $61.0 billion in forgone revenue for FY2017, and $58.1 billion for FY2018. The decline in the charitable deduction tax expenditure is the result of (1) fewer taxpayers itemizing deductions following the 2017 tax revision ( P.L. 115-97 ); and (2) lower tax rates following the 2017 tax revision. Most of the forgone revenue associated with the charitable deduction is from individual giving, as opposed to corporate giving. The charitable deduction does not reflect forgone revenue associated with giving from bequests (which is discussed further below). There are also revenue effects associated with allowing nonprofit educational institutions and hospitals to issue tax-exempt bonds, and for the provision exempting the housing allowance of ministers from tax. Tax expenditures for charities in FY2019 are reported in Table 2 . <2.2.4. The Tax Treatment of Investment Income> For charities, most investment income is exempt from tax (there is a tax on the investment income of certain endowments, which is discussed below). The JCT does not consider the exemption of charities' investment income from tax a tax expenditure, and thus does not provide an estimate of the forgone revenue associated with this tax treatment. Data from IRS Form 990 informational returns can be used to understand the magnitude of 501(c)(3)s' exemption for investment income. In 2015, charities had $32.6 billion in investment income, $35.8 billion in net capital gains (mostly from the sale of securities), $4.0 billion in net rental income, and $3.9 billion in royalties. If this income had been subject to a 35% income tax (the corporate income tax rate in 2015), $26.7 billion in revenue would have been raised. This number does not include religious organizations. IRS data for 2015 reported assets of $3.8 trillion held by charities, with about $1 trillion of that amount in land, buildings, and equipment. Private foundations had $0.8 trillion in assets, with $0.7 trillion in investment assets. A significant share of investment assets held in charities is held in university endowments, with an estimated value of $0.6 trillion in FY2018. Assets do not include assets of nonreporting religious organizations. <2.2.4.1. Private Foundations> Most private foundations differ from operating charities in that they often have a single donor or small group of donors. In addition, while a gift to a foundation is deductible for income (and estate and gift) tax purposes, the donated funds are not immediately used for active charitable purposes. Rather, funds are invested and donations are often made to charitable organizations from earnings that may allow the corpus of the foundation to be maintained and grow. Contributions to foundations benefit from both the charitable deduction, when the contribution is made, as well as the exemption on investment earnings, as earnings accrue on invested contributions over time. To address concerns that foundations could retain earnings and grow indefinitely, and because foundations are often closely tied to a family or specific group of donors, tax laws require a minimum payout rate (5% of assets) and restrict activities that may benefit donors. The tax code imposes taxes and/or penalties for self-dealing, for failure to distribute income on excess business holdings, for investments that jeopardize the charitable purposes, and for taxable expenditures (such as lobbying or making open-ended grants to institutions other than charities). Private foundations are subject to a 2% excise tax on their net investment income. However, the rate is reduced to 1% if qualifying charitable distributions are increased. In FY2017, excise taxes on private foundations generated $643.6 million in revenue. <2.2.4.2. Donor-Advised Funds (DAFs) and Supporting Organizations> Donor-advised funds (DAFs) allow individuals to make a gift to a fund in a sponsoring organization. Sponsoring organizations are charities that are allowed to receive tax-deductible donations. The gift is irrevocable, as in the case of a gift to a foundation or any other charity. The donor does not legally oversee the payment of grants to charities from the fund, which is determined by the sponsoring organizations. Donors make recommendations for grants (hence donor advised), and there is general agreement that these recommendations determine, with few exceptions, the contributions. DAFs, like private foundations, can accumulate assets and earn a return tax free, but they are not subject to many of the restrictions on foundations, including the minimum payout rate. These funds have been growing rapidly, in part through funds set up by major financial institutions. According to the National Philanthropic Trust, in 2017 there were 463,622 individual DAFs, with contributions of $29.2 billion, assets of $110.0 billion, and recommended grants of $19.1 billion. The DAFs were managed by 53 national charities, 604 community foundations, and 345 single-issue charities. In 2018, more than 200,000 donors had accounts at Fidelity Charity, with grants of over $5.2 billion. Supporting organizations are organized for the benefit of public charities, and they provide grants to these charities. There are several types of supporting organizations (DAFs are themselves supporting organizations). Type I and Type II organizations support a single charity and are supervised or controlled by the supported charity (with Type I similar to a parent-subsidiary relationship and Type II similar to a brother-sister relationship). A Type III organization supports more than one charity and falls into the category of a functionally integrated supporting organization, or FISO (either through performing certain activities directly or exercising governance and direction) and nonfunctionally integrated (non-FISO). A Type III non-FISO has a number of additional restrictions, including a requirement to distribute the greater of 85% of net income or 3.5% of nonexempt-use assets. <2.2.4.3. College and University Endowments> A college or university endowment fund often referred to simply as an endowment is an investment fund maintained for the benefit of the educational institution. University endowments have been the subject of some scrutiny, in part because of the juxtaposition of growing endowment sizes with increasing tuition at private universities. The 2017 tax revision, P.L. 115-97 , added a 1.4% excise tax on net investment income of nonprofit colleges and universities with assets of at least $500,000 per full-time student and more than 500 full-time students. The revenue gain was projected to be $0.2 billion per year. <2.2.5. Tax-Exempt Hospitals> For private nonprofit hospitals to be eligible for tax-exempt status, to be able to receive tax-deductible charitable contributions, and to be eligible for tax-exempt bond financing, they must meet a community benefit standard . Health care is not by itself a stated objective in the tax provisions determining charitable (501(c)(3)) status. Generally, the community benefit standard requires the hospital to show that it has provided benefits that promote the health of a broad class of persons in the community. One way hospitals may demonstrate that they have met the community benefit standard is by providing charity care (free or discounted services to charity patients). Other types of community benefit include participation in means-tested programs such as Medicaid; providing health professions education, conducting health services research, providing subsidized health services, funding community health improvement, and donating cash or in-kind contributions to other health-related community groups. Community-building activities (such as for housing and the environment) may qualify if a link to community health can be shown. The IRS does not count shortfalls associated with Medicare or bad debts from those not qualifying for charity care as part of the community benefit standard. The Patient Protection and Affordable Care Act (PPACA; P.L. 111-148 ) added additional requirements for 501(c)(3) tax-exempt hospitals. Specifically, 501(r) requires these hospitals to conduct community health needs assessments, establishing a written financial assistance policy, limit charges to financial-assistance-eligible patients to amounts billed to insured patients, and not engage in extraordinary billing collections until an effort is made to determine eligibility for financial assistance. Tax-exempt hospitals report their community benefit actions on their Form 990. In 2014, total net community benefit expenses were $63.0 billion (8.84% of expenses); of that amount, $12.7 billion was for charity care (1.78% of expenses) and $26.3 billion for unreimbursed means-tested costs (3.7%, almost entirely Medicaid). One study estimated the cost of all federal, state, and local subsidies for tax-exempt hospitals (income, sales, and property tax benefits) to be $24.6 billion in 2011. Another study using 2012 data found that nonprofit hospitals' community benefit expenses were 7.63% of total expenses, while the value of nonprofit hospitals' tax exemption was 5.87% of total expenses. The study also evaluated incremental community benefits, or community benefits beyond those provided by for-profit hospitals. Incremental community benefits provided by nonprofit hospitals were estimated to be 5.71% of expenses in 2012. <2.2.6. Tax Treatment of Charitable Bequests> Charitable donations made by an estate are generally referred to as charitable bequests . Decedents potentially subject to the estate tax can deduct charitable contributions. Estates are effectively subject to a 40% rate on amounts above the statutorily exempted value, which was set at $11.18 million per decedent for 2018. The estate tax exemption was doubled temporarily through 2025 by the 2017 tax revision, P.L. 115-97 . Transfers to a spouse at death are also excluded from the estate tax, and any unused exemption can be added to the exemption of the second spouse. Because of the large exemption, a small share of estates are subject to the estate tax, although a significant share of charitable contributions made by bequests appear on estate tax returns. The increase in the exemption decreased the amount of bequests that receive a benefit from the charitable deduction. The data from decedents dying in 2013 showed $18.1 billion of bequests reported on all estate tax returns, with $10.2 billion reported on taxable returns. Some of the bequests reported on nontaxable returns may benefit from the tax deduction, indicating a range of revenue costs from $4.0 billion to $7.2 billion. While there are no data available for the effects after the 2017 tax revision, estimates suggest a revenue cost of around $4 billion to $5 billion. <3. Data Describing the Charitable Sector> The following sections describe the charitable sector. Specifically, data are presented on the size of the sector and the sector's revenues (including charitable contributions). Since the potential effect of the 2017 tax revision on charitable giving is a policy issue of interest, changes in charitable giving between 2017 and 2018 are examined in more detail. <3.1. The Size of the Charitable Sector> For 2015, 501(c)(3) organizations reported $3.8 trillion in total assets ($2.3 trillion in net assets) and total revenues of $2.0 trillion (or approximately 11% of GDP). Most of IRS Form 990 filers are small (assets of less than $500,000) or medium-sized (assets of $500,000 up to $10 million) charities (41.2% and 47.2%, respectively). Large organizations, those with at least $10 million in assets, were 11.6% of Form 990 filers. Assets and revenues, and to a lesser extent contributions, are concentrated in these larger organizations. While large organizations are 11.6% of charitable organizations filing Form 990s, 93.1% of assets are held by, 87.1% of revenues are received by, and 71.5% of contributions are made to these large organizations. Charitable contributions are a small share of revenues of 501(c)(3) organizations reporting to the IRS, accounting for 12.9% of revenue in 2015 ( Figure 4 ). The primary source of revenue (73.1%) is program services, such as tuition paid by college and university students, payments for hospital stays, and entry fees. Charitable organizations' revenue sources depend on the type of charity, with charitable giving, for example, being much less important for fee-for-service organizations such as educational institutions and hospitals. (These data represent those filing Form 990 returns. This excludes nonfiling religious organizations, which are likely to rely more on contributions.) <3.2. Magnitude, Sources, and Beneficiaries of Charitable Giving> In absolute terms, charitable giving has increased over time. In 2015, total giving was $375.9 billion, including data not represented in the IRS data (primarily gifts to religious organizations). When considering the magnitude of the charitable sector in the economy, one metric is charitable giving as a share of GDP. In 2018, estimated total giving was $427.7 billion, or 2.1% of GDP. Charitable giving since 1978 has averaged 1.9% of GDP. However, as seen in Figure 5 , this average obscures variation over time and across business cycles. The smallest share of charitable giving occurred in 1995 (1.6% of GDP) while the largest share occurred five years later in 2000 (2.2% of GDP). Private contributions to charitable organizations come from four different sources: individuals, foundations, bequests, and corporate giving. As shown in Figure 6 , individuals were the largest source of charitable giving in 2018 and totaled $292.1 billion, or 68.0%. As estimated subsequently in this report, 54% of that giving received a tax benefit from itemized deductions. Grants from foundations were the second-largest source of charitable contributions in 2018 at ($75.9 billion, or 17.7%), followed by charitable bequests ($39.7 billion, or 9.3%) and corporate giving ($20.1 billion, or 4.7%). Changes in giving from different sources are consistent with expectations following the changes in incentives for giving resulting from the 2017 tax revision. As illustrated in Figure 7 , individual giving as a percentage of GDP fell by 6.0% between 2017 and 2018. Individual giving was expected to fall as (1) fewer taxpayers itemized deductions; and (2) lower marginal tax rates reduced the incentive to give. Taxpayers may also have shifted the timing of gifts, making gifts late in 2017 instead of 2018 to take advantage of larger deductions in 2017, when tax rates were higher and more taxpayers itemized deductions. Giving from bequests as a percentage of GDP fell by 4.9% between 2017 and 2018. The share of bequests on taxable estate tax returns declined following the tax law changes. In contrast, there was little change in corporate charitable giving as a percentage of GDP (an increase of 0.3%). For corporations, the large change in the corporate tax rate might have reduced the incentive to give. Giving from foundations as a percentage of GDP increased by 2.0% between 2017 and 2018. Foundation giving was less likely to be directly affected by the tax policy changes between 2017 and 2018 (although contributions to foundations and future foundation giving might be affected). Religious charities receive the largest share of charitable giving, receiving 29.1% of total giving in 2018 ( Figure 8 ). Education ranked next, at 13.7%, with human services 12.1%, gifts to foundations 11.8%, and health 9.5%. Other beneficiaries each accounted for less than 9.5%. Giving to most beneficiaries as a percentage of GDP fell between 2017 and 2018, as shown in Figure 9 , with the exception of gifts to international affairs. Giving to public-society benefit organizations as a percentage of GDP fell by 8.4%. Giving to religious organizations as a percentage of GDP fell by 6.4%, while giving to education as a percentage of GDP fell by 6.2%. Gifts to foundations as a share of GDP experienced a larger decline that other categories, falling by 11.5%. Giving to religion as a percentage of GDP and as a share of total giving has declined over time, as shown in Figure 10 . Giving to most other beneficiaries has increased as a share of GDP, with the largest increases (in absolute terms) in giving to foundations and education. The decline in giving to religion from 2017 to 2018 may have just been part of a continuing trend, while the decline in giving to foundations may have reflected effects of the estate tax, or have been part of regular fluctuations in giving to foundations. <4. The Incentive Effects of Tax Benefits for Charitable Contributions and Organizations> To understand how much charitable giving is induced by tax incentives, it is important to understand how donors respond to tax incentives. Individuals give for a variety of reasons (e.g., altruism); research indicates that tax benefits may also influence charitable giving. Tax benefits encourage charitable giving by reducing the cost of giving, with the federal government effectively subsidizing charitable giving. For ordinary donations during donors' lifetimes (inter-vivos giving) and for donors not claiming the standard deduction, their marginal income tax rate determines the incentive effect by lowering the cost of giving. Donors who do not claim itemized deductions do not receive an incentive effect from the tax code. For gifts of appreciated property, subsidies are affected by the capital gains tax rate as well, regardless of whether itemized deductions are used. For bequests, the tax rate is the estate tax rate, but only a small fraction of estates are subject to tax. Corporate giving is potentially affected by the corporate tax rate. Taxes also have income effects, which may be important for wealthy donors who donate large shares of income or leave large shares of their estates to charity; taxes reduce charitable giving by reducing disposable income. Deductions for charitable contributions not only provide a tax incentive for donating or leaving bequests, but also have an income effect that increases giving. <4.1. Tax Subsidies for Charitable Giving, Inter-Vivos Giving> Taxpayers who itemize their deductions face a lower cost of giving than other taxpayers. Prior to the 2017 tax revision, the majority of individuals' charitable giving was deducted. For the most recent year of tax data available, 2016, charitable deductions of $233.9 billion were reported on tax returns, although $12.3 billion of that number was on returns with no ultimate tax liability. According to Giving USA , in that same year individuals donated $279.4 billion, indicating that approximately 80% of charitable deductions benefited from some subsidy in that year. Taxpayers with $500,000 of adjusted gross income or more, representing slightly under 1% of returns, accounted for 38% of charitable contributions. Taxpayers with $100,000 to $500,000 of income, slightly over 16% of returns, accounted for 38% of itemized charitable contributions as well. The amount of giving that benefits from tax reductions through itemized deductions is expected to have declined substantially in 2018 due to provisions of the 2017 tax revision. (Actual data on charitable deductions claimed from the IRS based on 2018 tax returns are not yet available.) This legislation is expected to decrease the share of itemizers due to a significant increase in the standard deduction and restrictions on itemized deductions, most importantly a $10,000 cap on deductions for state and local taxes. The Tax Policy Center (TPC) estimated the share of households reporting a benefit from deducting charitable contributions would fall from 21% to 9.1%. (This share reflects the share of the entire population, including nonfilers.) Data from the TPC that estimate itemized charitable contributions can be used to estimate the share of individual charitable contributions that would be claimed as itemized deductions. For 2018, TPC estimates that itemized charitable deductions would have been $212.1 billion without the 2017 tax revision, with itemized deductions for charitable giving being an estimated $143.1 billion as a result of the 2017 tax revision. In other words, charitable contributions itemized on individual income tax returns are estimated to have fallen by about one-third as a result of the 2017 tax revision. Assuming a similar level of itemized deductions in 2018 under prior law as reflected in actual data for 2016 (80%), the share of charitable contributions itemized would be projected at 54%. The tax savings from charitable contributions reflecting both the decline in itemizing and the small decline in tax rates also fell by about a third. The steepest declines were in the middle and upper middle of the income distribution (the benefit fell by 62% in the fourth quintile, while the benefit fell by 1.4% in top 0.1%). The TPC reported that taking into account all returns (including those not itemizing before the tax change), the average marginal tax rate across all donations fell from 20.7% to 15.2%. <4.1.1. Gifts of Cash> About two-thirds of charitable contributions in 2016 were in cash, and high-income taxpayers have a smaller share of cash contributions (47% in 2016 for taxpayers with income greater than $1 million). The price of charitable contributions for itemizers is (1-t), where t is the taxpayer's tax rate at which contributions are deducted. For example, if the individual is in a 25% tax bracket, every dollar the taxpayer donates and deducts from their income reduces their taxes by 25 cents. Hence, the tax price is 0.75, indicating that a taxpayer has to give up 75 cents for each dollar of charitable contributions. That is, if the taxpayer in that bracket contributes a dollar, he or she saves 25 cents in taxes and loses 75 cents that could have been used for other purposes. Charitable giving is concentrated at higher income levels, and the effect of the incentive depends on the tax rate. Consider the top tax rate (applicable for taxpayers with very high income levels), which has fluctuated substantially since the income tax was introduced in 1913, beginning at rates as low as 7% and rising as high as 92%. Starting in the mid-1960s, the top rate was 70% for many years (although it rose slightly with the Vietnam War surcharge). Beginning with legislation in 1981, the top tax rate has been reduced substantially. Effective in 1982, it was reduced from 70% to 50%. In 1986, it was further reduced to 28%. Rate increases occurred in 1990 and 1993, decreases in 2001, increases in 2013, and decreases in 2017. Table 3 compares the magnitude of those past changes in tax price. Importantly, as marginal tax rates fall, the tax price of giving increases in effect, the subsidy from the charitable deduction is reduced. Conversely, when marginal rates increase, the tax price of giving falls, and the subsidy of the charitable deduction increases. There were very large percentage changes in the 1981 and 1986 tax cuts, with much smaller changes subsequently. The effect of the top rate change in 2017 is relatively small compared to these earlier changes. The TPC estimated that across all taxpayers the tax price rose by 6.9%, to reflect the change in itemized deductions as well as the small change in tax brackets. <4.1.2. Gifts of Appreciated Property> The value of donating property differs from the value of cash donations; most property is appreciated property such as stocks and other property gaining value. Taxpayers with incomes of $500,000 or more account for 69% of these contributions. Currently, taxpayers are allowed to deduct the entire cost of donated property, without paying the capital gains tax. Since the cost of a dollar of consumption from sale of an appreciated asset is 1/(1-at g ), where t g is the capital gains tax rate and a is the share of value that would be taxed as a gain, the tax price of charitable giving of appreciated property is (1-t)/(1-at g ). The tax price effects in Table 3 reflect tax prices of assets with no appreciation. Table 4 shows the effects at the top rates for cases with appreciation of 50% of the value and 100% of the value. An appreciation approaching the full value would occur with assets that have been held for a long time and had a faster growth rate. Although changes in capital gains tax rates in isolation can affect the price of giving (for example, causing an increase in the price of giving by up to 10% in 1997), they sometimes offset the effects of a change in ordinary rates (as in 1986) and at other times exacerbate the effects. As with cash gifts, however, the largest changes to the tax price of appreciated property occurred in 1981 followed by 1986, where the price of charitable giving increased; the largest price decrease remains in 1993. <4.2. Tax Incentives for Bequests> A small share of estates are subject to the estate tax, and that share has been further reduced by the 2017 tax revision, which doubled the estate tax exemption. According to the TPC, 0.2% of deaths were subject to the estate tax before the change, which fell to 0.1% after the increase in the exemption. The latest IRS estate tax data are for decedents dying in 2013, before enactment of the 2017 tax revision. These data showed $18.1 billion of bequests reported on all estate tax returns, with $10.2 billion reported on taxable returns. The amount potentially benefiting from the estate tax deduction presumably fell between those two values, as the charitable deduction could have resulted in some estates not being taxable. Giving USA reported bequests of $26.3 billion in 2013 and $28.1 billion in 2014; thus, between 30% and 53% of bequests received the benefits of estate tax deductions. The tax price of a bequest is (1-t e ), where t e is the estate tax rate. The capital gains tax rate does not apply because the capital gain on assets passed on at death is not recognized. The current estate tax rate is 40%. The estate tax rate has fluctuated over time. From the post-World War II period to 1976, the top rate was 77%, when it was reduced to 70%. In 1981, the rate was reduced over a three-year period to 55% from 1982 to 1984, an increase in tax price of 50%. The estate tax rate was lowered from 55% to 45% over the period from 2002 to 2007, a 22% price increase. The estate tax was repealed for 2010, an 82% increase in the tax price (although individuals were retroactively allowed to pay an estate tax at 2011 rates of 35% to avoid a provision that would have required future capital gains to be recognized on sale by heirs, called carryover basis ). For those electing the 2011 tax rate, the price increase was 18%. The tax rate was reduced to 35% temporarily for 2011 and 2012; in 2013, the rate was set at 40%, a decrease in the tax price compared to the temporary rates of 8%. Aside from the year of repeal in 2010, the largest price increase was 50%, and significant price changes were fewer than for inter-vivos gifts. The benefits of the subsidy for bequests are also affected by the exemption, and the recent increases in exemptions make the tax subsidy less applicable reducing the tax incentive for charitable bequests. Nevertheless, for bequests reported on estate tax returns, these bequests are concentrated in large estates. The 2013 estate tax data report only estates of $5 million or more, since smaller estates would be exempt, but 57% of contributions on these estates were in estates of $50 million or more, and 74% were reported for estates of $20 million or more. For taxable estates, 78% were reported on estates of $50 million or more, and 92% were reported on estates of $20 million or more. Thus, it appears that most charitable contributions that benefited from the tax subsidy would continue to do so under the new exemption level. <4.3. Incentives for Corporate Giving> Corporate giving is a relatively small share of total giving. In 2013, the last year for which tax data were available, tax statistics indicated total contributions of $15.9 billion, while Giving USA reported $20.05 billion in 2018. The incentive effects for corporate giving depend on the motivation. If charitable contributions are an expenditure for purposes of advertising and public relations, the deduction is like any other cost, and the corporate tax rate does not matter. If the contribution increases the welfare of managers, the donation reduces profit, and the corporate tax matters. To the extent that the corporate tax price affects charitable giving, the tax price has changed infrequently. In 1981, the corporate tax rate was 46%. The 1986 legislation phased the rate down over two years to 34%, increasing the tax price by 22%. In 1993, the corporate tax rate increased to 35%, for a small tax price reduction of less than 2%. The corporate tax rate stayed at that level, until 2018, when the rate was reduced to 21%, for a tax price increase of 25%. <4.4. Accumulating Earnings Tax Free> Numerous opportunities are available for adding to the tax benefit of a charitable contribution by accumulating earnings that are not subject to tax. In effect, the deduction for the charitable contribution is provided before it is actually spent on charitable activity. An example illustrates this point. If the interest rate is 10%, a dollar donated today and spent a year later by a tax-exempt charity will provide $1.10 in resources. If a taxpayer is subject to the 37% top tax rate on the earnings, the amount available to give to charity after paying taxes is $1.063. In the tax-exempt case, the tax price of giving is $0.61, while the tax price of giving in the taxable case is $0.63. The longer the asset is held by a tax-exempt entity, the greater the benefit to the charitable organizations: after 10 years tax-exempt accumulation leads to $2.69, while the amount available after paying tax is $1.84. There are a number of ways to accumulate funds without paying taxes on earnings, most notably through foundations, although they are required to pay out a minimum amount each year in charitable purposes. Other methods of delaying the payment of taxes is through private charities' endowment funds and supporting organizations, and well as DAFs, none of which is subject to payout restrictions. A DAF can act, in many ways, as a private foundation but without many of the restrictions of a private foundation. Taxing these earnings directly at the corporate rate would reduce the tax incentive for those subject to high individual marginal tax rates, but not eliminate it, given the lower corporate rate now in place. <5. The Aggregate Effect of Tax Incentives on Giving> As previously discussed, the effect of changes in tax incentives on giving depends on the behavioral response to changes in tax rates. The measure is a price elasticity, which is the percentage change in charitable contributions divided by the percentage change in the tax price (in the case of individual cash giving, the tax price is one minus the tax rate). Given the large changes in tax price that have occurred over time, it is useful to examine some historical data. Figure 5 above shows the pattern of giving as a percentage of GDP over the period 1978-2018. There is little indication of significant shifts in giving due to tax rate changes. Contributions after 1981, despite pronounced tax price increases at higher incomes, remained relatively stable as a percentage of GDP. The small peak around 1986 is generally attributed by most researchers to a temporary rise in deductions reflecting a timing shift as tax cuts for 1987 and 1988 were preannounced in the Tax Reform Act of 1986 (TRA86; P.L. 99-514 ), but by 1989 contributions had returned to their previous levels. Contributions following enactment of the 1993 tax increase fell rather than increased. Thus, there is little in the historical record to suggest a significant response to changes in tax incentives. Economists have employed a variety of statistical methods to try to formally estimate the effects of tax incentives on charitable giving. The effects can be measured by estimating a price elasticity, which is the percentage change in charitable contributions divided by the percentage change in tax price. Since increasing the price of giving will reduce the amount of giving (and vice versa), the price elasticity is a negative number. For example, if the elasticity is -0.7, a 10% increase in the tax price (1-t) will result in a 7% decrease in the amount of charitable contributions. <5.1. Individual Charitable Contributions> Some early statistical estimates indicated that giving was very responsive to the tax rate. The temporary increase in individual charitable contributions following the 1986 tax revision, where lower tax rates were announced in advance, caused researchers to suspect that some of these estimated effects were due to transitory changes. The most common instance of this transitory effect would be when income fluctuated: the periods when income rises and individuals are in higher tax brackets would be the best time to concentrate charitable giving. Thus, some of the relationship between high tax rates and higher contributions reflected timing and would overstate the response (i.e., the elasticity) to a permanent tax change. Statistical estimates are also made more difficult because charitable giving responds to income, so that higher incomes lead both to higher charitable contributions and, in a progressive tax rate system, to higher tax rates. Appendix A contains a review of studies of the price elasticity of charitable giving that control for transitory effects. The elasticities in those studies range from close to 0 to -1.2. The review of that evidence points to an elasticity of around -0.5. That elasticity would imply that the percentage change in individual charitable contributions due to the 2017 tax revision (where the price rose by 7%) was a 3.5% decline in individual charitable contributions. For 2017, individual giving was $302.5 billion, suggesting a decline in charitable contributions of around $11 billion as a result of the 2017 tax revision. With a current average tax rate for individual contributions of 15.2%, the tax price would rise by 9% if all charitable deductions were eliminated. These effects would be twice as large with an elasticity of -1.0. The National Council on Nonprofits has estimated a similar effect of the 2017 tax change for individual contributions, a decline in charitable giving of $13 billion or more. As a percentage of GDP, individual giving declined by about 6% from 2017 to 2018. Some of that decline might reflect a shift in giving from 2018 to later in 2017, to take advantage of the higher tax rates or the expectation of taking the standard deduction in the following year. Contributions as a percentage of GDP grew about 1.4% from 2016 to 2017. Many other factors, however, influence giving as a percentage of GDP, and individual giving as a share of GDP in 2018 was about the same as in 2015. <5.1.1. A Note on Beneficiaries of Charitable Tax Incentives> The 2017 tax revision eliminated many charitable deductions taken for the middle and upper-middle-income taxpayers, leaving a charitable tax incentive mostly claimed by high-income individuals. The TPC estimates that in 2018 91.5% of the benefit for charity accrues to the top quintile (taxpayers with incomes of $153,300 or more), 83.5% is received by the top 10% (taxpayers with incomes of $222,900 or more), 56.4% is received by the top 1% (taxpayers with incomes of $754,800 or more), and 35% accrues to the top 0.1% (taxpayers with income of $3,318,600). The 2017 Panel Study of Income Dynamics (PSID) can be used to examine the patterns of giving by income class to different types of charitable organizations and also to examine the share of contributions likely to benefit low-income individuals (i.e., that go to charities and foundations that serve the poor). According to CRS's analysis of the PSID data, higher-income individuals give a larger share of their contributions to organizations that focused on health, education, arts, the environment, and international aid relative to contributions by lower-income individuals, while giving a smaller share to organizations focused on religion, youth and family services, community improvement, and directly providing basic necessities. For example, nearly two-thirds of contributions of those with incomes under $200,000 went to religious organizations, compared to roughly 47% for those with incomes over $200,000. In contrast, just over 5% of giving from families with income under $200,000 was directed to education purposes, compared to almost 19% for those with income over $200,000. The PSID data can also be used to estimate the share of various charitable benefits focused on the needs of the poor. Nearly 36% of charitable giving made by families with income under $200,000 was focused on the poor, compared to nearly 33% for families with income over $200,000. While the PSID sample sizes limit the ability to draw conclusions about charitable giving at very high income levels (greater than $1,000,000), they are suggestive that the share focused on the poor may further decline as income levels increase. As the changes from the TCJA resulted in a further concentration of charitable incentives toward high-income taxpayers, they also focused incentives on charitable giving less likely to benefit the poor and more likely to benefit organizations that focus on health, education, arts, the environment, and international aid. Although it is difficult to separate various causal factors, the recipient organizations that experienced the largest decline in giving in 2018 were foundations, although there was also extraordinary growth in giving to foundations in 2017. Foundations may be the most likely beneficiary of transitory giving (in this instance, making of gifts that otherwise might be made in 2018 into 2017). Other recipient organizations that saw larger declines in donations were public society benefit (an umbrella for many types of organizations), religious organizations, and educational organizations. Beneficiary organizations that saw an increase in donations or smaller declines were international affairs, environment and animals, arts, and health. Again, it is difficult to determine any causal relationships; for example, religious giving has been declining as a share of total giving for many years. <5.2. Bequests> Empirical estimates of the price elasticities for bequests are also reported in Appendix A . These estimates also vary significantly, although the evidence suggests they are more responsive to taxes than inter-vivos contributions. In the following calculations, an elasticity of -2.0 is used. It is difficult to determine the effect of the recent changes in the exemption in the 2017 act because the share of bequests reported on estate tax returns differs substantially from the share represented by taxable returns (30%) and the share represented by all returns (53%). Some returns that would have been taxable without the charitable deduction but are not taxable without the deduction benefit from the incentive. In addition, a much smaller share of taxable estate returns would fall below the exemption for taxable returns. Assuming that the share with an estate of less than $20 million would no longer be subject to the estate tax, that share is 92% for taxable returns, indicating 2.4% of bequests would lose the tax incentive (8% of 30%). For all estates the share is 74%, which suggests 13.8% of bequests would lose the benefit of the charitable deduction (26% of 53%). The tax price increase for those estates affected by the TCJA is 66%. Such a large price increase does not permit the use of a point elasticity estimate, so the underlying exponential formula is used, leading to a reduction in affected estates of 64% with an elasticity of -2.0. These calculations produce a range of percentage reductions in total bequests of 1.5% (0.64 times 2.4%) to 8.8% (0.64 times 13.8%). Bequests were $39.7 billion in 2017, suggesting a decline in bequests ranging from $0.6 billion to $3.5 billion. This same methodology can be used to estimate the effect on bequests of either eliminating the charitable deduction or repealing the estate tax, which would result in a further reduction of $7.0 billion to $10.0 billion. These estimates depend, however, on the elasticity. Excluding the one study that found no effect, the smallest elasticity estimated (-0.6) would result in an effect 30% smaller, and the largest (-3.0) would result in an effect 22% larger than these amounts. The National Council on Nonprofits has estimated a decline in bequests of $4 billion as a result of the 2017 tax revision. Because bequests vary considerably from year to year (and can be affected by very wealthy decedents as well as economic factors), examining changes from the previous year provides a limited amount of information. <5.3. Corporate Giving> As noted above, some theories of corporate giving suggest that taxes do not affect a decision that is made for purposes of maximizing profits by generating advertising and goodwill. Empirical studies of the response are limited, dated, and quite mixed, including findings of large responses, small responses, no responses, and responses that are positive rather than negative. All of these findings make estimated effects on giving responses difficult to determine, although the corporate rate cut in 2017 substantially increased the tax price (by 22%) to the extent giving provided a benefit to managers. Corporate giving constituted the smallest share of total giving, amounting to $19.5 billion in 2017; therefore, the effects of the TCJA on overall corporate giving are likely small. <6. Policy Options> Some proposals to revise the tax treatment of charitable giving are aimed at increasing the incentive to give or changing the distribution of incentives across donors, while others are aimed at what may be perceived as abuses. <6.1. Options Related to Tax Incentives for Charitable Giving> <6.1.1. Deduction for Nonitemizers> As mentioned previously, tax incentives for giving are largely confined to higher-income households because these taxpayers are more likely to itemize their deductions (largely deductions for state and local taxes, mortgage interest, and charitable contributions), which tend to rise with income, or choose the standard deduction of a fixed dollar amount. This concentration of tax benefits on higher-income individuals also tends to favor the charities they favor, such as those pertaining to health, education, and the arts, while disfavoring religion and charities aimed at human services. The concentration of charitable giving incentives to those with higher incomes has increased as a result of the 2017 tax revision. Nonitemizers were able to claim a deduction for charitable contributions in the early 1980s. A temporary charitable deduction for itemizers was adopted in the Economic Recovery Tax Act of 1981 ( P.L. 97-34 ), initially allowing a deduction for 25% of contributions in 1982-1984, 50% in 1985, and a full deduction in 1986, with the provision then expiring. The deduction was also capped in the first three years, at $100 in the first two years and $300 in the third year. Over time, policymakers have continued to propose policies that would extend charitable tax benefits to all taxpayers, either by allowing a deduction for nonitemizers (often termed an above-the-line deduction , reflecting its position on the tax form) or by replacing the itemized deduction with a credit available to all taxpayers. In the 116 th Congress, Representative Danny Davis has introduced legislation that would allow an above-the-line deduction for charitable giving H.R. 1260 ), as have Representatives Henry Cuellar and Christopher Smith ( H.R. 651 ). (A similar bill was introduced in the 115 th Congress as H.R. 5771 .) Earlier proposals for an above-the-line charitable deduction include the Universal Charitable Giving Act of 2017 ( H.R. 3988 / S. 2123 ) in the 115 th Congress, introduced by Representative Mark Walker in the House and Senator James Lankford in the Senate. In the 116 th Congress, Representative Danny Davis has introduced legislation that would allow an above-the-line deduction for charitable giving ( H.R. 1260 ), as have Representatives Henry Cuellar and Christopher Smith ( H.R. 651 ). (A similar bill was introduced in the 115 th Congress as H.R. 5771 .) Different models have been used to estimate the budgetary cost of a nonitemizer deduction. Using the Penn-Wharton Budget Model, the Indiana University Lilly Family School of Philanthropy estimates a nonitemizer deduction would cost between $14.4 billion and $16.1 billion in 2020 (see Table 5 for a summary of the revenue and charitable giving effects of the policy options evaluated in the study). Building on the Open Source Policy Center's Tax Calculator, Brill and Choe estimated such a change would cost $25.8 billion at 2018 levels (the revenue and charitable giving effects of the policy options in the study are summarized in Table 6 ). These studies also estimated the effect of the proposals on charitable giving. One concern is whether further encouraging charitable contributions is an efficient way of achieving the benefits such charitable giving might bring. In general, if the price elasticity of giving is less than 1.0, the induced charitable giving will be less than the revenue cost, and more charitable giving could be obtained by making direct expenditures. If the elasticity is greater than 1.0, charitable giving will be greater than the revenue loss. (This argument also applies to existing charitable deductions.) Brill and Choe used a unitary elasticity (an elasticity of -1.0) in their study, but found a smaller increase in charitable contributions ($21.5 billion) than the lost revenue (the absolute value of lost revenue) when evaluating an above-the-line or nonitemizer deduction. Presumably some additional revenue beyond the amount of induced giving is lost because some itemizers would move to the standard deduction, causing a loss of revenue unrelated to the charitable incentive. (Even very-high-income individuals who had no mortgages might be better off moving to a standard deduction because of the $10,000 cap on state and local tax deductions; the standard deduction for a married couple is $24,000). The Indiana University study looks at giving under a "low-elasticity" scenario (an elasticity of -0.5), a high-elasticity scenario (an elasticity of -1.0), and an income-based elasticity scenario. The increase in giving in 2020 under each scenario was $8.4 billion, $16.8 billion, and $24.9 billion, respectively. Under the low-elasticity scenario, an above-the-line deduction for giving would reduce revenues by $15.0 billion in 2020, while generating $8.4 billion in additional charitable giving. Under the high-elasticity scenario, the revenue reduction in 2020 is estimated at $15.5 billion, with additional charitable giving estimated at $16.8 billion. In the income-based elasticity scenario, the revenue reduction in 2020 is $16.1 billion, while additional charitable giving is $24.9 billion in 2020. Thus, if elasticities are less than 1.0, as the survey of studies accounting for transitional effects in Appendix A indicates, charitable deductions would likely be smaller than the revenue cost. In evaluating the trade-off between revenue loss and charitable contributions, the charitable contributions from an above-the-line deduction would tend to go to charitable causes favored by lower- and middle-income taxpayers. These include religion, youth and family services, community improvement, and directly providing basic necessities. If the desired objective is to increase resources devoted to these activities, additional resources could be provided directly by the federal government, instead of induced via charitable giving incentives (which result in a loss in federal revenue). The Indiana University study also looks at a scenario that would provide an enhanced nonitemizer deduction. In this policy, single filers with less than $20,000 in income ($40,000 for joint filers) would be able to deduct 200% of their charitable contributions. Taxpayers making less than $40,000 ($80,000 for joint filers) would be able to deduct 150% of their contributions. Under this policy, revenue losses would be between $15.9 billion and $18.2 billion in 2020, depending on the elasticities assumed. Charitable giving would increase by an estimated $9.2 billion to $27.7 billion, with the rise in giving greater than the loss in revenue in both the high-elasticity and income-based-elasticity case. This policy would tend to encourage additional giving by lower-income taxpayers. Adding a deduction for nonitemizers (or replacing the existing itemized deduction with a credit, as discussed below) would increase the complexity of the tax code for the individuals now taking the standard deduction. Charitable deductions require various types of substantiation and recordkeeping, and it is difficult for the IRS to monitor these contributions, especially with respect to small contributions where audit and investigation by the IRS are not cost effective. Charitable deductions are among the items with no third-party reporting, which makes enforcement more costly and difficult. Allowing a charitable deduction or credit to be taken regardless of whether a taxpayer itemizes or takes the standard deduction would further increase the share of taxpayers who take the standard deduction rather than itemizing deductions. The remaining major itemized deductions are state and local taxes and mortgage interest. Such a move would, for example, reduce the incentives for owner-occupied housing even further than the effects of the 2017 tax revision, which some might see as desirable and others as undesirable. <6.1.2. A Tax Credit for Charitable Giving> An alternative to a nonitemizer deduction is to provide for a nonrefundable tax credit. It could either be as a substitute for or an addition to the current itemized deduction. Both the Indiana University and Brill and Choe studies estimate revenue effects and increased charitable contributions for a 25% credit. Indiana University considers a credit as an addition to the current itemized deduction, with an estimated revenue cost in 2020 of $20.6 billion to $24.6 billion, depending which elasticity is assumed. Brill and Choe consider a 25% credit that replaces the current itemized deduction, costing $31.1 billion at 2018 levels. Brill and Choe estimate the credit would (at their assumed -1.0 price elasticity) increase charitable giving by $23.3 billion. The Indiana University study estimates increased contributions in 2020 of $35.1 billion for the higher income-based elasticities, $22.8 billion for the elasticity of -1.0, and $11.4 billion for an elasticity of -0.5. The induced contributions associated with the elasticities of -1.0 and -0.5 are smaller than the revenue losses and raises the basic concerns about the tradeoff between revenue loss and contributions. If the credit replaced the itemized deduction, it would shift more of the incentive to lower- and middle-income individuals by creating the same tax price for all taxpayers and thus to their preferred beneficiaries. Expanding the scope of the benefit for charitable contributions would, like a deduction, tend to increase complexity in compliance and tax administration, as well as potentially reduce the incentive for home ownership by reducing the number of itemizers. If a credit substituted for the itemized deduction, it would be possible to set the credit so as not to lose revenue while equalizing the treatment of the charitable contribution incentive across taxpayers. For example, in a 2011 report by the Congressional Budget Office (CBO), an option of a 15% credit was considered, which, compared to a 25% credit, would have cost $20.4 billion less in 2006 dollars, and a larger amount at current income levels. <6.1.3. Modifying Charitable Giving Incentives: Caps and Floors> Some proposals would cap expanded deductions. For example, the Universal Charitable Giving Act of 2017 ( H.R. 3988 / S. 2123 ) in the 115 th Congress would have limited the nonitemizer deduction to be one-third of the standard deduction that was available at that time. When a nonitemizer deduction was available in the early 1980s, it was limited to a certain percentage of contributions in the first three years of the temporary policy. Proposals have also been made to provide a floor, either under nonitemizer deductions or all deductions. <6.1.3.1. Caps> A cap for a deduction that provides a desired incentive could be inefficient, as the cap eliminates the incentive for those with giving above the cap while still resulting in a revenue loss. Nevertheless, a cap may be useful for a deduction for nonitemizers or a credit that does not replace the itemized deduction, as it would reduce the number of current itemizers who would switch to the standard deduction. The Indiana University study finds that imposing a cap of $8,000 for a joint return (and $4,000 for a single return) applied only to the nonitemizer deductions would have, depending on what giving elasticity is assumed, a revenue cost in the range of $5.6 billion to $16.6 billion in 2020 (less than the $8.4 billion to $24.9 billion estimate for a nonitemizer deduction without a cap). This cap is generous compared the one proposed in the Universal Charitable Giving Act of 2017 (one-third of the standard deduction in 2017, which was $12,700 for a married couple and $6,350 for a single return). The $8,000/$4,000 cap is about a third of the current standard deduction under the new law ($24,000 for married couples and $12,000 for singles in 2018). The Indiana University study found an itemized deduction with this cap would increase charitable giving in 2020 by $16.6 billion assuming their high income-based elasticities, $11.2 billion at the elasticity of -1.0, and $5.6 billion at the elasticity of -0.5. With this cap, induced contributions are less than the revenue loss in all but the high income-based elasticity case (induced contributions are less than the revenue loss in all cases over the 10-year period). Caps for itemized deductions could also be set at a certain rate, instead of a fixed dollar amount. For example, the Obama Administration's FY2010 and FY2011 budgets proposed limiting the value of itemized deductions to 28% (a rate below the top individual income tax rate at the time of 35%). By limiting the amount of the deduction, the value of the charitable tax incentive would decrease for taxpayers in tax brackets above 28%. However, the subsidy would become more equal across taxpayers in different tax brackets. The policy would also raise additional revenue and result in a decline in charitable giving. <6.1.3.2. Floors> Floors would allow charitable deductions in excess of a given amount, either a dollar amount or a percentage of income. As opposed to a cap, a floor could increase the efficiency of the incentive; to the extent that contributions are above the floor in the absence of the incentive, the floor does not affect the incentive at the margin, even though it reduces revenue loss. The floor would also, if applied only to the nonitemizer deduction, reduce the attractiveness of this deduction and thus reduce the number of taxpayers who shift to a standard deduction. A 2% floor was included in the 2014 major tax reform proposal by then-chairman of the House Ways and Means Committee Dave Camp (the Tax Reform Act of 2014, H.R. 1 in the 113 th Congress). The Brill and Choe study estimated the revenue effect of a nonitemizer above-the-line deduction and the 25% credit with a floor of $1,000 for married couples and $500 for singles. For the above-the-line deduction, they found a substantial fall in the revenue loss from $25.8 billion to $14.6 billion, but a relatively small effect on charitable contributions (at their -1.0 price elasticity), which were estimated to fall from $21.5 billion to $19.1 billion. Thus, at their unitary price elasticity, the induced contributions were expected to be larger than the revenue loss. Looking at the same dollar floor for the 25% credit, the revenue loss was reduced even more, from $31.1 billion to $15.4 billion, presumably because the floor would apply to existing itemizers as well. The induced contributions (at the -1.0 price elasticity) fell from $23.3 billion to $20.0 billion. The Indiana University study examined a modified percentage-of-income floor where contributions below 1% of AGI would receive a 50% deduction and the remainder a full deduction. The estimates of revenue loss and induced giving depend on the elasticity that is assumed. In the high-elasticity case, giving in 2020 would increase by $23.7 billion, while the revenue loss would be $13.4 billion. At the elasticity of -1.0, induced giving would be $15.9 billion, while the revenue loss would be $12.8 billion. With an elasticity of -0.5, induced giving would be $7.9 billion, with a revenue loss of $12.3 billion. In addition to potentially creating more "bang for the buck," a floor (as long as it completely excluded contributions below a dollar amount or percentage of income) would simplify administration and compliance by having no deductions for small contributions. In considering a percentage of income versus a dollar floor, a dollar floor would be more transparent and serve the purpose of excluding deductions for minor contribution amounts, but the percentage-of-income floor would be more efficient because it could provide a meaningful floor for wealthy taxpayers. <6.1.4. Charitable Giving and Disaster Relief> As noted previously, in the past Congress has passed legislation eliminating the percentage of AGI limit for charitable contributions made for disaster-relief purposes following certain disaster events. Senator Tim Scott has introduced legislation that would temporarily increase the limitation on charitable contributions made for relief efforts related to Hurricane Dorian ( S. 2476 ). Other proposals in the 116 th Congress would temporarily increase charitable giving limits following disaster events generally (the Tax Relief and Expedited Assistance for Disasters Act of 2019 (TREAD Act) ( H.R. 3287 ), introduced by Representative Tom Rice), or for disasters in 2019 (the Disaster Tax Relief Act of 2019, introduced by Representative Adrian Smith [ H.R. 2284 ] and Senator Deb Fischer [ S. 1133 ]). Other legislation introduced earlier in the 116 th Congress would have increased the limitation on charitable contributions made for relief efforts for disasters in 2018 (the 2018 Natural Disasters Tax Relief Act [ H.R. 1148 ], introduced by Representative Rice). <6.2. Gifts of Appreciated Property> Gifts of appreciated property, as noted above, receive a double benefit: a deduction for the fair market value and an exclusion of the gain from tax. These benefits also create an incentive to overvalue a gift so as to maximize the value of the charitable deduction. Charities may also incur costs to maintain or sell the property and may not even want the contribution but will accept it so as not to antagonize a wealthy donor. Several options could be considered for gifts of appreciated property. First, only contributions made in cash could be deductible, which would force the taxpayer to sell the property and then donate the proceeds to charity (thus incurring a capital gains tax and valuing the deduction at market value). A similar approach would be to allow a deduction equal to the basis in the property (usually, the amount originally paid for it). Taxpayers might still donate property with little appreciation, but that approach would also eliminate the double benefit and address the valuation issue. One difficulty with this option is that it would require either a loss of deduction or limit the optimal recipient in cases where the property was particularly desired to be used by the recipient, such as a contribution of a work of art to a museum. An option that would eliminate the double benefit but not address the valuation problem would be to allow the contribution of appreciated property but to tax the appreciation as if it were a realized capital gain. This approach would address the problem of donating an artwork to a museum. The Tax Reform Act of 2014 ( H.R. 1 ) had provisions aimed at limiting the problems attached to valuation. The deduction would have been limited to basis except for property related to the purpose of the charitable institution, certain property receiving special treatment such as conservation easements, and publicly traded stock as long as it was no more than 10% of the total shares. Another option is to allow a deduction only for the amount that the charity receives from a sale. One analyst has suggested (presumably to address property used by the charity) that the deduction be limited to the lesser of the benefit from sale, or the donor's tax basis plus one-half of the untaxed appreciation. There are proposals to address concerns about inflated values of easements that may be associated with the use of syndicated partnerships to donate conservation easements. One proposal would limit the value of these deductions to 2.5 times the partnership adjusted basis (the Charitable Conservation Easement Program Integrity Act of 2019, introduced by Senator Steve Daines [ S. 170 ] and Representative Mike Thompson [ H.R. 1992 ]). <6.3. Charitable Mileage Rate> Charitable organizations can reimburse volunteers (without income tax consequences) for miles driven for charitable purposes. Nontaxable reimbursements by charities can be made up to the charitable mileage rate of 14 cents per mile. This rate was set in 1997, and has not been adjusted since. The IRS has the authority to adjust the business mileage rate (58 cents per mile for 2019) and the medical and moving expense mileage rate (20 cents per mile for 2019). The charitable mileage reimbursement rate is set in statute. Legislation in the 116 th Congress, the CHARITY Act of 2019 ( S. 1475 / H.R. 3259 ), would align the charitable mileage reimbursement with the rate used for medical and moving expense purposes. Other legislation, the Volunteer Driver Tax Appreciation Act of 2019 ( H.R. 2072 ), introduced by Representative Collin Peterson, and the Nonprofit Relief Act of 2019 ( H.R. 3323 ), introduced by Representatives Carolyn Maloney and James Clyburn, propose increasing the charitable rate to match the business mileage rate. The Delivering Elderly Lunches and Increasing Volunteer Engagement and Reimbursements (DELIVER) Act of 2019, introduced by Representatives Joseph Morelle and Ron Wright ( H.R. 2928 ) and Senators Angus King and John Cornyn ( S. 1603 ), would raise the standard charitable mileage rate for delivery of meals to homebound individuals who are elderly, disabled, frail, or at-risk. Increasing the charitable mileage reimbursement rate could encourage charitable activity, such as meal delivery, and help adjust for the increase in the cost of automobile use since the late 1990s. A concern with increasing the charitable mileage rate, particularly to the business mileage rate, is that a higher rate could overcompensate volunteers for their automobile-related expenses (i.e., allow taxpayers to take a deduction that exceeds actual driving/vehicle use costs). <6.4. Proposals Relating to Tax-Exempt Organizations> Some proposals relate to the treatment of the charitable organizations. Certain types of tax-exempt or charitable organizations may have specific or additional requirements. <6.4.1. DAFs, Endowments, and Foundations (Nonactive Charities)> Several policy options are related to entities that receive charitable contributions, but do not immediately use these contributions for a charitable purpose. These entities include DAFs, supporting organizations, and university endowments. One option could be to subject these organizations to rules similar to private foundations and Type III Non-FISO supporting organizations, and require a minimum payout. Another option is to require all funds in a DAF account to be distributed within five to seven years. A proposal has been made to not allow foundations to make donations to DAFs, or require that if they do, the funds be spent immediately and with full disclosure. This option might address the concern that DAFs can be used to avoid transparency that is otherwise required of private foundations. The New York State Bar Association (NYSBA) Tax Section, commenting on an advance version of Treasury Notice 2017-73, addressing certain issues relating to DAFs, suggested that foundations could give to DAFs if the DAFs agree to distribute the funds immediately. The NYSBA also recommends applying the same rules as applied to foundations in cases where a pledge is made and DAF distributions satisfy it. A proposal to encourage greater use of DAFs would allow IRA rollover contributions to charity to go to DAFs (generally these contributions must go to public charities but cannot go to supporting organizations or DAFs). This proposal was included in the Charities Helping Americans Regularly Throughout the Year (CHARITY) Act of 2019, introduced by Senator John Thune ( S. 1475 ) and Representative Earl Blumenhauer ( H.R. 3259 ). Several policy options that relate to university endowments might be considered. These could include payout requirements, or measures to address offshore sheltering of earnings from the UBIT. Another proposal is to modify or repeal the tax on endowment net investment income enacted in the 2017 tax revision. The Reducing Excessive Debt and Unfair Costs of Education (REDUCE) Act of 2018 ( H.R. 5916 ) would have imposed an excise tax on undistributed required payouts from college and university endowments, with payout requirements designed to direct support lower- and middle-income students. Also in the 115 th Congress, the Don't Tax Higher Education Act ( H.R. 5220 ) would have repealed the endowment excise tax. Another proposal would eliminate the provision that reduces the excise tax rate on private foundations contingent on distributions and directly reduce the excise tax rate to 1%. This proposal is included in the proposed CHARITY Act of 2019. <6.4.2. Tax-Exempt Hospitals> A nonprofit hospital applying for, or seeking to maintain, tax-exempt status as a "charitable" organization under IRC Section 501(c)(3) must meet the "community benefit standard." Broadly, and as previously discussed, this standard requires the hospital to show that it has provided benefits that promote the health of a broad class of persons to the community. One way hospitals can demonstrate that they have met the community benefit standard is by providing charity care. The potential for increased coverage of health care for low-income individuals in the Affordable Care Act may have reduced the need for charity care and has raised questions about the need for the tax benefits for nonprofit hospitals. Disallowing tax-exempt bond financing was an option discussed during debates leading up to the 2017 tax revision. In addition, concerns have been raised about the enforcement of the community benefit standard. <6.4.3. UBIT Provisions Adopted in the 2017 Tax Revision> Some proposals reconsider the UBIT provisions adopted in the 2017 tax revision ( P.L. 115-97 ). One proposal would eliminate the separate business calculation of the UBIT (see the Nonprofit Tax Relief Act of 2019; H.R. 3323 ). Requiring that unrelated business taxable income be computed separately for each trade or business activity treats nonprofits differently from for-profit businesses, and it complicates administration and compliance because of the difficulties of classifying businesses. This provision may have been motivated by concerns about improper allocation of expenses across 501(c)(3) colleges' and universities' unrelated business activities. A 2013 IRS compliance report found that some colleges and universities were misallocating expenses between nonprofit and for-profit activities (which was already disallowed) and underpaying UBIT. Criticisms have also arisen about a change in the 2017 tax revision that subjects transportation benefits for employees to the UBIT. The purpose of this provision was to treat nonprofit business like for-profit businesses (where deductions are denied). This provision includes free parking, which would require nonprofits (including churches) that provide parking for their employees to determine the value of this benefit and file a tax return, in some cases for the first time. The House Committee on Ways and Means has approved legislation (the Economic Mobility Act of 2019; H.R. 3300 ) that would, among other things, repeal the inclusion of certain fringe benefits in UBIT. Other legislation that would repeal the inclusion of nonprofit fringe benefits in UBIT includes Representative James Clyburn's Stop the Tax Hike on Charities and Places of Worship Act ( H.R. 1223 ); the Lessen Impediments From Taxes (LIFT) for Charities Act ( S. 632 ), introduced by Senators James Lankford and Christopher Coons; the Stop the Tax Hike on Charities and Places of Worship Act ( S. 501 ), introduced by Senator Sherrod Brown; and legislation introduced by Representative Mark Walker ( H.R. 1545 ). The Preserve Charities and Houses of Worship Act ( S. 1282 ), introduced by Senator Ted Cruz, and the Nonprofits Support Act ( H.R. 513 ), introduced by Representative Michael Conaway, would repeal both of the TCJA provisions discussed above. <6.4.4. Administrative Reforms> Several proposals have been made to provide administrative reforms. One such proposal is to require electronic filling of 990 forms. This proposal is included in the CHARITY Act of 2019. Another proposal, considering the task of monitoring a large number of charities, would be to provide more funds to the IRS or even to create a separate regulatory authority, given that the IRS is a revenue collection agency, not a nonprofit regulator. For that reason the IRS has few incentives to devote resources to enforcing the rules regarding nonprofits. Appendix A. Evidence on Elasticities for Charitable Giving Lifetime (Inter-Vivos) Giving Table A-1 reports the results of seven different studies (with a number of specifications that attempt to measure both permanent and transitory effects of changes in price and income on charitable giving). Two of these studies (Bakija 2000, and Bakija and McClelland 2002) also provided some critiques of other studies and some sensitivity analysis that is useful in understanding the studies and their strengths and weaknesses. Results that are not statistically significant have an asterisk. Lack of statistical significance means that, although a relationship that most closely fits the data is estimated, there is such deviation from that relationship in the observations that there is not a clear causal effect. Estimates that are not statistically significant are usually, although not always, associated with very small values that are close to zero. While the studies differ in methodology, as discussed below, one difference is the type of data used. Tax return data are available for general use only to researchers in the Treasury Department and the Joint Committee on Taxation. (The Congressional Budget Office [CBO] has access to taxpayer data but must have uses approved by the Joint Committee on Taxation.) The data on giving and tax rates are probably superior in these studies and contain a larger sample of high-income taxpayers; however, such research cannot be replicated or subjected to any sensitivity analysis by others. Other researchers have to use public-use data constructed from other sources. Of the seven studies in Table A-1 four (Randolph 1995, Auten et al. 2002, and Bakija and Heim 2008 and 2011) used taxpayer data, and all had as authors or coauthors a Treasury employee. The Bakija and McClelland (2002) study, with a CBO coauthor, included a sensitivity analysis for the Auten et al. study, but used a public-use file, not the tax data. The other two studies also used a public-use file. Many of the studies listed below report multiple results using different specifications and, in general, an attempt is made to report the results that appear to be preferred by the author(s). In the case of the Bakija and Heim (2011) report, the preferred estimate for the permanent elasticity is associated with variations in the state tax rate, and estimates from other specifications (such as allowing coefficients to vary across incomes) are even larger (see the discussion of that study). For comparison with this table and to illustrate the importance of dealing with transitory effects, Bakija and McClelland (2002), who presented a range of strategies, also estimated a standard pooled cross-section estimate, the type that had been done prior to the evidence shown by the 1980s tax cuts that did not deal with transitory effects. That estimate showed results that are typical of past cross-sectional studies, a price elasticity of -1.22 and an income elasticity of 0.84. In general, the theoretical expectation is that transitory price effects are large and transitory income effects are small (due to the permanent income hypothesis or consumption smoothing). Price elasticities and income elasticities in cross-section studies are a combination of permanent and transitory effects. Thus, a lower permanent price elasticity and a higher permanent income elasticity would be expected than those observed in cross-section studies. Only two studies, Randolph (1995) and Bakija and Heim (2008) find these results, and the Bakija and Heim income elasticity is only marginally higher. Randolph (1995) was the first study to focus on the problem of transitory effects, and the technique used a 10-year panel that treated deviations from average income (and the resultant deviations from tax rates) as transitory. Permanent tax rates varied through changes in the tax law (and years around the 1981 and 1986 changes were excluded). This study allowed a long period of time to be transitory; therefore, it is possible that some of the permanent price and income effects are reflected in the transitory estimates, as the author acknowledges. Other studies tend to allow much shorter-term transitory effects, which might go too far in the other direction. Randolph's model allowed the price elasticity to vary by the share of giving, and he reports two measures: one unweighted with a price elasticity of -0.08, which is not statistically significant, and one weighted more heavily toward large contributors, which Randolph appears to prefer. The results in the Randolph study are consistent in general magnitude with the expectations based on the aggregate data discussed in the text: a small permanent price elasticity, a large transitory price elasticity, an income elasticity of around 1.0, and a smaller transitory income elasticity. Bakija (2000), who among other things replicates the Randolph results with public-use data, argues that the second weight, which yields an insignificant price elasticity, is more appropriate (although he criticizes other aspects of the model). In his own replications with public-use files he finds effects similar to Randolph's unweighted results but suggests the appropriate measure of the aggregate elasticity evaluated over the full sample. These results are similar to Randolph's unweighted results: he also finds similar results for the elasticity when confined to incomes over $100,000. Based on the specification he prefers and his replication, this approach basically finds no evidence of a permanent price response. The Randolph study differs from the other studies in some important ways. By using average income over the panel as permanent income and estimating transitory effects based on deviations, he allows a broad scope for shifting over time, whereas other studies use shorter periods. This choice may be influenced by experience with capital gains realizations studies, where using short periods to control for transitory effects was not successful in producing reasonable results. Barrett et al. (1997) allow limited intertemporal shifting variation and also a lagged value of giving to deal with adjustment. They focus particularly on how quickly adjustment takes place, which they find to be very rapid. Their panel also does not include tax rate changes after 1986, which are an important exogenous source of variation. They find a lower price elasticity than a standard cross section, but also a small income elasticity. Like the other studies, this study includes individual fixed effects that are designed to control for heterogeneity among taxpayers (e.g., a taste for philanthropy, religiosity). (Randolph could not employ individual fixed effects because he used an average over the entire panel for permanent income, which was then indistinguishable from a fixed effect.) One drawback, however, of fixed effects, as Barrett et al. acknowledge, is that the fixed effect could also be picking up permanent income effects, and so suppressing the value of that elasticity. The Barrett et al. study also allowed a more limited scope for intertemporal substitution. Auten et al. (2002) also use fixed effects and more limited intertemporal substitutions. As pointed out by Bakija and McClelland (2002), they also did not address known changes in the tax law (that is, 1986 was a higher-tax year than 1987, even though the high realizations in 1989 were associated with a preannounced drop in tax rates), which would tend to bias their price elasticities upward. This was a particular problem for panels that included 1986, and Bakija and McClelland reestimated their model using a public data file and found a much lower elasticity. Bakija (2000) mainly contrasted his model with Randolph's by using legislated transitory changes in tax rates as the way to determine the transitory component of taxes. Bakija and McClelland base their analysis off Auten et al., and while they introduce a number of innovations, their main changes are to model expected tax changes and introduce adjustment lags. Bakija and Heim (2008) use a panel approach with tax data, with fixed effects, with more limited substitution frameworks than Randolph, and with attention to expectations of tax changes. They characterize intertemporal substitution mainly through those preannounced tax changes and allow shorter substitution periods. The main source of determining the price elasticity is the difference in response across taxpayers who had different changes in their tax rates. They also examine separate estimates for higher-income individuals. They obtain different estimates depending on how they deal with fixed time effects (variables meant to control for changes that affect all observations in a given year), which cannot be introduced into the higher income levels because they are so closely correlated across the sample with legislated changes in tax rates. The first one they reported, which did not use fixed time effects but incorporated a time trend, is included in the assessment. Bakija and Heim (2011) is similar to their 2008 study but reports effects for using the state tax rate alone, the federal tax rate alone, and the combined federal and state rate. The authors believe the state tax rate provides a more reliable measure of response because state tax rates allow a comparison of people with the same income but living in different states, and thus is less likely to reflect the effects of omitted variables. The federal rate or combined rate (where the federal rate would dominate) captures the effects of changes in income and the effects of exogenous federal tax changes. The study also reports effects when coefficients of nonprice variables (i.e., other than the tax variables) differ across income, finding higher permanent price elasticities (a permanent elasticity of -1.53). When the study allows price elasticities to vary across income, there is some indication that elasticities increase with higher incomes, but some estimates are statistically insignificant (including estimates for some high-income individuals). Statistically significant estimates of -1.19 are found for the $200,000-$500,000 class and of -1.71 for the over $1 million class; but estimates for the other classes were not statistically significant. Ultimately no study is perfect, and thus it is difficult to choose a central elasticity from among these. Excluding the high elasticities in Auten et al. for the panel that covers 1986 and that are likely overstated, the elasticities range from essentially 0 to 1.2. It seems likely that the unweighted Randolph estimate may be biased downward, but some others may be biased upward because of fixed effects or short periods for intertemporal substitution. In addition, the response to the 1986 tax revision suggests a higher transitory price elasticity than permanent price elasticity, and intuition would suggest that charitable giving is a luxury that would tend to have an income elasticity above 1.0. Only the Randolph study finds effects consistent with these expectations, suggesting an elasticity of around 0.5. Table A-2 reports the results of seven different studies that attempt to estimate both the price and wealth elasticities of charitable bequests. Although these studies find a diverse set of estimated elasticities, they reach two common general conclusions: (1) the price elasticity dominates the wealth elasticity and (2) charitable bequests, generally, respond elastically to changes in the tax price of bequests. The exception to this second conclusion is provided by Greene and McClelland (2001) and is likely explained by their focus on the portion of the tax price related to the exemption level. Appendix B. History of the Tax Treatment of Charitable Contributions and Organizations Charitable Contributions The charitable deduction was added by passage of the War Revenue Act of 1917 (P.L. 65-50). Senator Henry Hollis, the sponsor, argued that high wartime tax rates would absorb the surplus funds of wealthy taxpayers, which were generally contributed to charitable organizations. The deduction was originally limited to individuals. A deduction for trusts and estates was added in the Revenue Act of 1918 (P.L. 65-254), and a deduction for corporations was added in the Revenue Act of 1936 (P.L. 74-740). The deduction allowed in 1917 was limited to 15% of taxable income. Most of the revisions in the early tax law related to this limit. In 1944, it was changed to 15% of adjusted gross income. The corporate deduction was limited to 5% of income when introduced. In 1952, the individual limit was increased to 20%. The limit was increased to 30% in 1954, but the additional 10% had to go to specified charities (churches or religious orders, educational institutions, and hospitals). Thus, the 20% limit was retained for foundations and other charities. A carryover of unused deductions for two years was first allowed for corporations in 1954. In 1964, the carryover was increased to five years and extended to individuals. The percentage limit on individual contributions to charities was increased to 50% by the Tax Reform Act of 1969 (P.L. 91-172) but was restricted to 30% for gifts of appreciated property. The percentage limit on corporate charitable contributions was increased to 10% of taxable income in the Economic Recovery Tax Act of 1981 ( P.L. 97-34 ). The limit on contributions to private foundations was increased to 30% for cash contributions by the Deficit Reduction Act of 1984 ( P.L. 98-369 ). The Economic Recovery Tax Act of 1981 also allowed a temporary deduction for nonitemizers, but this provision was not extended by the Tax Reform Act of 1986 ( P.L. 99-514 ). Concerns about abuse led to provisions requiring greater substantiation of gifts. The Deficit Reduction Act of 1984 ( P.L. 98-369 ) required written substantiation of contributions in excess of $2,000, and the Omnibus Budget Reconciliation Act of 1993 ( P.L. 103-66 ) lowered that amount to $250. The American Jobs Creation Act of 2004 ( P.L. 108-357 ) increased reporting requirements for donors of noncash gifts. The Pension Protection Act of 2006 ( P.L. 109-280 ) provided for some temporary additional benefits (part of the "extenders") that were effective through 2007 at that time. The 2006 act also added restrictions on DAFs and certain supporting organizations. The 2006 law also tightened rules governing charitable giving in certain areas, including gifts of taxidermy, contributions of clothing and household items, contributions of fractional interests in tangible personal property, and recordkeeping and substantiation requirements for certain charitable contributions. Temporary charitable giving incentives were further extended through 2009 by the Economic Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ), enacted in October 2008, and through 2011 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ). Some provisions were extended through 2013 by the American Taxpayer Relief Act ( P.L. 112-240 ). These provisions were made permanent in the Consolidated Appropriations Act ( P.L. 114-113 ). The 2017 tax change, P.L. 115-97 , popularly known as the Tax Cuts and Jobs Act, increased the percentage-of-income limit for contributions of cash to public charities to 60% and eliminated the phase-out of itemized deductions on a temporary basis (through 2025). Charitable Organizations Corporations or associations organized for religious, charitable, or educational purposes were defined as exempt from tax in the original 1913 law establishing the income tax. These organizations could earn exempt income from activities related to their mission and also from unrelated business activities whose profits were used for the exempt purpose. The Revenue Act of 1950 (P.L. 81-814) established the unrelated business income tax (UBIT) on the income from commercial activities (other than on churches). The UBIT also applied to rents from real estate sale-leaseback arrangements that relied on debt finance. The Tax Reform Act of 1969 (P.L. 91-172) defined private foundations, established a series of restrictions on them, imposed a 4% excise tax on their investment income (to share the cost of enforcement), and established a minimum payout requirement of 6% of assets to avoid a penalty. The 1969 legislation also expanded the UBIT to all tax-exempt organizations (including churches), and applied it to all debt-financed income. The Tax Reform Act of 1976 ( P.L. 94-455 ) changed the minimum distribution requirement to 5% of assets. The Revenue Act of 1978 ( P.L. 95-600 ) reduced the net investment income excise tax to 2%. The Deficit Reduction Act of 1984 ( P.L. 98-369 ) exempted certain operating foundations from the excise tax and reduced the tax to 1% for foundations making improvements in their distributions. The 2017 tax reduction ( P.L. 115-97 ) imposed an excise tax of 1.4% on investment income of certain private colleges and universities (excluding smaller ones), added certain fringe benefits (such as parking) to the UBIT base, and required UBIT to be calculated separately for each business activity.

The federal government supports the charitable sector by providing charitable organizations and donors with favorable tax treatment. Individuals itemizing deductions may claim a tax deduction for charitable contributions. Estates can make charitable bequests. Corporations can deduct charitable contributions before computing income taxes. Further, earnings on funds held by charitable organizations and used for a related charitable purpose are exempt from tax. In FY2019, projected tax subsidies for charities, not including the value of the tax exemption on earnings of charities or the estate tax deduction, totaled $51.8 billion. If investment income of nonprofits were taxed at the 35% corporate tax rate in 2015, revenue collected is estimated at $26.7 billion (this amount excludes religious organizations). The cost of deducting bequests on estates is estimated at $4 billion to $5 billion. Charitable organizations include both operating charities (including religious institutions) and organizations that tend to hold assets and make grants to operating charities, most notably private foundations, but also donor-advised funds (DAFs) and supporting organizations. The tax code treats different types of organizations differently. For example, foundations and certain supporting organizations have minimum payout requirements, while DAFs do not. Limits on charitable giving also differ across gifts to different types of organizations. Changes in the tax revision enacted in late 2017, popularly known as the Tax Cut and Jobs Act (TCJA; P.L. 115-97 ), while not generally aimed at charitable deductions, reduced the scope of the tax benefit for charitable giving. A higher standard deduction and the limit on the deduction for state and local taxes caused more individuals to take the standard deduction, as opposed to itemizing deductions. As a result, many individuals who were able to deduct charitable contributions no longer claim this itemized deduction. Other changes exempted more estates from the estate tax, eliminating the benefit of deducting charitable contributions in these cases. Concerns have arisen that these changes are expected to lead to a reduction in charitable contributions. In 2018, charitable contributions were estimated at $427.7 billion, or 2.1% of gross domestic product (GDP). Charitable gifts come from four sources: individual contributions (accounting for 68%), foundations (accounting for 18%), bequests (accounting for 9%), and corporations (accounting for 5%). In 2018, estimates suggest approximately 54% of individual contributions are expected to have received a tax subsidy. Comparing giving levels in 2017 and 2018 provides some insight into the possible impacts of the 2017 tax revision on charitable giving and the charitable sector. Compared to 2017, 2018 contributions from individuals and bequests declined as a percentage of GDP (by 6% and 5%, respectively), while corporate contributions were virtually unchanged and foundation contributions rose by 2%. In 2017, an estimated 80% of individual contributions benefited from the tax subsidy for itemized deductions. Surveying the literature can also provide some insight regarding the effect of tax subsidies on charitable giving. Based on statistical estimates of the responsiveness of individual giving to tax subsidies, a decrease in individual giving of around 3% to 4% might be expected from the 2017 tax revision. Limitations in the data make the effect on estates difficult to estimate, but it could be a decrease of up to 8%; the small share of bequests in total giving, however, would lead even that effect to reduce overall charitable giving by less than 1%. A number of policy options could be considered with respect to the tax treatment of charitable giving or the tax treatment of charitable entities. The charitable deduction could be modified in ways that could extend charitable giving incentives to taxpayers not itemizing deductions, or with the intent of making charitable giving tax incentives more effective (inducing more giving for each dollar of lost federal tax revenue). There are also options related to the type of treatment of certain types of gifts, such as appreciated property or charitable miles driven. Some proposals have also been made to address concerns about aspects of certain charitable organizations, such as payouts by DAFs and university endowments. Some proposals would reverse certain changes made by the 2017 tax revision to the unrelated business income tax (UBIT) or impose administrative reforms.

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<1. Introduction> The Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136 ) was passed by Congress and signed into law by President Donald Trump on March 27, 2020. The CARES Act provides over $2 trillion in relief to individuals; businesses; state, local, and federal agencies; and industry sectors impacted by the COVID-19 pandemic and the government-led effort to limit its public health impact. Given the scope of the relief provided, the variety of new and existing programs that are to provide this aid, and the number of individuals and entities receiving aid, the administration of the CARES Act is likely to be a complicated and significant undertaking by executive branch agencies and non-federal partners. These complexities may be made even greater by both pressure to provide relief as swiftly as possible and unique logistical challenges posed by the ongoing public health emergency. All of those factors make Congress's oversight role during the COVID-19 pandemic especially important and may make it more difficult for Congress to conduct timely oversight. Congress included a variety of oversight mechanisms in the CARES Act. In addition to requiring executive branch officers to submit reports on a variety of topics, provide notice before taking specified actions, and testify before certain committees, the CARES Act provides additional resources to the Government Accountability Office (GAO) and to Offices of Inspectors General (OIGs) that may have additional audit and investigative activity due to the CARES Act. In addition, the CARES Act creates three new oversight entities: a Congressional Oversight Commission, a Special Inspector General for Pandemic Recovery (SIGPR), and the Pandemic Recovery Accountability Committee (PRAC, a group of inspectors general). Each of those entities is empowered to provide oversight of significant aspects of the CARES Act. This report is a reference guide for congressional clients interested in understanding the congressional oversight tools built into the CARES Act. Oversight provisions are broadly organized into sections related to the nature of the oversight mechanism. Within each of these sections, agencies and entities are listed in alphabetical order. To the extent practicable, sections include citations to the CARES Act and to any other relevant laws and regulations. <1.1. Scope of the Report> This report identifies selected provisions in the CARES Act that may facilitate Congress's ability to provide oversight of its implementation. Congress's authority to oversee the executive branch extends beyond these explicit requirements and includes many additional tools and requirements. The fact that many provisions of the CARES Act do not have explicit reporting requirements or other more formal oversight mechanisms does not prevent Congress from engaging in oversight activities related to those programs by seeking information from the executive branch, engaging with stakeholders, holding hearings, and using legislation to direct activities with specificity. Requirements on agencies and entities are usually described in this report generally, with minimal discussion of detailed content requirements. The same is true for descriptions of new and altered programs. To the extent practicable, the text and footnotes of the report provide citations to the appropriate provisions of both the CARES Act and existing law to facilitate a more detailed review. The report captures those oversight tools that pertain to inspectors general (who already have obligations to report to Congress in the Inspector General Act of 1978 ) and provisions that explicitly provide for congressional involvement. For instance, the CARES Act requires certain agencies to make information publicly available but does not explicitly direct that this information be submitted to Congress or its committees. Such provisions are not identified in this report but may nevertheless be referred to in practice as congressional reporting requirements. Provisions included in the CARES Act may trigger reporting of information under other statutes. Interactions between the CARES Act and current law are not covered in this report. <2. Oversight Provisions> The CARES Act contains a number of oversight provisions. These include: the creation of a congressionally appointed oversight commission established in the legislative branch; provisions related to inspectors general, including the establishment of SIGPR, the PRAC within the Council of the Inspectors General on Integrity and Efficiency (CIGIE), and supplemental appropriations and additional duties provided for inspectors general across multiple agencies; additional funding and responsibilities provided to GAO; and requirements for agencies and entities and their leadership to provide reports to, consult with, provide notice to, and testify before Congress and its committees regarding a range of subjects. Each aforementioned category is discussed in greater detail below. <2.1. Congressional Oversight Commission> Section 4020 establishes a legislative branch entity called the Congressional Oversight Commission to conduct oversight of the Department of the Treasury and Federal Reserve Board's economic relief activities under Title IV, Subtitle A (Coronavirus Economic Stabilization Act of 2020) of the CARES Act. The commission is similar in structure to the Congressional Oversight Panel created to participate in the oversight of the Troubled Asset Relief Program in 2008. The commission is composed of five members selected by the majority and minority leadership of the House and the Senate. The commission is empowered to request staff to be detailed from agencies and departments, hire experts and consultants, conduct hearings, and obtain information from agencies to support its oversight activities. The commission is required to report to Congress on the relevant activities of Treasury and the Federal Reserve Board, the impact of the programs on the financial well-being of the nation, whether required disclosures in the CARES Act provides market transparency, and the effectiveness of the Coronavirus Economic Stabilization Act of 2020 in minimizing costs and maximizing benefits for taxpayers. The first report of the commission is due within 30 days of Treasury and the Federal Reserve Board's first exercise of authority under the act. Additional reports are then due every 30 days thereafter. The commission terminates on September 30, 2025. <2.2. Provisions Pertaining to Inspectors General20> <2.2.1. Special Inspector General for Pandemic Recovery> Section 4018 establishes a Special Inspector General for Pandemic Recovery within the Treasury. The SIGPR is nominated by the President with the advice and consent of the Senate and may be removed from office according to Section 3(b) of the Inspector General Act of 1978. The SIGPR is tasked with conducting audits and investigations of the activities of the Treasury pursuant to the CARES Act, including the collection of detailed information regarding loans provided by Treasury. The SIGPR is empowered to hire staff and enter into contracts and has broadly the same authority and status as inspectors general under the Inspector General Act of 1978. The SIGPR is required to report to the "appropriate committees of Congress" within 60 days of Senate confirmation, and quarterly thereafter, on the activities of the office over the preceding three months, including detailed information on Treasury loan programs. The SIGPR terminates five years after the enactment of the CARES Act (i.e., March 27, 2025). Section 4027 appropriates a total of $500 billion to Treasury. Of that amount, Section 4018 directs that $25 million shall be made available to the SIGPR as no-year funds (i.e., funds that are available until expended). <2.2.2. Pandemic Response Accountability Committee> Section 15010 establishes the PRAC within the CIGIE. The PRAC is directed to "promote transparency and conduct and support oversight" of the government's coronavirus response in order to "prevent and detect fraud, waste, abuse, and mismanagement" and "mitigate major risks that cut across program and agency boundaries." In addition, the PRAC is tasked with conducting oversight and audits of the coronavirus response as well as coordinating and supporting related oversight by inspectors general across the federal government. The PRAC is composed of the inspectors general of identified agencies as well as any other inspectors general for agencies involved at the coronavirus response as designated by the chairperson of the council. The CIGIE chairperson designates the PRAC chairperson. In addition, the PRAC is required to appoint an executive director selected in consultation with the majority and minority leadership of the House and the Senate. The PRAC has the same authority to conduct audits and investigations as inspectors general under the Inspector General Act of 1978. The PRAC is required to provide management alerts to the President and Congress on "management, risk, and funding" issues that may require immediate attention. The PRAC is also required to report to the President and Congress biannually with a summary of PRAC activity and, to the extent practicable, a quantification of the impact of tax expenditures in the CARES Act. Finally the PRAC is required to provide other reports and periodic updates to Congress as it considers appropriate. In addition, the PRAC is directed to establish and maintain a "user-friendly, public-facing website to foster greater accountability and transparency in the use of covered funds." The PRAC is required to post specified information, including agencies' use of funds provided in the act. The PRAC terminates on September 30, 2025. Section 15003 appropriates $80 million in no-year funds to support the activities of the PRAC. The PRAC's organization and duties have similarities to those of the Recovery Accountability and Transparency Board that was established as part of the American Recovery and Reinvestment Act to conduct oversight of the use of funds in that act. <2.2.3. Supplemental Appropriations and Additional Duties for Inspector General Offices> The CARES Act appropriates $148 million for established inspector general offices in addition to the $25 million for the SIGPR and $80 million for the PRAC discussed above. In total, therefore, the CARES Act provides $253 million to the inspector general community to oversee the federal government's coronavirus response. <2.2.3.1. Department of Agriculture> Title I of Division B, under the heading "Office of the Inspector General," provides $750,000 to the Department of Agriculture OIG. The appropriation expires September 30, 2021, and may be used only to oversee funds appropriated to the department under the CARES Act. <2.2.3.2. Department of Commerce> Title II of Division B, under the heading "Department of Commerce Economic Development Administration," provides that of the $1.5 billion appropriated to the Department of Commerce, $3 million is to be transferred to the department's OIG to oversee the use of funds appropriated to the department under the CARES Act. The appropriation expires September 30, 2022. <2.2.3.3. Department of Defense> Title III of Division B, under the heading "Office of the Inspector General," provides $20 million for the Department of Defense OIG. This appropriation may be used only to oversee the use of funds appropriated to the department under the CARES Act. <2.2.3.4. Department of Education> Title VII of Division B, under the heading "Office of the Inspector General," provides $7 million to Department of Education OIG. These funds expire on September 30, 2022. This appropriation may be used only to respond to COVID-19 generally and to oversee the use of funds appropriated to the department under the CARES Act. <2.2.3.5. Department of Health and Human Services> Title VII of Division B, under the heading "Office of the Secretary," requires the Department of Health and Human Services (HHS) OIG to provide a final audit report to the House and Senate Appropriations Committees on payments from $100 billion appropriated to the Public Health and Social Services Emergency Fund to support eligible health care providers with their expenses related to the COVID-19 pandemic. The audit report is due three years after the final payment is made under the program. Section 18113 provides that, of the $27 billion appropriated to the Public Health and Social Services Emergency Fund, up to $4 million shall be transferred to the HHS OIG. Appropriated funds are available until expended and may be used only to oversee the use of funds appropriated to HHS under the CARES Act. In addition, the HHS inspector general is required to consult with the House and Senate Appropriations Committees prior to obligating these funds. <2.2.3.6. Department of Homeland Security> Title VI of Division B, under the heading "Disaster Relief Fund," provides a total of $45 billion in no-year funds for the Disaster Relief Fund with the Federal Emergency Management Agency (FEMA). Of the total appropriation, $3 million is to be transferred to the Department of Homeland Security (DHS) OIG to oversee the funds appropriated for the Disaster Relief Fund in the CARES Act. <2.2.3.7. Department of Housing and Urban Development> Title XII of Division B, under the heading "Office of the Inspector General," provides $5 million in no-year funds to the Department of Housing and Urban Development OIG. This appropriation may be used only to oversee the use of funds appropriated to the department under the CARES Act. <2.2.3.8. Department of the Interior> Title VII of Division B, under the heading "Departmental Offices," provides $158.4 million for the Office of the Secretary, Department of the Interior. This appropriation expires September 30, 2021. Of that appropriation, $1 million is to be transferred to the department's OIG to oversee the use of funds appropriated to the department under the CARES Act. <2.2.3.9. Department of Justice> Title II of Division B, under the heading "Office of the Inspector General," provides $2 million in no-year funds for the Department of Justice OIG. The appropriation is to be used to oversee funds provided to the department in the CARES Act and the general impact of COVID-19 on the department's activities. <2.2.3.10. Department of Labor> Section 2115 provides $25 million for the Department of Labor (DOL) OIG. The appropriation does not expire and may be used only to conduct oversight activity related to provisions in the CARES Act. Title XIII of Division B, under the heading "Departmental Management," appropriates $15 million to respond to COVID-19 generally and to support enforcement of the Families First Coronavirus Response Act ( P.L. 116-127 ). Of that appropriation, $1 million in no-year funds are to be transferred to the DOL OIG. <2.2.3.11. Department of Transportation> Title XII of Division B, under the heading "Office of Inspector General," provides $5 million in no-year funds to the Department of Transportation OIG. This appropriation may be used only to oversee the use of funds appropriated to the department under the CARES Act. <2.2.3.12. Department of the Treasury> Section 5001 provides $35 million in no-year funds for the Treasury OIG. The appropriation may be used only to conduct oversight and recoupment activities related to the Coronavirus Relief Fund established by Title V of the CARES Act. Section 5001 also requires the Treasury OIG to oversee the Coronavirus Relief Fund established by the section, which provides funding to state, local, and tribal governments. If the Treasury OIG determines that a state, tribal government, or unit of local government fails to comply with the requirements for the program, the section provides for the recoupment of the funds. Section 4113(d) requires the Treasury OIG to conduct audits of certifications related to employee compensation provided by air carriers in order to receive financial assistance under Section 4113(a). <2.2.3.13. Department of Veterans Affairs> Title X of Division B, under the heading "Office of Inspector General," provides $12.5 million for the Department of Veterans Affairs (VA) OIG. These funds expire on September 30, 2022. This appropriation may be used only to oversee the use of funds appropriated to the VA under the CARES Act. <2.2.3.14. Small Business Administration> Section 1107(a)(3) provides $25 million for the Small Business Administration (SBA) OIG. These funds expire September 30, 2024. <2.3. Provisions Pertaining to the Government Accountability Office> Title IX of Division B of the CARES Act, under the heading "Government Accountability Office," appropriates $20 million to GAO to conduct additional oversight and provide Congress with several reports. GAO is required to report to House and Senate Appropriations Committees within 90 days of enactment of the CARES Act with a spending plan for the funds and a timeline for audits and investigations. <2.3.1. GAO Reporting Requirements and Additional Responsibilities> Healthy Start Program : Section 3225 reauthorizes the Healthy Start Program. The section includes a requirement that GAO "review, access, and provide recommendations" on the program within four years of enactment of the CARES Act (i.e., March 27, 2024) and report its findings to the appropriate committees. Nurse Loan Repayment Programs : Section 3404 requires the comptroller general to study "nurse loan repayment programs" administered by the Health Resources and Services Administration and report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions, within 18 months of enactment of the CARES Act (i.e., September 27, 2021). Community and Mental Health Services Demonstration Program : Section 3814 extends the end date for the Community Mental Health Services Demonstration Program P.L. 93-288 and directs GAO to provide a report on the program to the House Committee on Energy and Commerce and Senate Committee on Finance. This report is due 18 months after enactment of the CARES Act (i.e., September 27, 2021). Regulation of Over the Counter Drugs : Section 3851 requires GAO to conduct a study on the effectiveness and impact of exclusivity under Sections 505G and 586C of the Federal Food, Drug, and Cosmetic Act. The study is to be submitted to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions within four years of enactment of the CARES Act (i.e., March 27, 2024). Coronavirus Economic Stabilization Act of 2020 : Section 4026(f) directs the comptroller general to conduct a study on "loans, loan guarantees, and other investments" made under Section 4003 of the CARES Act and report to the House Committee on Financial Services; the House Committee on Transportation and Infrastructure; the House Committee on Appropriations; the House Committee on the Budget; the Senate Committee on Banking, Housing, and Urban Affairs; the Senate Committee on Commerce, Science, and Transportation; the Senate Committee on Appropriations; and the Senate Committee on the Budget. The initial report under this provision is due nine months after enactment of the CARES Act (i.e., December 27, 2020), and additional reports are required annually thereafter through the "year succeeding the last year for which loans, loan guarantees, and other investments made under Section 4003 are outstanding." Monitoring and Audits by Comptroller General : Section 19010 requires the comptroller general to conduct monitoring and oversight of federal spending in response to the COVID-19 pandemic. The section empowers the comptroller general to access relevant records, make copies of those records, and conduct pertinent interviews. The comptroller general is to offer briefings at least once per month to the House Committee on Appropriations; the House Committee on Homeland Security; the House Committee on Oversight and Reform; the House Committee on Energy and Commerce; the Senate Committee on Appropriations; the Senate Committee on Homeland Security and Governmental Affairs; and the Senate Committee on Health, Education, Labor, and Pensions. The comptroller general is also required to report on GAO's relevant activities to the same committees within 90 days of enactment of the CARES Act (i.e., June 25, 2020), then monthly until one year after enactment (i.e., March 27, 2021), and periodically thereafter. <2.4. Agency Reporting, Notice, and Consultation Requirements for Federal Entities and Sub-Entities> <2.4.1. Architect of the Capitol> Title IX of Division B, under the heading "Architect of the Capitol," appropriates $25 million to the Architect of the Capitol for expenses related to the COVID-19 pandemic. The Architect of the Capitol is required to provide an expenditure report within 30 days of enactment of the CARES Act (i.e., April 26, 2020) and every 30 days thereafter to the House and Senate Appropriations Committees, the House Committee on House Administration, and the Senate Committee on Rules and Administration. <2.4.2. Armed Forces Retirement Home Trust Fund> Title X of Division B, under the heading "Armed Forces Retirement Home Trust Fund," appropriates $2.8 million from the available funds of the trust fund for expenses related to the COVID-19 pandemic. The chief executive officer of the Armed Forces Retirement Home is required to submit monthly spending reports to the House and Senate Appropriations Committees. <2.4.3. Board of Governors of the Federal Reserve System> Section 4026(b)(2)(A) requires the Board of Governors of the Federal Reserve System to report to the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs whenever it exercises its purchase and loan-making authority under Section 4003(b)(4). Reports are to be submitted within seven days and are required to contain the same information as reports required under Title 12, Section 343(3)(C)(i), of the United States Code . In addition, reports are to be submitted every 30 days regarding outstanding loans and financial assistance under Section 4003(b)(4) in accordance with Title 12, Section 343(3)(C)(ii), of the U.S. Code . <2.4.4. Centers for Disease Control and Prevention> Title VII of Division B, under the heading "Centers for Disease Control and Prevention," appropriates a total of $4.3 billion to the Centers for Disease Control and Prevention (CDC). Of that total, $500 million is directed to "public health data surveillance and analytics infrastructure modernization." Within 30 days of enactment of the CARES Act (i.e., April 26, 2020), CDC is required to report to the House and Senate Appropriations Committees on the development of a "public health surveillance and data collection system for coronavirus." <2.4.5. Department of Commerce> Section 1108(d) requires the Minority Small Business Development Agency of the Department of Commerce to submit reports to the House Committee on Small Business; the House Committee on Energy and Commerce; the Senate Committee on Commerce, Science, and Technology; and the Senate Committee on Small Business and Entrepreneurship regarding the programs developed pursuant to Section 1108(b). Reports are due six months after enactment of the CARES Act (i.e., September 27, 2020) and annually thereafter. <2.4.6. Department of Defense> Section 13006(a) authorizes the delegation of select procurement authorities within the Department of Defense for transactions related to the COVID-19 pandemic. In the event that a transaction of this type does occur, either the Under Secretary of Defense for Research and Engineering or the Under Secretary of Defense for Acquisition and Sustainment, as applicable, is required to notify the House and Senate Appropriations and Armed Services Committees "as soon as is practicable." <2.4.7. Department of Education> Section 3510(a) allows foreign institutions to use distance education during the declared COVID-19 emergency under certain circumstances. Section 3510(c) requires that the Secretary of Education submit a report to the House Committee on Education and Labor and the Senate Committee on Health, Education, Labor, and Pensions identifying foreign institutions that use distance education under Section 3510(a). The report is due not later than 180 days after enactment of the CARES Act (i.e., September 23, 2020). Additional reports are due every 180 days for the duration of the declared emergency. Section 3510(d) allows foreign institutions to enter written agreements with certain institutions of higher education in the United States to allow students to take courses at the American institutions. Section 3510(d)(4) requires that the Secretary of Education submit a report identifying the foreign institutions using such arrangements to the House Committee on Education and Labor and the Senate Committee on Health, Education, Labor, and Pensions. The report is due not later than 180 days after enactment of the CARES Act (i.e., September 23, 2020). Additional reports are due every 180 days for the duration of the declared emergency. Section 3511(b) authorizes the Secretary of Education to waive certain statutory requirements identified in the section upon the request of a state or Indian tribe. Section 3511(d)(2) requires the Secretary of Education to notify the House Committee on Education and Labor; the Senate Committee on Health, Education, Labor, and Pensions; and the House and Senate Appropriations Committee within seven days of granting any waiver. In addition, Section 3511(d)(4) requires the Secretary of Education to submit a report to the same committees within 30 days of enactment of the CARES Act (i.e., April 26, 2020) with recommendations for additional necessary waivers of statutory requirements. Section 3512(a) authorizes the Secretary of Education to defer payments on loans made to historically black colleges and universities under Title 20, Section 1066, of the U.S. Code . Section 3512(c) requires the Secretary of Education to report to the House Committee on Education and Labor and the Senate Committee on Health, Education, Labor, and Pensions within 180 days of enactment of the CARES Act (i.e., September 23, 2020) and every 180 days thereafter on any institutions receiving this relief. Section 3517(c) requires the Secretary of Education to submit a report to the House Committee on Education and Labor and the Senate Committee on Health, Education, Labor, and Pensions identifying all institutions of higher education receiving waivers of statutory requirements identified in Section 3517(a). Reports are due within 180 days of enactment of the CARES Act (i.e., September 23, 2020) and every 180 days thereafter until the end of the fiscal year following the end of the declared emergency. Section 3518(c) requires the Secretary of Education to submit a report to the House Committee on Education and Labor and the Senate Committee on Health, Education, Labor, and Pensions identifying all institutions of higher education and other recipients who receive grant modifications as authorized in Section 3518(a). Reports are due within 180 days of enactment of the CARES Act (i.e., September 23, 2020) and every 180 days thereafter until the end of the fiscal year following the end of the declared emergency. <2.4.8. Department of Health and Human Services> Section 3212 amends the Public Health Service Act to require that the Secretary of HHS submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions within four years of enactment of the CARES Act (i.e., March 27, 2024) and every five years thereafter on the "activities and outcomes" of the Telehealth Network Grant Program and the Telehealth Resource Centers Grant Program. Section 3213 amends the Public Health Service Act to require the Secretary of HHS to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions within four years of enactment of the CARES Act (i.e., March 27, 2024), and every five years thereafter, on the "activities and outcomes" of the Rural Health Care Services Outreach Grant Program, the Rural Health Network Development Grant Program, and the Small Health Care Provider Quality Improvement Grant Program. Section 3226(d) requires the Secretary of HHS to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions within two years of enactment of the CARES Act (i.e., March 27, 2022) on HHS's efforts to support the blood donation system. Section 3301 amends the Public Health Service Act to, during a public health emergency, eliminate a cap on the value of certain transactions related to the Biomedical Advanced Research and Development Authority that may be entered into by the Secretary of HHS. After the termination of the public health emergency, the Secretary of HHS is required to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions that details the use of funds, including a discussion of outcome measures for such transactions. Section 3401 amends the Public Health Service Act and renews a previously enacted requirement that the Secretary of HHS submit reports to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions concerning the need for underrepresented minorities on medical peer review councils. The first report is due September 30, 2025, and subsequent reports are due every five years thereafter. Section 3401 further amends the Public Health Service Act to require the Advisory Council on Graduate Medical Education to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions (as well as the Secretary of HHS) no later than September 30, 2023, and every five years thereafter. In these reports, the Advisory Council is directed to discuss its recommendations on the issues outlined in Title 42, Section 294o(a)(1), of the U.S. Code . Section 3402(a) requires the Secretary of HHS to develop a comprehensive and coordinated plan for the health care workforce development programs within one year of enactment of the CARES Act (i.e., March 27, 2021). Section 3402(c) requires the Secretary of HHS to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions describing the plan and how it is being implemented within two years of passage of the CARES Act (i.e., March 27, 2022). Section 3403(c) amends the Public Health Service Act to require the Secretary of HHS to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions on outcomes associated with the Geriatrics Workforce Enhancement Program. The report is due within four years of the enactment of the Title VII Health Care Workforce Reauthorization Act of 2019 and then every five years thereafter. Section 3404(a)(4)(D) amends the Public Health Service Act to require the Secretary of HHS to submit reports to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions assessing HHS programs to enhance the nursing workforce. Reports are due by September 30, 2020, and biennially thereafter. Further, Section 3404(a)(6)(F) incorporates additional requirements for these reports that are codified in Title 42, Section 296p, of the U.S. Code . Section 3854(c)(2) requires the Secretary of HHS to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions when a revised sunscreen order under the Section 3854(c)(1) does not include certain efficacy information. Section 3855(a) requires the Secretary of HHS to submit a letter to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions describing the Food and Drug Administration's (FDA's) evaluations and revisions to the cough and cold monograph for children under the age of six. The letter is due one year after enactment of the CARES Act (i.e., March 27, 2021) and annually thereafter. Section 3862 adds a new part to the Federal Food, Drug, and Cosmetic Act to alter the FDA's management of monographs for over-the-counter drugs. This new part includes two additional reporting requirements on the implementation and impact of the new provisions. The Secretary of HHS is required to report on each of those issues to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions within 120 calendar days after the end of FY2021 and within 120 days after the end of each fiscal year thereafter. In addition, the Secretary of HHS is required, by January 15, 2025, to transmit to Congress recommendations to revise the goals of the program. While developing those recommendations, the Secretary of HHS is required to consult with the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions, among others. Title VIII of Division B, under the heading "Centers for Disease Control and Prevention," requires the Secretary of HHS, in consultation with the director of the CDC, to report to the House and Senate Appropriations Committees every 14 days for one year if the HHS Secretary declares an infectious disease emergency and seeks to use the Infections Diseases Rapid Response Fund (as authorized by the third proviso of Section 231 of Division B of P.L. 115-245 ) "as long as such report[s] would detail obligations in excess of $5,000,000" or upon request. Title VIII of Division B, under the heading "Office of the Secretary," appropriates $27 billion to the Public Health and Social Services Emergency Fund. Among other things, the provision allows for funds to be used to reimburse the VA for expenses related to the COVID-19 pandemic and for care for certain patients. To provide this reimbursement, the Secretary of HHS must certify to the House and Senate Appropriations Committees that funds available under the Stafford Act are insufficient to cover expenses incurred by the VA. In addition, the Secretary of HHS must notify the House and Senate Appropriations Committees three days prior to making such a certification. Title VIII of Division B, also under the heading "Office of the Secretary," appropriates $100 billion to the Public Health and Social Services Emergency Fund to support eligible health care providers with their expenses related to the COVID-19 pandemic. The Secretary of HHS is required to submit a report to the House and Senate Appropriations Committees within 60 days of enactment of the CARES Act (i.e., May 26, 2020), and every 60 days thereafter, on the obligation of these funds, including state-level data. Section 18111 provides that funds appropriated under the heading "Department of Health and Human Services" in Title VII of Division B may be transferred or merged with appropriations to other specified HHS budget accounts so long as the House and Senate Appropriations Committees are notified 10 days in advance of any transfer. Section 18112 requires the Secretary of HHS to provide a spend plan for funds appropriated to HHS to the House and Senate Appropriations Committees within 60 days of enactment of the CARES Act (i.e., May 26, 2020) and then every 60 days until September 30, 2024. <2.4.9. Department of Homeland Security> Title VI of Division B, under the heading "Department of Homeland Security," appropriates $178 million for DHS's response to the COVID-19 pandemic. The provision grants additional authority to transfer these funds between DHS accounts for the purchase of personal protective equipment and sanitization materials. Within five days after making such a transfer, DHS is required to notify the House and Senate Appropriations Committees. <2.4.10. Department of the Interior> Title VII of Division B, under the heading "Departmental Offices," provides $158 million to support for the Department of the Interior's COVID-19 pandemic response. Beginning 90 days after enactment of the CARES Act (i.e., June 25, 2020), and monthly thereafter, the Secretary of the Interior is required to provide a report detailing the use of these funds to the House and Senate Appropriations Committees. <2.4.11. Department of Labor> Title VIII of Division B, under the heading "Departmental Management," appropriates $15 million for DOL's response to the COVID-19 pandemic and provides that the Secretary of Labor may transfer these funds to other specified DOL budget accounts for this purpose. Fifteen days prior to transferring any funds, the Secretary of Labor is required to submit an operating plan to the House and Senate Appropriations Committees describing how funds will be used. <2.4.12. Department of State> Section 21007 authorizes the Secretary of State and the administrator of the U.S. Agency for International Development (USAID) to provide additional paid leave to employees for the period from January 29, 2020, to September 30, 2022, in order to address hardships created by the COVID-19 pandemic. Prior to using this authority, the Secretary of State and the administrator must consult with House and Senate Appropriations Committees, the House Committee on Foreign Affairs, and the Senate Committee on Foreign Relations. Section 21009 authorizes the Secretary of State to use passport and immigrant visa surcharges to pay costs for consular services during FY2020.The Secretary of State is required to report to the House and Senate Appropriations Committees, the House Committee on Foreign Affairs, and the Senate Committee on Foreign Relations within 90 days of the expiration of this authority (i.e., December 29, 2020) on specific expenditures made pursuant to this authority. Section 21010 authorizes the Department of State and USAID to enter into personal services contracts to support their response to the COVID-19 pandemic subject to prior consultation with and notification of the House and Senate Appropriations Committees, the House Committee on Foreign Affairs, and the Senate Committee on Foreign Relations. Within 15 days of using this authority, the Secretary of State is required to report to the same committees on the staffing needs of the Office of Medical Services. Section 21011 authorizes the Secretary of State and the administrator of USAID to administer any legally required oath of office remotely through September 30, 2021. Prior to using this authority, the Secretary of State and the administrator must each submit a report to the House and Senate Appropriations Committees, the House Committee on Foreign Affairs, and the Senate Committee on Foreign Relations describing the process they will use to administer an oath of office in this manner. <2.4.13. Department of Transportation> Section 22002 requires the Secretary of Transportation to notify the House and Senate Appropriations Committees; the House Committee on Transportation and Infrastructure; and the Senate Committee on Commerce, Science, and Transportation within seven days of enactment of the CARES Act (i.e., April 3, 2020), and every seven days thereafter, of the furlough of any National Railroad Passenger Corporation employee due to the COVID-19 pandemic. Section 22005 allows the Secretary of Transportation to waive specified requirements for highway safety grants if the COVID-19 pandemic will substantially impact the ability of the states and the Department of Transportation to meet those grant requirements. The Secretary is required to "periodically" report to the relevant committees on any waivers made under this provision. <2.4.14. Department of the Treasury> Section 2201(f)(2) establishes reporting requirements associated with the 2020 Recovery Rebates provided in Section 2201. The Secretary of the Treasury is required to submit a report to the House and Senate Appropriations Committees within 15 days of enactment of the CARES Act (i.e., April 11, 2020) providing a spending plan for the funds provided for this program. In addition, 90 days after enactment (i.e., June 25, 2020), and quarterly thereafter, the Secretary is required to provide reports to the House and Senate Appropriations Committees on actual and projected expenditures under this program. Section 4026(b)(1)(A) requires the Secretary of the Treasury, within seven days after making a loan or loan guarantee under Sections 4003(b)(1), 4003(b)(2), or 4003(b)(3), to report to the chairmen and ranking members of the House Committee on Financial Services; the House Committee on Ways and Means; the Senate Committee on Banking, Housing, and Urban Affairs; and the Senate Committee on Finance. These reports are to include an overview of the actions and financial information about those transactions. Section 4118(a) requires the Secretary of the Treasury to submit a report no later than November 1, 2020, to the House Committee on Transportation and Infrastructure; the House Committee on Financial Services; the Senate Committee on Commerce, Science, and Transportation; and the Senate Committee on Banking, Housing, and Urban Affairs on the financial assistance provided to air carriers and contractors under Subtitle B of Title IV of the CARES Act. Section 4118(b) requires that the Secretary of the Treasury provide an updated report to the same committees no later than November 1, 2021. Section 21012 amends the Bretton Woods Agreements Act to authorize additional lending by the Department of the Treasury pursuant to a decision of the executive directors of the International Monetary Fund. Prior to taking such action, the Secretary of the Treasury is required to report to Congress on the need for such loans to support the international monetary system and the availability of alternative actions. <2.4.15. Department of Veterans Affairs> Title X of Division B, under the heading "Information Technology Systems," appropriates $2.15 billion for information technology expenses related to the COVID-19 pandemic. The VA Secretary is required to submit a spending plan for these funds to the House and Senate Appropriations Committees and must also notify the same committees before any of these funds are reprogrammed among VA's budget subaccounts for information technology. Section 20001 provides additional transfer authority for the Secretary to transfer funds between identified accounts. For transfers that account for less than 2% of the amount appropriated to a particular account, the Secretary is required to notify the House and Senate Appropriations Committees. For all other transfers, the VA Secretary may transfer funds only after requesting and receiving approval from the House and Senate Appropriations Committees. Section 20002 requires the Secretary to submit monthly expenditure reports to the House and Senate Appropriations Committees for all funds appropriated by Title X of Division B. Section 20008 authorizes the Secretary to waive any limitations on pay for VA employees during the COVID-19 public health emergency for work done in support of the response to the emergency. The Secretary is required to submit a report to the House and Senate Veterans' Affairs Committees in each month that such a waiver is in place. <2.4.16. Election Assistance Commission> Title V of Division B, under the heading "Election Assistance Commission," provides a total of $400 million for election security grants to be distributed to the states by the Election Assistance Commission. This provision requires states to submit reports on how these funds were used within 20 days of each election in the 2020 federal election cycle. Within three days of receipt, the commission is required to transmit these reports to the House Committee on House Administration, the Senate Committee on Rules and Administration, and the House and Senate Appropriations Committees. <2.4.17. Federal Emergency Management Agency> Title VI of Division B, under the heading "Federal Emergency Management Agency," appropriates $45 billion to FEMA's Disaster Relief Fund. The FEMA administrator is required to report to the House and Senate Appropriations Committees every 30 days on the actual and projected use of these funds. <2.4.18. General Services Administration> Title V of Division B, under the heading "General Services Administration," appropriates $275 million to the Federal Buildings Fund of the General Services Administration (GSA) for expenses related to the COVID-19 pandemic. The provision requires the administrator of GSA to notify the House and Senate Appropriations Committees quarterly on obligations and expenditures of these funds. Section 15003 requires the GSA administrator to notify Congress in writing if the administrator determines that it is in the public interest to use non-competitive procurement procedures as authorized by the Federal Procurement Policy during a declared public health emergency. <2.4.19. House of Representatives> Title IX of Division B, under the heading "House of Representatives," appropriates a total of $25 million for expenses related to the COVID-19 pandemic. The chief administrative officer of the House of Representatives is required to submit a spending plan to the House Committee on Appropriations. <2.4.20. Internal Revenue Service> Section 15001 appropriates $250 million to the Internal Revenue Service (IRS). The provision requires that the IRS commissioner submit a spending plan to the House and Senate Appropriations Committees no later than 30 days of enactment of the CARES Act (i.e., April 26, 2020). The provision also provides that, with advance notice to the House and Senate Appropriations Committees, these funds may be transferred between IRS budget accounts as necessary to respond to the COVID-19 pandemic. <2.4.21. Kennedy Center> Title VII of Division B, under the heading "John F. Kennedy Center for the Performing Arts," provides $25 million to support the Kennedy Center's response to the COVID-19 pandemic. The provision requires the Board of Trustees of the Kennedy Center to report to the House and Senate Appropriations Committees by October 21, 2020, with a detailed explanation of the use of the funds. <2.4.22. Register of Copyrights> Section 19011 amends Chapter 7 of Title 17 of the U.S. Code to provide that, through December 31, 2021, if an emergency declared by the President under the National Emergencies Act disrupts the ordinary functioning of the copyright system, the Register of Copyrights may waive or modify specified timing requirements. If the Register of Copyrights takes such action he or she must notify Congress within 20 days. <2.4.23. Small Business Administration> Section 1103(d) requires SBA to report to the House Committee on Small Business and the Senate Committee on Small Business and Entrepreneurship on its activities related to education, training and advising grants under Section 1103(b) of the CARES Act. The initial report under this section is due six months after enactment of the CARES Act (i.e., September 27, 2020), with additional reports annually thereafter. Section 1107(c) requires SBA to provide a spending plan for funds appropriated in Section 1107(a) to the House and Senate Appropriations Committees within 180 days of enactment of the CARES Act (i.e., September 23, 2020). <2.4.24. U.S. Patent and Trademark Office> Section 12004(a) provides the director of the U.S. Patent and Trademark Office with authority to toll, waive, adjust, or modify specified deadlines in Title 35 of the U.S. Code during the COVID-19 emergency if certain conditions are met. To use this authority, the director is required, under Section 12004(c), to submit a statement to Congress within 20 days explaining his or her action and the rationale underlying it. <2.4.25. General Provisions for Title VII of Division B> In addition to the requirements listed above for specific federal entities and sub-entities, Section 18109 authorizes that funds provided under Title VII of Division B may be used for personal services contracts with prior notification to the House and Senate Appropriations Committees. Title VII of Division B makes appropriations to the Department of the Interior, the Environmental Protection Agency, the Forest Service (Department of Agriculture), the Indian Health Service (HHS), the Agency for Toxic Substances and Disease Registry (HHS), the Institute of American Indian and Alaska Native Culture and Arts Development, the Smithsonian Institution, the Kennedy Center, and the National Foundation on the Arts and Humanities. <2.5. Requirements for Testimony> <2.5.1. Chairman of the Board of Governors of the Federal Reserve System> Section 4026 requires the chairman of Federal Reserve to testify, on a quarterly basis, before the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs regarding the Federal Reserve's activities under the CARES Act. <2.5.2. Secretary of the Treasury> Section 4003(c)(3)(A)(iii) allows the Secretary of the Treasury to waive compensation limits established by Section 4004 as well as restrictions on "stock buybacks," the payment of dividends, and other capital distributions established by Section 4003(c)(3)(A)(ii) for businesses receiving a loan, loan guarantee, or other investment under the CARES Act. In order to waive those requirements, the Secretary must determine that such action is necessary to "protect the interests of the Federal Government" and must also "make himself available to testify before the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives regarding the reasons for the waiver." Section 4026 requires the Secretary of the Treasury to testify, on a quarterly basis, before the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs regarding the Treasury's activities under the CARES Act.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136 ) includes a variety of oversight provisions designed to increase the information available to Congress regarding the federal government's implementation of the CARES Act and response to the COVID-19 pandemic more generally. Specifically, the CARES Act: establishes a Congressional Oversight Commission, establishes a Special Inspector General for Pandemic Recovery, establishes a Pandemic Response Accountability Committee made up of certain agencies' inspectors general, provides additional financial resources for certain Offices of Inspectors General, creates additional reporting and oversight duties for the Government Accountability Office, and institutes new reporting requirements on a variety of agencies based on provisions in the CARES Act. As agencies begin to implement the CARES Act and as the COVID-19 pandemic continues to develop, understanding the federal resources and information available can help Congress support both its own oversight activity and the consideration of potential future legislation to respond to COVID-19. This report is a reference guide to the oversight mechanisms in the CARES Act and a launching pad for deeper consideration of oversight-related issues. This report complements other CRS products, such as a list of CRS experts covering issue areas related to other provisions of the CARES Act: CRS products: Other CRS products on the COVID-19 response efforts can be found on the CRS Coronavirus Disease 2019 resource page at https://www.crs.gov/resources/coronavirus-disease-2019 . CRS subject matter experts: For a list of points of contact for CRS's congressional clients with specific questions regarding the particular authorities and appropriations in the CARES Act, see CRS Report R46299, Coronavirus Aid, Relief, and Economic Security (CARES) Act: CRS Experts , by William L. Painter and Diane P. Horn.

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<1. Introduction> The U.S. Army Corps of Engineers (USACE) is an agency within the Department of Defense with both military and civil works responsibilities. Congress directs USACE's civil works activities through authorization legislation, annual and supplemental appropriations, and oversight activities. This report summarizes USACE's annual discretionary appropriations for civil works activities, which typically are funded through Title I of annual Energy and Water Development appropriations acts. First, the report introduces USACE and its funding. Second, it summarizes the appropriations process through discussions of three major milestones: President's budget request, congressional appropriations process, and annual USACE work plan. Third, the report provides a brief discussion of trends and policy questions related to USACE annual appropriations. <1.1. USACE Primer> A military Chief of Engineers commands USACE's civil and military operations. The Assistant Secretary of the Army for Civil Works (ASACW) provides civilian oversight of USACE. The agency's responsibilities are organized into eight geographically based divisions, which are further divided into 38 districts. As part of USACE's civil works activities, Congress has authorized and appropriated funds for the agency to perform the following: water resource projects for maintaining navigable channels and harbors, reducing risk of flood and storm damage, and restoring aquatic ecosystems, among other purposes; environmental infrastructure assistance; regulation of activities affecting certain waters and wetlands activities; and remediation of sites involved in the development of U.S. nuclear weapons from the 1940s through the 1960s, administered under the Formerly Utilized Sites Remedial Action Program (FUSRAP). <1.2. USACE Funding> From FY2010 to FY2020, Congress provided USACE with appropriations ranging from $4.72 billion in FY2013 to $7.65 billion in FY2020. Unlike federal funding for highways and municipal water infrastructure, the majority of federal funds provided to USACE are not distributed by formula to states or through competitive grant programs. Instead, USACE generally expends the appropriations on its congressionally authorized water resource projects. That is, the majority of USACE's appropriations are for the planning, construction, and operation of the agency's water resource projects, such as multipurpose dams and commercial navigation improvements along coasts and inland waterways. Congress generally funds USACE civil works through Title I of annual Energy and Water Development appropriations acts. In addition to funding the agency's water resource activities, Congress provided $100 million for environmental infrastructure activities, $210 million for USACE regulatory activities, and $200 million for FUSRAP in FY2020. Each year, some USACE projects receive construction funds; however, many authorized USACE construction projects have not been federally funded for years after their authorization. That is, Congress has authorized construction projects and rehabilitation and repair work that totals an estimated $96 billion: approximately $32 billion of authorized but unfunded projects and approximately $64 billion of rehabilitation and repair work (e.g., for dam safety). This is often referred to as the agency's construction backlog . The backlog includes much more authorized work than can be accomplished with annual construction appropriations, which has ranged from $2.1 billion to $2.7 billion annually during FY2018 through FY2020. A subset of the projects in the backlog are funded in a given year, and many projects in the backlog receive no funds for years. Congress also has provided USACE with emergency supplemental appropriations in some years, typically in response to floods. Most of these supplemental funds are directed to repairing damage to existing USACE facilities, paying for flood fighting and repair of certain levees and dams maintained by nonfederal entities, and constructing new riverine and coastal flood control improvements. For more information on supplemental funds for USACE and associated congressional direction, see CRS In Focus IF11435, Supplemental Appropriations for Army Corps Flood Response and Recovery , by Nicole T. Carter and Anna E. Normand. In addition to federal funding, most USACE activities require a nonfederal sponsor to share some portion of project costs. For some project types (e.g., levees), nonfederal sponsors are required to perform operation, maintenance, repairs, replacement, and rehabilitation of the works once construction is complete. For more information on nonfederal cost-share requirements, see CRS Report R45185, Army Corps of Engineers: Water Resource Authorization and Project Delivery Processes , by Nicole T. Carter and Anna E. Normand. <2. Annual Appropriations Process> The annual appropriations process generally involves three major milestones: President's budget request, congressional deliberation and enactment of appropriations, and Administration development of a USACE work plan (see Figure 1 ). The process begins with the release of the President's budget request, typically in early February (i.e., roughly eight months before the start of the fiscal year addressed by the request), although it is sometimes delayed. Congress may consider the President's budget request, stakeholder interests, and other factors when creating an annual Energy and Water Development appropriations bill that includes USACE civil works activities. The length of the congressional appropriations process varies from year to year, as shown in Figure 1 . Following enactment of the Energy and Water Development bill, the Administration develops a USACE work plan, which identifies the amount of additional funding provided to specific studies and projects. The following sections describe these major milestones in more detail. <2.1. President's Budget Request> The President's budget request for USACE typically is for funding at the account level (i.e., Investigation, Construction, and Operation and Maintenance), as shown in the appendix to the President's FY2020 budget request. The agency's budget justification includes more detailed information regarding the request by providing information for specific activities, such as the level of funding requested for particular USACE studies and construction projects. USACE also publishes a summary of this information in a document it refers to as the p ress b ook . The press book shows the requested funding for USACE projects for each state and identifies how the President's requests for various accounts are distributed across the agency's business line s (i.e., types of activities, such as navigation, restoration, and recreation) in a crosswalk (see Appendix A ). In recent years, the executive branch has used various metrics, including benefit-cost ratios and other performance criteria, to identify which projects and activities to include in the President's request. For example, to identify operation and maintenance investments, the Administration's budget development guidance has used risk assessments, which consist of an evaluation of an existing project's condition and the consequences of reduced project performance (i.e., the consequence of not making an investment). USACE budget development guidance describes these metrics and other aspects of the budget development process each year. Recent Administrations also have limited funding for new starts to focus on completing existing projects and on actions to address aging infrastructure. <2.2. Congressional Appropriation Acts> As shown in Figure 2 , since FY2006, Congress has appropriated more for USACE civil works than the President requested in all but one year. In the text of enacted appropriations laws, Congress generally provides appropriations to USACE at the account level (see Table 1 for a description of the accounts and their FY2018 to FY2020 appropriations amounts). Accompanying appropriations reports (i.e., conference reports, committee reports, or explanatory statements), which sometimes are incorporated into law by reference, often identify specific USACE projects and programs to receive appropriated funds. In addition to regular appropriations, Congress provided USACE with various emergency supplemental appropriations from FY2006 to FY2019. For example, Congress provided a total of more than $47 billion for flood fighting (e.g., construction of temporary levees) and flood recovery (e.g., construction of flood risk reduction in states and territories affected by flooding) over those years, as well as $4.6 billion for economic recovery as part of the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ). These supplemental appropriations are not shown in Figure 2 . Generally, Congress provides the majority of USACE's funding to two accounts the Construction account and the Operation and Maintenance (O&M) account. The O&M account has made up a growing portion of the agency's use of annual appropriations, as shown in Figure 3 . Between FY2006 and FY2020, the O&M account increased from 37% of USACE annual appropriations in FY2006 and FY2007 to a high of 53% in FY2018 and FY2019. <2.2.1. Additional Funding> For decades, Congress provided funding to USACE projects that were not included in the President's request until the House and Senate earmark moratoriums limited Congress's ability to select which site-specific projects would receive funding. Since the 112 th Congress, in lieu of increasing funding for specific projects, Congress has provided additional funding for specified categories of work within some USACE budget accounts. That is, in recent appropriations cycles, Congress has included additional funding categories for various types of USACE projects (e.g., additional funding for inland navigation), along with directions and limitations on the use of these funds on authorized studies and projects. Recent levels of additional funding are shown in Figure 4 . For example, Congress provided $2.69 billion more in P.L. 116-94 than the President's request for FY2020. Of this $2.69 billion, $2.53 billion was identified as additional funding for 26 categories of USACE activities in four budget accounts (see Appendix B ). In Figure 4 , categories are aggregated into navigation activities, flood risk reduction activities, and other authorized project purposes (e.g., environmental restoration). Since FY2014, Congress also has specified in each appropriations bill the number and types of studies and projects to be selected to receive funding for the first time (referred to as new starts ). For example, Congress directed USACE to use FY2020-enacted funding to initiate a maximum of six new studies and six new construction projects. <2.3. Agency Work Plan> Since FY2012, Congress has directed USACE to produce an annual work plan describing how funds will be allocated at the project level. For example, in FY2020, the explanatory statement accompanying the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), called for USACE, within 60 days after enactment of the appropriations bill, to issue a work plan that includes the specific amount of additional funding to be allocated to each project. The Administration develops the work plan, which typically consists of tables that list the projects, the amount of additional funding that each project is to receive, and a one- or two-sentence description of what USACE is to accomplish with the funds for the project. For projects not in the budget justifications that accompanied the President's budget request, the information included in the work plan may be the extent of the Administration's public explanation of the project-level work to be accomplished during the fiscal year. During the FY2014 to FY2019 period, investments in some USACE business lines increased and investments in other business lines decreased. As shown in Figure 5 , Congress provided year-to-year increases in funding for navigation, which exceeded annual navigation spending in the FY2006 to FY2013 period. In contrast, annual funding for the environment (i.e., environmental restoration and environmental stewardship business lines) was less from FY2014 to FY2019 (ranging from $470 million to $591 million annually) compared with funding in the earlier FY2006 to FY2012 period, which ranged from $609 million to $680 million annually. Funding for flood risk reduction has remained around 30% of the total annual appropriations for most of the years in the FY2006 to FY2019 period shown in Figure 5 . The majority of the annual flood-related funds shown in Figure 5 are for riverine flood risk reduction activities. For example, of the construction funds for flood risk reduction provided in annual appropriations acts for FY2017, FY2018, and FY2019, funding for coastal storm damage reduction represented 11%, 9%, and 7%, respectively. The explanatory statement accompanying the FY2020 appropriations act ( P.L. 116-94 ) includes the following statement: "Within the flood and storm damage reduction mission, the Corps is urged to strive for an appropriate balance between inland and coastal projects." Of the previously mentioned $47 billion in flood-related supplemental appropriations from FY2006 to FY2019, Congress provided around $24 billion for construction of flood risk reduction projects. Congress provided almost $15 billion of the $47 billion to the Flood Control and Coastal Emergencies (FCCE) account for flood fighting and repair of certain nonfederal flood risk reduction projects during the FY2006 to FY2019 period. In contrast, annual appropriations for FCCE generally have been less than $35 million and used for emergency response training and preparedness ( Table 1 ). <3. Trends and Policy Questions> Congress may consider the following trends and policy questions when determining future appropriations and funding allocation language directed to USACE. Shift to Administration -Developed Work Plans Since earmark moratorium policies were introduced in the 112 th Congress, Congress has provided annual appropriations above the President's request to fund various additional categories of work (see Figure 4 for funding levels from FY2012 to FY2020). The Administration follows congressional guidance regarding priorities, new starts, and other matters, in part, to develop post-enactment agency work plans that specify which projects are to receive the additional funding. Unlike the justification documents that accompany the President's budget request, the Administration limits the project-level details in the work plan to a few sentences per project. Potential policy questions related to the shift to Administration-developed work plans include the following: What is the effect on congressional oversight when the USACE work plan provides fewer project-level details than the budget request? As Congress debates the limits on congressionally directed spending (or earmarks), will considerations include the type of direction Congress can provide USACE on the use of additional funding? How might Congress address differences between its priorities and the Administration's priorities for USACE in future fiscal years' appropriations? Construction Backlog According to USACE, in early FY2020, there was a construction backlog of $96 billion, including projects with signed Chief's reports (i.e., reports recommending new projects for congressional construction authorization), dam modifications, and deferred maintenance. At the FY2021 budget release press conference, the Chief of Engineers stated that since the enactment of the last Water Resources Development Act (Title I of America's Water Infrastructure Act of 2018; P.L. 115-270 ), he had signed 19 Chief's reports, representing over $9 billion in proposed construction; he also said he anticipated signing another 19 Chief's reports by the end of CY2020. If Congress authorizes these projects, the construction backlog would likely continue to increase more quickly than construction would progress using available USACE appropriations. For example, Congress appropriated $2.2 billion in FY2019 and $2.7 billion in FY2020 for the Construction account and required five new construction starts in FY2019 and six new construction starts in FY2020. Potential policy questions related to the construction backlog include the following: How might Congress address the national demand for water resource infrastructure projects, in part illustrated by the USACE construction backlog? How might Congress address stakeholder interest in new starts and identify a path to construction for authorized but unfunded USACE projects? Shift to Operation and Maintenance U.S. water infrastructure is aging; the majority of the nation's dams, locks, and levees are more than 50 years old. An increasing share of USACE's annual discretionary appropriations goes to O&M activities, including activities to maintain USACE-constructed water infrastructure (see Table 1 for description of activities funded by the O&M account). The O&M account increased from 37% of USACE annual appropriations in FY2006 and FY2007 to a high of 53% in FY2018 and FY2019. The following is a potential policy question related to the shift toward more annual appropriations being used to for O&M: How might Congress address the funding of aging USACE infrastructure, while also meeting the other demands for agency projects and funds? Navigation As discussed in the box titled "Navigation Trust Funds," in P.L. 116-136 , Congress altered how some Harbor Maintenance Trust Fund spending is accounted for in relation to budget caps. Congress, as recently as for FY2020 appropriations in P.L. 116-94 , has reduced the funds to be derived from the Inland Waterways Trust Fund for some projects to allow more inland waterway construction projects to proceed. The Administration has proposed identifying additional ways for waterway interests to contribute to the costs of inland waterway construction and O&M. Potential policy questions related to funding navigation actives include the following: How might Congress address the interest of the inland waterways industry and its stakeholders in spending on waterway construction that exceeds the Inland Waterways Trust Fund's ability to cover 50% of the construction costs? Will the anticipated changes to Harbor Maintenance Trust Fund accounting toward budget caps and allocations result in congressional adjustments to the annual appropriations levels for USACE or other federal agencies' appropriations? Flood Risk Reduction Congress has directed around 30% of USACE's annual appropriations to support flood risk reduction activities, with around 90% of these funds, in most years, supporting riverine flood risk reduction. In addition, as previously noted, the FCCE account typically receives annual appropriations around $35 million, and its flood response and repair activities are primarily funded through supplemental appropriations. Potential policy questions related to funding flood risk reduction actives include the following: Will Congress or the Administration address the balance between inland and coastal projects referenced in the explanatory statement accompanying USACE's FY2020 appropriations in P.L. 116-94 ? What are the consequences of primarily using supplemental appropriations to fund FCCE activities, including repair of damaged nonfederal levees? Environment As previously noted, appropriations for USACE's environmental activities in recent years have been less than in the late 2000s. Annual funding for the environment was less from FY2014 to FY2019 (ranging from $470 million to $591 million) compared with funding in the earlier FY2006 to FY2012 period, which ranged from $609 million to $680 million annually. Postponed investments in aquatic ecosystem restoration may result in missed opportunities to attenuate wetlands loss and realize related ecosystem benefits. Potential policy questions related to the funding of USACE environmental actives include the following: What are the consequences of the current level and distribution of USACE restoration funding? Appendix A. USACE Business Line/Account Crosswalk Congress appropriates funding to the U.S. Army Corps of Engineers (USACE) for its civil works activities at the account level (e.g., Investigation, Construction, and Operation and Maintenance [O&M]). Table 1 provides a description of each account. Activities funded in these accounts are categorized by business lines based on the type of activities. Whereas some business line activities (e.g., navigation, flood damage reduction, restoration, recreation) are spread across accounts (e.g., Investigations, Construction, O&M), other business line activities are exclusive to one account with the same name (e.g., Formerly Utilized Sites Remedial Action Program, regulatory, expenses). Along with the President's budget request, USACE publishes a press book that identifies in a crosswalk how the President's requests for various accounts are distributed across the agency's business lines. For example, Figure A-1 shows the crosswalk for the FY2018 President's budget request for USACE; the columns are the accounts, and the rows are the business lines. Following enactment of appropriations and work plan development, USACE typically also calculates the level of funding for each business line. Appendix B. Additional Funding Categories and Amounts Since the 112 th Congress, Congress has provided additional funding for specific categories of work within some USACE budget accounts (e.g., Investigations, Construction, O&M, Mississippi River and Tributaries). Table B-1 shows the additional funding Congress provided in FY2018 to FY2020 for 26 categories of USACE activities across four budget accounts. Congress directed USACE to produce a work plan no later than 60 days after enactment of the appropriations bill, allocating these additional funds to projects meeting the criteria of the categories and any other direction provided in the explanatory statement or conference report. Some states received funding for larger projects, whereas others received funding for less extensive work. For example, under the Construction account, the work plan allocated $100 million or more per state in additional funding to 10 states Alabama, California, Florida, Illinois, Louisiana, North Dakota, New Jersey, Pennsylvania, Tennessee, and Texas in at least one of FY2018, FY2019, or FY2020; the work plans over that same period included between $1 million and $7 million annually per state for other states (e.g., Minnesota, Montana, New Mexico, Nevada, and Utah).

The U.S. Army Corps of Engineers (USACE) is an agency within the Department of Defense with both military and civil works responsibilities. The agency's civil works activities consist largely of the planning, construction, and operation of water resource projects to maintain navigable channels, reduce the risk of flood and storm damage, and restore aquatic ecosystems. Congress directs USACE's civil works activities through authorization legislation, annual and supplemental appropriations, and oversight. Unlike federal funding for highways and municipal water infrastructure, the majority of federal funds provided to USACE are not distributed by formula to states or through competitive grant programs. Instead, USACE generally is directly engaged in the planning and construction of projects. The majority of the agency's appropriations are used to perform work on geographically specific studies and congressionally authorized projects. Between FY2010 and FY2020, USACE discretionary appropriations, typically funded through Title I of annual Energy and Water Development appropriations acts, have ranged from $4.72 billion in FY2013 to $7.65 billion in FY2020. Congress also has provided USACE with emergency supplemental appropriations, most often as part of flood response and recovery efforts (see CRS In Focus IF11435, Supplemental Appropriations for Army Corps Flood Response and Recovery , for more information). USACE's annual appropriations process generally involves three major milestones: the President's budget request, congressional deliberation and enactment of appropriations, and Administration development of a USACE work plan. Each of the milestones is accompanied by various documents, such as USACE budget justifications, congressional conference reports, and USACE work plans. The process begins with the release of the President's budget request, typically in early February. The request's appendix includes funding levels for different USACE accounts (e.g., Investigations, Construction, Operation and Maintenance). USACE also releases more detailed documents (i.e., press book, budget justifications) providing information on the projects that the request would fund. Congress may consider the President's budget request, stakeholder interests, and other factors when creating an annual Energy and Water Development appropriations bill and its USACE civil works title. In reports accompanying appropriations bills, Congress provides direction to USACE on how to allocate enacted appropriations to various USACE activities and types of projects. In the months following enactment, the Administration develops a work plan that adheres to congressional direction regarding the priorities for the funding provided above the requested amount (e.g., $2.7 billion for 26 categories of USACE activities in FY2020) and the number of new starts (e.g., six new studies and six new construction projects using FY2020 appropriations). Some USACE-related topics repeatedly arise in congressional appropriations deliberations For example, Congress often considers how to address the increasing maintenance needs of USACE's aging infrastructure, stakeholder demand for USACE projects, and the number of finalized project studies awaiting construction. Issues for Congress also may include the distribution of appropriations (e.g., activity type, new starts, and geographic distribution) and the level of discretion Congress provides the Administration in allocating USACE's funding in the work plan.

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<1. Introduction> Whether many provisions of the Federal Food, Drug, and Cosmetic Act (FD&C Act) apply to a particular drug product turns in part on the novelty of the "active ingredient" of the drug in question. In particular, the Food and Drug Administration (FDA) must assess the novelty of the active ingredient in a new drug, comparing it to a previously approved drug's active ingredient to determine whether the new drug qualifies for the five-year "new chemical entity" (NCE) exclusivity. FDA generally cannot accept new drug applications or abbreviated new drug applications that refer to a drug with NCE exclusivity (i.e., rely on its clinical data and FDA's approval of the drug) for five years. Companies that receive approval for drugs with new active ingredients generally enjoy a competitive advantage in the market while the exclusivity is in effect until generic drugs enter the market. Given how expensive it can be to bring a new drug to market, when Congress passed the Hatch-Waxman Amendments in 1984 to allow an abbreviated pathway for approval of generic drugs, it also created NCE exclusivity to reward innovators of new pharmaceutical products with an opportunity to recoup their investment. To determine whether FD&C Act provisions that depend in part on the drug's "active ingredient" apply, FDA must evaluate the "active ingredient(s)" of both the drug under review and any previously approved drug that may contain the same active ingredient. This process can be technically quite complicated. For instance, compounds in a final drug product may convert to other compounds through chemical reactions inside the body before arriving at the site of the therapeutic effect, and related but distinct drug molecules may be clinically indistinguishable or convert into the same pharmacologically or physiologically active component inside the body. This phenomenon raises the question of which molecule the one existing before or after ingestion should be the relevant molecule for purposes of determining active ingredient. Alternatively, two drug molecules with the same core compound may have different compounds appended to them by either covalent (i.e., shared electrons) or noncovalent (i.e., no shared electrons) bonds. For example, replacing a hydrogen atom in an acid molecule with "a metal or its equivalent" forms a salt, whereas replacing the hydrogen atom with "an organic radical" forms an ester. These derivatives may or may not vary from each other in clinically significant ways, raising the question of which derivative(s), if any, should be considered as the same active ingredient as the core or base molecule. Generally, a more expansive interpretation of the phrase "active ingredient," that is, one that considers more types of derivatives to be the same active ingredient, reduces the number of drugs eligible for NCE regulatory exclusivity by expanding the drug ingredients considered previously approved, which, in turn, allows for earlier introduction of generic versions of those drugs. As discussed in more detail below, historically, for purposes of the exclusivity provisions, FDA has interpreted "active ingredient," as the term appears in statute, to mean "active moiety," as defined by FDA regulations. FDA generally defines active moiety as the core molecule or ion of a drug (i.e., the drug molecule without certain appendages) that is "responsible for the physiological or pharmacological action of a drug substance." FDA's interpretation has generated disputes between FDA and pharmaceutical companies, as FDA's approach tends to exclude some drugs from being afforded five-year NCE exclusivity under the FD&C Act. In 2015, a federal district court rejected FDA's interpretation as inconsistent with the statutory language, though it did not explicitly invalidate FDA's regulations. This report discusses FDA's interpretation of the FD&C Act as referring to active moieties, judicial review of FDA's interpretation, and how FDA's rationale has changed over time. In the 116th Congress, legislation has been introduced that would generally codify FDA's current approach to evaluating NCE exclusivity and extend that approach to other provisions under the FD&C Act that include the phrase "active ingredient (including any ester or salt of the active ingredient)." <2. FDA Interpretation of Active Ingredient> Multiple provisions of the FD&C Act use the phrase "active ingredient (including any ester or salt of the active ingredient)." Among them are a provision for five-year exclusivity to drugs approved under a new drug application (NDA) with active ingredients that FDA has not previously approved, a provision for three-year exclusivity for drugs with the same active ingredient as previously approved drugs that required additional clinical studies for approval due to other changes, and provisions authorizing priority review vouchers for certain types of drugs. In the context of the five-year-exclusivity, which FDA has coined "new chemical entity" or NCE exclusivity, FDA interprets the term "active ingredient" to mean "active moiety." FDA reasons that this definition, which allows a wider range of molecules to be considered previously approved, is warranted in the new drug context to encourage innovation by ensuring that a new drug is truly innovative. This interpretation of "active ingredient" in the NCE exclusivity context has been the subject of a decades-long debate. The statutory provision on NCE exclusivity states, in relevant part, If an application submitted under subsection (b) of this section for a drug, no active ingredient (including any ester or salt of the active ingredient) of which has been approved in any other application under subsection (b) of this section, is approved . . . no application may be submitted under this subsection which refers to the drug for which the subsection (b) application was submitted before the expiration of five years from the date of approval of the application under subsection (b) of this section . . . . Disputes over how FDA should interpret this provision have centered on the meaning of the phrase "active ingredient (including any ester or salt of the active ingredient)." The FD&C Act does not define the term "active ingredient." Rather than define "active ingredient" for purposes of the exclusivity provisions, FDA examines the relevant drugs' active moieties. Specifically, FDA defines NCE exclusivity in its regulations as "a drug that contains no active moiety that has been approved by FDA in any other application submitted under section 505(b) of the act." The various other exclusivity regulations also refer to active moieties. FDA defines "active moiety" in its regulations as follows: Active moiety is the molecule or ion, excluding those appended portions of the molecule that cause the drug to be an ester, salt (including a salt with hydrogen or coordination bonds), or other noncovalent derivative (such as a complex, chelate, or clathrate) of the molecule, responsible for the physiological or pharmacological action of the drug substance. As one court put it, "[f]or salts, esters, and noncovalent derivatives, a molecule's 'active moiety' can be thought of as its core; salt, ester and noncovalent derivative versions of the same basic molecule have different appendages, but they share the same active moiety." Put another way, because these specified derivatives would be considered to have the same "active moiety," if FDA approves a drug containing any one of the specified derivatives as the active ingredient, a later approved drug containing another form of a specified derivative or even the core molecule would not be entitled to NCE exclusivity. For instance, if Drug A contains as its active ingredient a salt , ester , or other noncovalent derivative of a molecule that FDA previously approved as part of Drug B, Drug A would not be entitled to NCE exclusivity because FDA had previously approved that active moiety. Similarly, if Drug B contains as its active ingredient a salt derivative of a molecule, and Drug A contains that same molecule or an ester derivative of that molecule and is approved after Drug B, Drug A would not be entitled to NCE exclusivity. In contrast, if Drug A contained as its active ingredient a non-ester covalent derivative of a molecule that FDA previously approved in Drug B, Drug A could be considered to have a new active moiety and be eligible for NCE exclusivity if other relevant conditions are met. If a drug molecule is converted to a different but related compound after ingestion, the relevant molecule for determining active moiety is the compound in the final drug product before the drug is ingested. <3. Challenges to FDA's Approach> In the NCE exclusivity context, FDA's interpretation of "active ingredient" as "active moiety," as well as its definition of "active moiety," have both been subject to dispute. Challenges to FDA's approach to NCE exclusivity have generally addressed two questions: 1. Whether FDA may permissibly interpret the phrase "no active ingredient (including any ester or salt of the active ingredient) of which has been approved" as "a drug that contains no active moiety that has been approved." 2. Whether FDA has correctly defined "active moiety," including whether FDA may permissibly deny exclusivity for in addition to "salts and esters," which appear in the statute other noncovalent derivatives of the underlying drug molecule. <3.1. FDA's Interpretation of the Exclusivity Provision> Proposed Rule. In 1989, in its implementing regulations for the Hatch-Waxman Amendments, FDA first interpreted the FD&C Act's exclusivity provisions to distinguish between NCEs, which are entitled to a five-year term of regulatory exclusivity, and previously approved active ingredients, which are entitled to three years of regulatory exclusivity, based on active moieties. To support its interpretation in the proposed rule, the agency relied on the statutory text, FDA's preexisting classification scheme for drugs that included a "new molecular entity" class based on active moieties, and the legislative history of the Hatch-Waxman Amendments. FDA reasoned that "Congress was aware of FDA's classification scheme" when it passed the Hatch-Waxman Amendments, including FDA's "longstanding interpretation of the term 'new molecular entity' [as] a compound containing an entirely new active moiety." In support of its definition of active moiety, which includes other noncovalent derivatives of a drug molecule in addition to the drug molecule itself and its salt and esters, FDA reasoned that Congress "did not intend to confer significant periods of exclusivity on minor variations of previously approved chemical compounds." FDA did not specifically identify which part of the statutory phrase "an active ingredient (including any ester or salt of the active ingredient)" it had determined to be ambiguous when adopting the interpretation of "active moiety." Initial Litigation Rejecting FDA Approach . Between FDA's proposed rule in 1989 and its final rule in 1994 implementing the exclusivity regulations, two cases addressed the agency's interpretation of the phrase "active ingredient (including any ester or salt of the active ingredient)" to mean active moiety. In Abbott Laboratories v. Young , the U.S. Court of Appeals for the D.C. Circuit (D.C. Circuit) considered FDA's denial of 10-year exclusivity for Depakote, an anticonvulsant seizure medication that used divalproex sodium as its active ingredient. FDA based its decision on findings that (1) divalproex sodium is a salt of valproic acid that converts into valproic acid in the body, and (2) the agency previously approved valproic acid as the active ingredient in Depakene. The court determined that the FD&C Act's use of the phrase " the active ingredient" is ambiguous, as it could refer to the active ingredient in the original approved drug or in the later approved drug. However, the D.C. Circuit rejected FDA's reliance on the term "including" to justify using its definition of active moiety, which extends beyond salts and esters of the active ingredient to other noncovalent derivative molecules, as " linguistically infeasible." Specially, the court concluded that Congress used the term "including" in the provision at issue not to provide examples of molecular derivatives undeserving of regulatory exclusivity but to extend the covered active ingredients to the two particular derivatives esters and salts. Upon concluding that the statute is ambiguous and that FDA failed to provide a reasonable construction, the D.C. Circuit remanded the case to FDA for further actions. Around the same time, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) considered the U.S. Patent and Trademark Office's (USPTO's) denial of Glaxo's request for a patent-term extension for its patent claiming cefuroxime axetil, the active ingredient in Ceftin tablets. The Hatch-Waxman Amendments require the USPTO to extend the terms of a patent claiming a product or a method of using or manufacturing a product when (1) the product is "subject to a regulatory review period" (e.g., the FDA drug approval process) and (2) the permission to market the product following the regulatory review (e.g., FDA approval of the drug) is the "first permitted commercial marketing or use of the product ." In turn, the statute defines "product" to mean "the active ingredient of a new drug . . . including any ester or salt of the active ingredient." Interpreting the product as the active moiety, the USPTO found that cefuroxime (an acid) rather than cefuroxime axetil (an ester of cefuroxime) was the active moiety in Ceftin. Because FDA had previously approved two drugs with cefuroxime salts as active ingredients, the USPTO determined that FDA's approval of Ceftin was not the "first permitted commercial marketing or use of the product" and denied the patent-term extension. The Federal Circuit held that the USPTO's denial of the patent term extension was contrary to law, affirming the district court's judgment. In contrast to the D.C. Circuit, which viewed the relevant statutory language as ambiguous, the Federal Circuit held that the terms in the phrase "active ingredient of a new drug . . . including any ester or salt of the active ingredient" all have a plain meaning. The court determined without discussing its reasoning in any detail that the USPTO's interpretation was inconsistent with the plain meaning of these terms. While acknowledging that legislative history can reveal "a clearly expressed legislative intention contrary to the statutory language," it identified no such support for the USPTO's interpretation here. Because the court found there was no clear legislative intent that the phrase be interpreted to refer to variations on the approved active ingredients beyond that product's ester or salt, an extension of the term for the patent claiming cefuroxime axetil was warranted because FDA had not approved that drug product or an ester or salt of it. While the appellate court did not elaborate on how it arrived at its interpretation, the district court had included more detail on the plain meaning of the operative statutory phrase, concluding that cefuroxime the acid from which cefuroxime axetil is derived could not be an "active ingredient" of Ceftin because it was not an ingredient , as that term is commonly understood because it did not appear in the Ceftin tablets in that form. Final Rule. In the wake of these rulings, public comments to FDA's proposed rule contended that Abbott Laboratories and Glaxo Operations rejected the agency's proposed interpretation of the NCE exclusivity provision, particularly its reliance on the phrase active moieties. Nonetheless, when FDA finalized its NCE exclusivity regulations in 1994, the agency included its proposed definition of "active moiety," but modified its justification. Rather than interpreting the parenthetical phrase (i.e., "(including any ester or salt of the active ingredient)") "broadly to include all active ingredients that are different but contain the same active moiety," which the D.C. Circuit in Abbott Laboratories had rejected as "linguistically impermissible," the agency concluded that the term " active ingredient," as used in the relevant provision, means active moiety. FDA did not, however, directly address the Federal Circuit's opinion. FDA also disagreed with comments objecting to its inclusion of other noncovalent derivatives in the definition of "active moiety," meaning that such derivatives would not receive NCE exclusivity. The agency reaffirmed that it "does not believe that providing exclusivity for . . . noncovalent derivatives of a previously approved active moiety would be consistent with the statutory intent" because such derivatives "generally do[] not affect the active moiety of a drug product." FDA accordingly enacted the definition of active moiety as proposed. D.C. Circuit Upholds FDA Use of Pre-Ingestion Rather than Post-Ingestion to Interpret Active Ingredient . In 2010, in Actavis Elizabeth LLC v. FDA , the D.C. Circuit revisited FDA's interpretation of "active ingredient," nearly two decades after the agency finalized its regulations in 1994. That opinion focused specifically on the term "active ingredient" in the context of whether the relevant molecule should be considered prior to its ingestion in the human body (i.e., the compound in the final drug product pre-ingestion) or after ingestion where the compound may convert to another related compound (e.g., from an ester to an acid) that is responsible for the drug's therapeutic effects (i.e., post-ingestion). A generic manufacturer challenged FDA's award of NCE exclusivity for Vyvanse, a drug that treats attention deficit hyperactivity disorder. Vyvanse's active ingredient is lisdexamfetamine dimesylate, a salt of lisdexamfetamine, meaning that lisdexamfetamine is the active moiety under FDA regulations. Lisdexamfetamine uses an amide bond (a type of covalent bond involving nitrogen) to connect a portion of lysine, a common amino acid, with dextroamphetamine. Once in the body, a chemical reaction converts lisdexamfetamine to dextroamphetamine. FDA had approved drugs with dextroamphetamine but had not yet approved drugs with lisdexamfetamine. Actavis, a generic manufacturer seeking to market a generic version of Vyvanse, alleged that because dextroamphetamine is responsible for the therapeutic effect inside the body and FDA had previously approved drugs with dextroamphetamine, Vyvanse had no right to NCE exclusivity. Focusing on the term "active," Actavis contended that "active ingredient" necessarily must refer to "the drug molecule that reaches the 'site' of the drug's action" because that is the part of the drug responsible for its "activity," which Activis argued meant the therapeutic effect. The court rejected Actavis's arguments. First, the court observed that the FD&C Act does not define the term "active ingredient" and that the statute's legislative history "is silent on what determines novelty" for NCE exclusivity. The court also concluded that the statute's structure and purpose did not preclude FDA's interpretation. Accordingly, the court held that (1) "active ingredient" is ambiguous as to whether it referred to the pre-ingestion or post-ingestion molecule, and (2) FDA's interpretation of "active ingredient" to refer to the pre-ingestion molecule is reasonable. The court further affirmed FDA's choice of a bright-line distinction between noncovalent derivatives (which do not receive NCE exclusivity) and non-ester covalent derivatives (which can receive NCE exclusivity and was at issue for Vyvance). While the D.C. Circuit acknowledged that some noncovalent bonds might alter a drug's properties and some covalent bonds might not, the court deferred to FDA's explanation that "its policy is based in part on the 'difficulty in determining precisely which molecule, or portion of a molecule, is responsible for a drug's effects.'" The court did not, however, directly address FDA's use of the term "active moiety," its inclusion of the other noncovalent derivatives in the definition, or the interaction between FDA's definition of active moiety and the statutory parenthetical. District Court Rejects FDA Interpretation of Active Ingredient as Active Moiety. Five years later, in Amarin Pharmaceuticals Ireland Ltd. v. FDA , a federal district court in the District of Columbia expressly considered FDA's interpretation of "active ingredient" to mean "active moiety," as defined in its regulations. Amarin had obtained FDA approval for Vascepa , whose active ingredient is icosapent ethyl, the ethyl ester of eicosapentaenoic acid (EPA), a type of omega-3 fatty acid. But FDA denied Amarin's request for NCE exclusivity for Vascepa because it had previously approved Lovaza, a drug whose active ingredient is "a mixture that is primarily composed of seven kinds of omega-3 fatty acid ethyl esters" including the ester of EPA. When FDA approved Lovaza, it considered the mixture as a whole the "active ingredient," and it later denied a petition from Lovaza's sponsor requesting FDA to recharacterize Lovaza as having multiple active ingredients on the grounds that "the Lovaza mixture has not been 'fully characterized.'" In other words, in approving Lovaza, FDA did not specifically approve an ester of EPA (or any other component omega-3 fatty acid ethyl esters) as an active ingredient. But when evaluating Vascepa's eligibility for NCE exclusivity, FDA relied on new studies to find that EPA was an active moiety of Lovaza and that, accordingly, FDA had previously approved Vascepa's active moiety. Rather than recognize multiple active ingredients in Vascepa, FDA provided a new interpretation framework for certain mixtures to treat them as having one active ingredient but multiple active moieties . In its decision letter to Amarin, FDA acknowledged that the agency had previously taken an inconsistent approach to identifying the active ingredients and active moieties for naturally derived mixtures, such as Lovaza, when evaluating NCE exclusivity. FDA "explained that, although they are often conflated, it is important to distinguish between the meaning of the terms active ingredient and active moiety." And that while "the distinction between active moiety and active ingredient[] generally is negligible" for "drugs that are composed of a single, well-characterized molecule," "the distinction between active ingredient and active moiety . . . becomes crucial" "[f]or naturally derived mixtures comprising multiple molecules." Critically, the agency distinguished between (1) "poorly characterized" and (2) "well-characterized mixtures" based on how difficult it is "'to determine with any certainty . . . which molecules in the mixture are consistently present or potentially are responsible for the physiological or pharmacological activity of the drug.'" For poorly characterized mixtures, FDA stated that it had "of necessity" treated the whole mixture as both the active ingredient and the active moiety. However, for well-characterized mixtures, FDA outlined "a three-part 'framework' 'for identifying the active moiety or moieties of such mixtures.'" FDA would consider component parts of well-characterized mixtures to be previously approved active moieties if 1. specific molecules in the mixture have been identified; 2. those specific molecules are "consistently present in the mixture"; and 3. those molecules are "responsible at least in part for the physiological or pharmacological action of the mixture, based on a finding that they make a meaningful contribution to the activity of the mixture." In effect, for single-molecule and poorly characterized drugs, FDA would apply a one-to-one approach between the active ingredient and active moiety, but for well-characterized mixtures, it would apply a one-to-many approach: one active ingredient with multiple active moieties. The district court set aside FDA's decision denying NCE exclusivity for Vascepa based on its interpretation of "active ingredient" to mean "active moiety". The court first relied on the canon against surplusage, finding that FDA's interpretation of the term "active ingredient" "would render the parenthetical clause in the exclusivity provisions either redundant or incomprehensible." By defining active moiety to exclude "those appended portions of the molecule that cause the drug to be an ester, salt . . . or other noncovalent derivative," the court concluded that FDA rendered the statutory parenthetical "(including any ester or salt of the active ingredient)" either unnecessary or incomprehensible. The court reasoned that FDA in effect read the parenthetical out of the statute by inserting "active moiety" in place of "active ingredient," violating the canon against surplusage that assumes Congress does not include unnecessary language in a statute. The court then used the presumption of consistent usage to reject FDA's view of active ingredient as synonymous with active moiety. Significantly, FDA only interpreted active ingredient to mean active moiety with respect to the FD&C Act's exclusivity provisions , relying on alternative interpretations of "active ingredient" elsewhere in the statute, such as, perhaps most notably, the provision allowing sponsors to submit abbreviated NDAs for generic drugs with the same active ingredient as an approved drug. FDA argued that it was justified in adopting different interpretations of the same phrase in different parts of the statute because the provisions had different statutory purposes. The agency contended that because the abbreviated NDA process focuses on safety and efficacy, a narrower range of molecules should be considered identical to previously approved drugs to ensure that FDA conducts a full review for safety and efficacy of any drugs that may clinically differ from previously approved drugs. In contrast, FDA argued that the exclusivity provisions aim to encourage innovation, requiring a wider range of molecules to be considered previously approved to ensure the new drug is truly innovative. While acknowledging that "the presumption of consistent usage is not unrebuttable," the court considered FDA's justifications for the differing interpretations of active ingredient unpersuasive. The court observed that Congress passed both provisions at the same time in the same part of the same statute, that the abbreviated NDA provisions and exclusivity provisions were two sides of the same coin intended to balance competition and innovation, and that Congress included the parenthetical "including any ester or salt of the active ingredient" in the exclusivity provision but not the abbreviated NDA provision, thus already distinguishing between the two provisions. Finally, the court determined that FDA's use of active moiety was inconsistent with the statutory requirement that the active ingredient "has been approved." It noted that FDA approves active ingredients, not active moieties, and that under FDA's proposed framework it would not even determine the relevant active moiety under another drug applied for exclusivity. Accordingly, an active moiety would never have previously been approved. Rejecting each of FDA's arguments and concluding FDA's interpretation invalid on multiple grounds, the court set aside the specific administrative decision being challenged in that case that is, FDA's exclusivity determination for Vascepa and remanded to FDA. The court did not, however, explicitly invalidate or set aside FDA's implementing regulations. FDA regulations therefore remain in place, but with questions looming as to their validity and defensibility. <3.2. FDA's Definition of Active Moiety> Beyond whether FDA can interpret the phrase "active ingredient" in the FD&C Act's exclusivity provisions to mean active moiety, how FDA has defined "active moiety" has also been the subject of legal challenges. The statutory parenthetical includes esters and salts of an active ingredient as the same active ingredient for determining exclusivity, meaning that an ester and salt of an active ingredient is ineligible for exclusivity. FDA's definition of active moiety extends beyond those two derivatives, however, to also include molecules with other noncovalent appendages . At the same time, the agency excludes from its definition of active moiety molecules with appendages attached through non-ester covalent bonds, meaning that drug molecules that differ from previously approved drugs based on such appendages would be eligible for NCE exclusivity. Brand name manufacturers have challenged including other noncovalent derivatives, which limits the availability of NCE exclusivity, while generic manufacturers have challenged excluding non-ester covalent derivatives, which expands the availability of NCE exclusivity. Other Derivatives with Noncovalent Bonds. As discussed above, Abbott Laboratories v. Young also addressed FDA's inclusion of other noncovalent derivative forms of the molecule in addition to salts and esters, which the statute explicitly includes. At the time, FDA relied on a broad interpretation of the word "including" to justify examining the base molecule without salts, esters, or any other component connected by noncovalent bonds. The agency viewed the term "including" as providing examples of molecules that would be considered minor modifications that do not merit five-year NCE exclusivity, rather than an exhaustive list. While the Abbott Laboratories court considered FDA's approach defensible on policy grounds, it considered the agency's approach "linguistically infeasible." It stated that it "cannot agree with [FDA's] unconvincing attempts to employ the 'including' clause to cover all possible permutations of active ingredient," distinguishing the NCE exclusivity "including" clause "from instances where an 'including' clause is designed to merely illustrate a few examples of the general category." Rather than provide its own interpretation, however, the court remanded the decision to FDA. FDA subsequently modified its interpretation of the statutory language in its 1994 final regulations. Rather than interpret the parenthetical phrase, the agency concluded that the term "active ingredient" means "active moiety," as defined in its regulations. In so doing, FDA reaffirmed its view that allowing NCE exclusivity for other noncovalent derivatives would be inconsistent with statutory intent. In 2015, as explained above, Amarin Pharmaceuticals Ireland Ltd. v. FDA rejected FDA's revised interpretation. However, because the court only set aside the challenged agency action at issue in that case without invalidating FDA regulations, FDA regulations remain in force with its original definition of "active moiety." Derivatives with Non-Ester Covalent Bonds. As discussed above, in Actavis Elizabeth LLC v. FDA , the D.C. Circuit upheld FDA's decision to exclude derivatives with different covalent bonds from its definition of active moiety. Unlike noncovalent bonds, covalent bonds entail the sharing of electrons between molecules, which tends to create a stronger bond. The court held that FDA's policy was reasonably "based on its view that drug derivatives containing non-ester covalent bonds are, on the whole, distinct from other types of derivative drugs such that the former are uniquely deserving of 'new chemical entity' status and the resulting five-year exclusivity." In particular, the court pointed to a 1989 response letter from FDA to a citizen petition. In that letter, the agency explained that "even minor covalent structure changes are capable of producing not only major changes in the activity of the drug but changes that are not readily predicted." Nonetheless, FDA observed that "the formation of a salt . . . or of an ester, is not intended to, and generally cannot, alter the basic pharmacologic or toxicologic properties of the molecule." Accordingly, without holding directly on whether FDA reasonably included other noncovalent derivatives in its active moiety definition, the court held that FDA's exclusion of non-ester covalent derivatives was reasonable. <4. Legislative Proposals in the 116th Congress> Against this backdrop of decades of complex litigation over FDA's interpretation of active ingredient, three bills have been introduced in the 116th Congress that address this issue. Each proposed legislation would generally (1) codify FDA's interpretation that eligibility for NCE exclusivity should be based on the drug's active moiety and (2) incorporate FDA's definition of active moiety by reference. Specifically, the proposed legislation would do so by replacing the entire phrase "active ingredient (including any ester or salt of the active ingredient)" with "active moiety (as defined by the Secretary in section 314.3 of title 21, Code of Federal Regulations (or any successor regulations))" wherever it is found, except for a few provisions that expired in 1984. This change would be made to several FD&C Act provisions, including the NCE exclusivity provision, three-year exclusivity for other changes, and provisions providing priority review vouchers for tropical disease treatments, rare pediatric disease treatments, and countermeasures for agents that threaten national security. Adopting this interpretation would resolve certain legal uncertainties under current case law. In Amarin Pharmaceuticals v. FDA , the court rejected FDA's interpretation but did not explicitly invalidate FDA's regulations. Though it left FDA's interpretation in place, the court's decision left uncertain FDA's ability to defend its interpretation going forward. The proposed legislation would address those questions by adopting FDA's interpretation. The proposed legislation would also resolve the questions that have been raised as to whether FDA's decision to include other noncovalent derivative forms of the molecule in its definition of active moiety, but not other covalent derivatives, accords with congressional intent and a justifiable distinction. The proposed legislation would both adopt FDA's current approach, by incorporating FDA's current definition, and allow FDA to modify its approach going forward as its understanding changed, by including any successor regulations. In effect, the proposed legislation would commit the decision as to which molecules should be deemed effectively the same and therefore not innovative enough to merit NCE exclusivity to FDA's judgment.

Whether many provisions of the Federal Food, Drug, and Cosmetic Act (FD&C Act) apply to a particular drug product turns in part on the novelty of the "active ingredient" of the drug in question. In particular, the Food and Drug Administration (FDA) must assess the novelty of the active ingredient in a new drug, comparing it to a previously approved drug's active ingredient to determine whether the new drug qualifies for the five-year "new chemical entity" (NCE) exclusivity. FDA generally cannot accept new drug applications that refer to a drug with NCE exclusivity (i.e., rely on its clinical data and FDA's approval of the drug) for five years. Companies that receive approval for drugs with new active ingredients generally enjoy a competitive advantage in the market while the exclusivity is in effect—and after, depending how long it takes for generic versions to receive approval once applications can be submitted. Comparing active ingredients can be technically quite complicated. For instance, compounds in a final drug product may convert to other compounds through chemical reactions inside the body before arriving at the site of the therapeutic effect. In addition, related but distinct drug molecules may be clinically indistinguishable or convert into the same pharmacologically or physiologically active component inside the body. Alternatively, two drug molecules with the same core compound may have different compounds appended to them by either covalent or noncovalent bonds. For example, replacing a hydrogen atom in an acid molecule with "a metal or its equivalent" forms a salt, while replacing the hydrogen atom with "an organic radical" forms an ester. These derivatives may or may not vary from each other in clinically significant ways. This raises the question of which derivative(s), if any, should be considered to be the same active ingredient as the core or base molecule. Generally, a more expansive interpretation of phrase "active ingredient," that is, one that considers more types of derivatives to be the same active ingredient, reduces the number of drugs eligible for NCE regulatory exclusivity by expanding the drug ingredients considered previously approved, which allows for earlier introduction of generic versions of those drugs. Historically, for the exclusivity provisions, FDA has interpreted "active ingredient" to mean "active moiety," as defined by FDA regulations. FDA generally defines active moiety as the core molecule or ion of a drug (i.e., the drug molecule without certain appendages) that is "responsible for the physiological or pharmacological action of a drug substance." FDA's interpretation has generated disputes between FDA and pharmaceutical companies, as FDA's approach tends to exclude some drugs from being afforded five-year NCE exclusivity under the FD&C Act. In 2015, a federal district court rejected FDA's interpretation as inconsistent with the statutory language, though it did not explicitly invalidate FDA's regulations. In the 116th Congress, legislation has been introduced that would generally codify FDA's current approach to evaluating NCE exclusivity and extend that approach to certain other provisions under the FD&C Act. This proposed legislation would moot questions about the validity of FDA's interpretation and clarify when chemical entities are sufficiently similar to be considered identical for purposes of drug approval and exclusivity.

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<1. Introduction> U.S. Energy Information Administration (EIA) has forecast U.S. coal production to decline through 2050, with the sharpest reduction to occur by the mid-2020s. Consequently, the coal industry's decline has contributed to economic distress in coal-dependent communities, including increased unemployment and poverty rates. In response, the Obama Administration launched the Partnerships for Opportunity and Workforce and Economic Revitalization (POWER) Plus Plan, which addressed the coal sector's decline through funding for (1) economic stabilization, (2) social welfare efforts, and (3) environmental efforts. The economic elements were organized within the POWER Initiative, a multi-agency federal initiative to provide economic development funding and technical assistance to address economic distress caused by the effects of energy transition principally in coal communities. Although the initiative began as a multi-agency effort as part of the POWER Plus Plan, the POWER Initiative currently operates as a funded program administered by the Appalachian Regional Commission (ARC) in its 420-county service area. This report considers the background of the POWER Initiative and the broader effort of which it was originally a part, the POWER Plus Plan. It broadly surveys the state of POWER elements in the current administration, including elements of the initiative in the Economic Development Administration (EDA), the Appalachian Regional Commission (ARC), and funded efforts for abandoned mine land reclamation. The Appalachian Regional Commission's POWER Initiative program is the largest of these, and the only program to retain the POWER Initiative branding. This report considers its scope and activities as well as its funding history. The POWER Initiative is supported by Congress as reflected by consistent annual appropriations. The POWER Initiative may also be of interest to Congress as an economic development program that actively facilitates and eases the repercussions of energy transition in affected communities in Appalachia. More broadly, in light of the projected continued decline of the coal industry, as well as proposals to address greenhouse gas (GHG) emissions from hydrocarbon combustion, congressional interest in programs to address economic dislocations as a result of energy transition is likely to accelerate. <2. Background> The POWER Initiative was launched in 2015 as a multi-agency federal effort to provide grant funding and technical assistance to address economic and labor dislocations caused by the effects of energy transition principally in coal communities around the United States. The POWER Initiative was a precursor to a broader effort known as the POWER Plus Plan (dubbed POWER+ by the Obama Administration). This latter plan was launched using preexisting funds, and was intended to develop an array of grant programs across multiple agencies to facilitate energy transition and ameliorate the negative effects of that transition. Most legislative elements of the POWER+ Plan were carried out under existing authorities rather than new legislation. Certain features continue to be active particularly elements of the POWER Initiative within the ARC and the EDA. <2.1. The POWER+ Plan> The POWER+ Plan was organized to address three areas of concern: 1. economic diversification and adjustment for affected coal communities; 2. social welfare for coal mineworkers and their families, and the accelerated clean-up of hazardous coal abandoned mine lands; and 3. tax incentives to support the technological development and deployment of carbon capture, utilization, and sequestration technologies. The POWER+ Plan was proposed in the FY2016 President's Budget as a multi-agency approach to energy transition. As proposed, the POWER+ Plan involved the participation of the Department of Labor (DOL), the Appalachian Regional Commission (ARC), the Small Business Administration (SBA), the Economic Development Administration (EDA), the Department of Agriculture (USDA), the Environmental Protection Agency (EPA), the Department of the Treasury, the Department of Energy (DOE), the Corporation for National and Community Service, and the Department of the Interior (DOI). The FY2016 President's Budget requested approximately $56 million in POWER+ Plan grant funds: (1) $20 million for the DOL; (2) $25 million for the ARC; (3) $6 million for the EDA; and (4) $5 million for the EPA. In addition, a portion of USDA rural development funds $12 million in grants and $85 million in loans were aligned to POWER+ Plan priorities. Also, the plan sought $1 billion for abandoned mine land reclamation and an additional $2 billion for carbon capture and sequestration technology investments. <2.2. The POWER Initiative> The Obama Administration described the POWER Initiative as a "down payment" on the POWER+ Plan, and focused on the Plan's economic development elements using existing funding sources ( Table 1 ). Those existing funding sources (or "Targeted Funds" in Table 1 ) refer to funds that were set aside by the respective federal executive agency in support of the POWER+ Plan in FY2015. These funding amounts are only those funds made available initially, and do not account for additional appropriations or set-asides made available as the program progressed. The EDA was initially designated as the lead agency for the POWER Initiative, with significant funding elements from the ARC, SBA, and DOL. While led by the EDA, POWER Initiative grants were determined by the individual awarding agency. Grants were divided into two funding streams: (1) planning grants; and (2) implementation grants. The POWER Initiative was announced in March 2015, with the first tranche of grants awarded in October 2016. With the exception of certain parts of the POWER Initiative and funding for reclaiming abandoned mine land (AML), broad elements of the POWER+ Plan were not enacted by Congress. Since the end of the Obama Administration, the ARC is the only federal agency with a POWER Initiative-designated program. <3. POWER Elements in the Current Administration> As of November 2019, the POWER Initiative exists solely as a funded program of the ARC, and is no longer a multi-agency initiative. However, certain other elements originally included in the POWER+ Plan and the POWER Initiative continue to receive appropriations and continue to be active, but they are not designated as such by the Trump Administration. These elements are discussed below. <3.1. The EDA Assistance to Coal Communities (ACC) Program> The EDA continues to receive appropriations for its Assistance to Coal Communities (ACC) program. The ACC program was a grant-making element launched as a part of the EDA's role in the POWER Initiative. In FY2019, $30 million was designated for the ACC program as part of appropriations to the EDA. The FY2019 appropriations represent the fifth consecutive fiscal year of funding for the program, and reflect 300% growth from approximately $10 million appropriated in FY2015. However, the Trump Administration's FY2017 Budget sought to eliminate the ACC program; and subsequent Administration Budget requests have proposed eliminating the EDA entirely, including the ACC program. While the ACC is an active outgrowth of the POWER Initiative and POWER+ Plan, it is no longer associated with the POWER Initiative and instead is identified as a separate program drawing on Economic Adjustment Assistance (EAA) funds. Because it draws on EAA funding, ACC investments may only be used for projects located in, or substantially benefiting, a community or region that meets EDA distress criteria. EDA economic distress is defined as "An unemployment rate that is, for the most recent 24-month period for which data are available, at least one percentage point greater than the national average unemployment rate; Per capita income that is, for the most recent period for which data are available, 80 percent or less of the national average per capita income; or A Special Need, as determined by EDA." <3.2. Abandoned Mine Land (AML) Reclamation Investments> One of the pillars of the POWER+ Plan was funding for the social welfare of miners and for cleanup and reclamation of former mine and other coal-related "brownfield" sites. While certain legislative proposals for these purposes were never enacted, Congress has approved annual funding since FY2016 for economic development grants to states for Abandoned Mine Land reclamation. The FY2016 appropriation of $90 million directed funds to be divided equally among the three Appalachian states with the greatest amount of unfunded AML needs ( P.L. 114-13 ). The $105 million appropriated for FY2017 set aside $75 million to be divided this way, with the balance of that amount being available more broadly to other eligible AML reclamation applicants ( P.L. 115-31 ). FY2018 appropriations of $115 million set aside $75 million for the three states demonstrating the greatest unmet need ( P.L. 115-141 ). For FY2019, the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2019, Division E of the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), appropriated $115 million, which was subdivided further: $75 million for the three Appalachian states with the greatest amount of unfunded needs; $30 million for the next three Appalachian states with the "subsequent greatest amount of unfunded needs"; and $10 million for federally recognized Indian Tribes. <4. The ARC's POWER Initiative> The Appalachian Regional Commission (ARC) is the only federal agency that continues to receive regular appropriated funding for energy transition activities under the POWER Initiative designation. While the POWER Initiative was launched as a multi-agency effort, only the ARC chose to designate its contributions as the POWER Initiative. <4.1. About the ARC> The ARC was established in 1965 to address economic distress in the Appalachian region (40 U.S.C. 14101-14704). The ARC's jurisdiction spans 420 counties in Alabama, Georgia, Kentucky, Ohio, New York, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia ( Figure 1 ). The ARC is a federal-state partnership, with administrative costs shared equally by the federal government and member states, while economic development activities are federally funded through appropriations. Thirteen state governors and a federal co-chair oversee the ARC. The federal co-chair is appointed by the President with the advice and consent of the Senate. <4.2. Scope and Activities> The ARC's POWER Initiative program prioritizes federal resources to projects and activities in coal communities that exhibit elements that produce multiple economic development outcomes (e.g., promoting regional economic growth; job creation; and/or employment opportunities for displaced workers); are specifically identified under state, local, or regional economic development plans; and have been collaboratively designed by state, local, and regional stakeholders. The ARC funds three classes of grants as part of the POWER Initiative: (1) implementation grants, with awards of up to $1.5 million; (2) technical assistance grants, with awards of up to $50,000; and (3) broadband deployment projects, with awards of up to $2.5 million. For FY2019, $45 million in grant funding was made available, of which $15 million was reserved for broadband projects. POWER investments are subject to the ARC's grant match requirements, which are linked to the Commission's economic distress hierarchy. Those economic distress designations are, in descending order of distress distressed (80% funding allowance, 20% grant match); at-risk (70%); transitional (50%); competitive (30%); and attainment (0% funding allowance). Special allowances at the discretion of the commission may reduce or discharge matches, and match requirements may be met with other federal funds when allowed. Designations of county-level distress in the ARC's service area are represented in Figure 1 . POWER investments are also aligned to the ARC's strategic plan. The current strategic plan, adopted in November 2015, prioritizes five investment goals: 1. entrepreneurial and business development; 2. workforce development; 3. infrastructure development; 4. natural and cultural assets; and 5. leadership and community capacity. Given its programmatic breadth, POWER investments may link to any one of these investment goals. POWER investment determinations are made according to annual objectives outlined in the request for proposals, as well as broader investment priorities, which are building a competitive workforce; fostering entrepreneurial activities; developing industry clusters in communities; and responding to substance abuse. The ARC has designated $50 million annually ("activities in support of the POWER+ Plan" ) for POWER activities ( Table 4 ). According to the ARC, over $148 million in investments have been made since FY2016 through 185 projects in 312 counties across the ARC's service area, leveraging an estimated $772 million of private investment. Figure 2 is a representation of the ARC's POWER Initiative projects tallied by state. <4.3. Funding History> While the POWER Initiative does not receive appropriations separate from that of the ARC as a whole, congressional intent is signaled in House Appropriations Committee reports, which specify amounts to be reserved for the POWER Initiative. In committee report language, it is described as activities "in support of the POWER+ Plan." Table 4 shows appropriations set aside for the POWER Initiative from FY2016 to FY2019, and for the ARC as a whole. The ARC received approximately $610 million in requests for POWER Initiative grant funding from FY2016 to FY2018 ( Table 5 ). This suggests that there was unmet demand for the POWER Initiative in the Appalachian region alone (the ARC's service area, as depicted in Figure 1 ). <5. Policy Considerations> The Energy Information Administration projects that coal production overall will continue to decline as a consequence of falling market demand. In particular, the EIA forecasts coal to account for 24% of U.S. electric energy generation in 2019 and 2020, down from 28% in 2018. By 2050, coal is projected to decline to 17% of U.S. electricity generation, nuclear is projected to account for 12%, renewables 31%, and natural gas 39%, according to EIA projections. Coal's decline is a function of market forces, particularly its higher cost relative to natural gas and renewable energy options. In the future, under current policies, coal's cost disadvantage is expected to continue, and could be accelerated if policies are adopted to reduce GHG emissions that contribute to climate change. Even with federal incentives to invest in carbon capture, utilization, and storage as a means to mitigate fossil fuel-related emissions, coal may still not be competitive in many situations. As a result of falling demand, noncompetitive coal producers and their communities are expected to face continued economic dislocation. Should it wish to broaden or intensify federal efforts to address energy transition in local communities, Congress may have several options. In the past, Congress has demonstrated bipartisan interest in the federal government providing assistance to populations adversely affected by the ongoing energy transitions. It has done so through its appropriations for the ARC's POWER Initiative, the EDA's ACC program, and the AML investments. In combination with evidence of unmet demand for federal assistance, as measured by unfunded requests to the ARC ( Table 5 ), Congress may consider reviewing the balance among needs, appropriations, and effectiveness of past efforts. Congress could conduct a review of the POWER Initiative and the efficacy of its performance and resources. This potential review suggests some particular considerations: Geography : While the ACC is available for the nation as a whole, the ARC's POWER Initiative is restricted to the ARC's service area in the Appalachian region. Congress may consider expanding the POWER Initiative to be available more broadly across the nation, or in a more targeted fashion as demonstrated by the ARC's program. Alternatively, funding could be made available nationwide to any eligible coal community, such as through other federal regional commissions and authorities and/or EDA regions. Funding : Projections of U.S. coal production (cited earlier) suggest that the ongoing transition in U.S. energy systems may lead to further localized economic distress without the development of new regional opportunities. Congress may consider the level of funding for POWER Initiative programs in the context of those economic needs. Funding levels could be tied to the overall scale of the challenge, allocated to areas with the greatest need, and made in consideration of data-driven evaluations of the program effectiveness. In assessing scale, Congress may consider macroeconomic factors as well as social and environmental policy objectives. Energy Type : Congress may also consider expanding the POWER Initiative program beyond the coal industry to other energy industries or regions perceived to be in decline. For example, economic strain and job losses following the closure of other electrical generating units, such as aging nuclear power plants, may signal additional types of displacement. EIA forecasts anticipate a modest decline in nuclear power generation by 2050 as older, less efficient reactors are retired. Nuclear-industry communities may face similar issues of economic distress and labor dislocation. Congress may also consider other public policy goals, such as reducing GHGs, to assist in promoting renewable energy types and carbon capture technologies. Should Congress consider such efforts, the ARC's POWER Initiative program could serve as a potential model to be scaled or replicated as needed. In addition, other models have also been proposed in bills introduced in the 116 th Congress that would assist coal communities in transition. <6. Concluding Notes> Although the POWER+ Plan was not enacted in its entirety, some of its legacy programs continue to receive annual appropriations and remain active. The persistence of such programs suggests support among many policymakers for federal efforts to rectify, or at least attenuate, economic distress as a consequence of energy transition. In addition, were Congress to pursue policy efforts reflective of broadening concern for climate issues, a POWER Initiative-type program could be developed to also facilitate energy transition from fossil fuel-based energy sources to a mix of renewables and other alternatives. Although the POWER+ Plan did not continue beyond the Obama administration, several constituent programs have continued to receive congressional backing, and applicant volume at least in the case of the ARC's POWER Initiative may suggest further demand for additional federal resources in addressing energy transition issues. More broadly, these mechanisms could also be purposed to facilitate federal resources for other related issues, such as related to ecological/environmental resilience and adaptation. The POWER Initiative, as originally conceived or in its current form as a program of the ARC, has not been subjected to a formal evaluation by the U.S. Government Accountability Office (GAO) or other research organization of its effectiveness as either a mechanism for alleviating community economic distress caused by the declining coal industry, or economic development more broadly. One recent GAO report mentioned the Assistance to Coal Communities program, but did not seek to analyze its activities or efficacy. Similarly, older GAO reports exist that feature the Abandoned Mine Land Reclamation program (prior to its current configuration), and the Appalachian Regional Commission, but may be of limited relevance when evaluating current programming, including more recent activities such as the POWER Initiative. Meanwhile, a number of anecdotal and media reports appear to tout the POWER Initiative's success and viability. The ARC, for its part, reports that the POWER Initiative has "invested over $190 million in 239 projects touching 326 counties across Appalachia." According to the ARC, those investments are "projected to create or retain more than 23,000 jobs, and leverage more than $811 million in additional private investment." In the ARC's 2018 Performance and Accountability Report, the ARC reported that the annual outcome target for "Students, Workers, and Leaders with Improvements" in FY2018 was exceeded by 55% "likely due to" investments from the POWER Initiative; similarly, the ARC reported the outcome target for "Communities with Enhanced Capacity" in FY2018 was exceeded by 125%, "due in part to priorities established for the POWER Initiative." The same report also noted that the ARC launched a new monitoring and evaluation effort on the POWER Initiative in September 2018 encompassing "approximately 135 POWER grants" in FY2015-FY2017. The results of that assessment have not yet been released.

With the decline of the U.S. coal industry, managing the economic effects of energy transition has become a priority for the federal government. The Partnerships for Opportunity and Workforce and Economic Revitalization (POWER) Initiative, and the broader POWER Plus Plan of which it was a part, represent the U.S. government's efforts to ease the economic effects of energy transition in coal industry-dependent communities in the United States, and especially in Appalachia. Launched in 2015 by the Obama Administration as a multi-agency effort utilizing various existing programs, the POWER Plus plan received partial backing through appropriations for Fiscal Year 2016 (FY2016) to the Appalachian Regional Commission, the Economic Development Administration, and for abandoned mine land reclamation. While certain proposed provisions of POWER Plus were never enacted or funded, other elements of the POWER Initiative continue under the Trump Administration. Continuing programs include the Assistance to Coal Communities program within the Economic Development Administration, the POWER Initiative under the Appalachian Regional Commission (the only program to retain the original branding), and a funding program for abandoned mine land reclamation. Of these efforts, the Appalachian Regional Commission's POWER Initiative is the largest of the initiative's economic development programs, having funded nearly $150 million in projects (out of over $600 million in proposed projects) since it was first launched in FY2016. The Appalachian Regional Commission's POWER Initiative is regionally targeted to declining coal communities in Appalachia, unlike the Economic Development Administration's Assistance to Coal Communities program, which has a national scope. To date, the initiative has reportedly leveraged approximately $772 million of private investment into the Appalachian regional economy. This report provides background on the origins, development, and activities of the POWER Initiative.

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<1. Introduction> Since November 1986, the Commemorative Works Act (CWA) has provided the legal framework for the placement of commemorative works in the District of Columbia. The CWA was enacted to establish a statutory process for ensuring "that future commemorative works in areas administered by the National Park Service (NPS) and the General Services Administration (GSA) in the District of Columbia and its environs (1) are appropriately designed, constructed, and located and (2) reflect a consensus of the lasting significance of the subjects involved." Areas administered by other agencies are not subject to the CWA. Responsibility for overseeing the design, construction, and maintenance of such works was delegated to the Secretary of the Interior or the Administrator of the GSA, the National Capital Planning Commission (NCPC), and the U.S. Commission of Fine Arts (CFA). Additionally, the CWA restricts placement of commemorative works to certain areas of the District of Columbia based on the subject's historic importance. Pursuant to the CWA, locating a commemorative work on federally owned and administered land in the District of Columbia requires the federal government to maintain the memorial unless otherwise stipulated in the enabling legislation. In some cases, however, authorized memorials are ultimately sited on land that falls outside of CWA jurisdiction and outside the boundaries of the District of Columbia and its environs. For example, the Air Force Memorial was authorized by Congress for placement on land owned and administered by either NPS or GSA in the District of Columbia. Memorial organizers, however, chose a site near the Pentagon in Arlington, VA, that is owned and administered by the Department of Defense. Consequently, the Department of Defense, not the NPS or GSA, is responsible for maintenance. This report highlights in-progress works and memorials with lapsed authorizations since the passage of the CWA in 1986. The report provides information located within text boxes for easy reference on the statute(s) authorizing the work; the sponsor organization; statutory legislative extensions, if any; and the memorial's location or proposed location, if known. A picture or rendering of each work is also included, when available. <2. Commemorative Works Areas of the District of Columbia> The CWA divides areas administered by the NPS and the GSA in the District of Columbia and its environs into three sections for the placement of memorials: the Reserve, Area I, and Area II. For each area, the standards for memorial placement are specified in law, and congressional approval of monument location is required. <2.1. Reserve> The Reserve was created in November 2003, by P.L. 108-126 , to prohibit the addition of future memorials in an area defined as "the great cross-axis of the Mall, which generally extends from the United States Capitol to the Lincoln Memorial, and from the White House to the Jefferson Memorial ." Under the act, this area is considered "a substantially completed work of civic art. " Within this area, "to preserve the integrity of the Mall the siting of new commemorative works is prohibited. " <2.2. Area I> Created as part of the original CWA in 1986, Area I is reserved for commemorative works of "preeminent historical and lasting significance to the United States. " Area I is roughly bounded by the West Front of the Capitol; Pennsylvania Avenue NW (between 1 st and 15 th Streets NW); Lafayette Square; 17 th Street NW (between H Street and Constitution Avenue); Constitution Avenue NW (between 17 th and 23 rd Streets); the John F. Kennedy Center for the Performing Arts waterfront area; Theodore Roosevelt Island; National Park Service land in Virginia surrounding the George Washington Memorial Parkway; the 14 th Street Bridge area; and Maryland Avenue SW, from Maine Avenue SW, to Independence Avenue SW, at the U.S. Botanic Garden. <2.3. Area II> Also created as part of the original CWA statute, Area II is reserved for "subjects of lasting historical significance to the American people. " Area II encompasses all sections of the District of Columbia and its environs not part of the Reserve or Area I. <3. Factors Potentially Influencing Commemorative Works' Completion> Of the 37 commemorative works authorized for placement in the District of Columbia since 1986, 19 (51%) have been completed and dedicated, 12 (32%) are in progress, and 6 (16%) have lapsed authorizations. Several factors may affect a memorial foundation's ability to complete a memorial. These include settling on a desired site location, getting design approval, and raising the funds necessary to design and build a commemorative work. <3.1. Site Location> Choosing a memorial site location is one of the biggest tasks for all authorized sponsor groups. Many groups want locations on or near the National Mall. The creation of the Reserve in 2003, however, makes placement of a future memorial on the National Mall difficult. Subsequently, many sponsor groups attempt to locate sites as close to the National Mall as possible in order to ensure that visitors have easy access to the memorial. For example, the Dwight D. Eisenhower Memorial is to be located on land directly south of the Smithsonian National Air and Space Museum, thus providing a prominent just off the Mall location. Likewise, the foundation previously authorized to construct a memorial to honor John Adams and his family's legacy evaluated site locations as close to the National Mall as possible. <3.2. Design Approval> In 1986, as part of the CWA, Congress authorized the NCPC and the CFA to approve memorial designs. The NCPC and the CFA were tasked with carrying out the goals of the CWA, which are (1) to preserve the integrity of the comprehensive design of the L'Enfant and McMillan plans for the Nation's Capital; (2) to ensure the continued public use and enjoyment of open space in the District of Columbia and its environs, and to encourage the location of commemorative works within the urban fabric of the District of Columbia; (3) to preserve, protect, and maintain the limited amount of open space available to residents of, and visitors to, the Nation's Capital; and (4) to ensure that future commemorative works in areas administered by the National Park Service and the Administrator of General Services in the District of Columbia and its environs are appropriately designed, constructed, and located; and reflect a consensus of lasting national significance of the subjects involved. In some instances, sponsor groups have difficulty creating a memorial vision that meets the specifications of the NCPC, CFA, and the National Capital Memorial Advisory Commission (NCMAC). In these cases, groups will often have to present multiple designs to these bodies before getting final design approval. For example, the Eisenhower Memorial Commission has presented variations on the design for the Eisenhower Memorial to the NCPC multiple times. In all instances, the NCPC gave feedback to the memorial design team and asked them to continue work to comply with NCPC guidelines for memorial construction. <3.3. Fundraising> Perhaps the most challenging step in the commemorative works process for many sponsor groups is raising the necessary funds to design and build a commemorative work. Although most sponsor groups do not anticipate fundraising difficulties, some groups have experienced challenges. Failure to raise the necessary funds can be used as a reason not to extend a memorial's authorization beyond the initial seven-year period. In some cases, even though the CWA generally prohibits the use of federal funds for memorial design and construction, Congress has authorized appropriations to aid sponsor groups in their fundraising efforts. For example, in 2005, Congress appropriated $10 million to the Secretary of the Interior "for necessary expenses for the Memorial to Martin Luther King, Jr." The appropriation was designated as matching funds, making them available only after being matched by nonfederal contributions. Since the enactment of the Commemorative Works Act in 1986, 37 memorials and monuments have been authorized by statute. On a yearly basis, however, legislation is pending before Congress to consider a wide range of additional commemorative works. Pursuant to the CWA, future commemorative works will continue to be considered according to congressional guidelines. If new commemorative works are authorized or currently authorized commemorative works are completed, this report will be updated accordingly. <4. Authorized Commemorative Works> Since the passage of the Commemorative Works Act (CWA) in 1986, Congress has authorized 37 commemorative works to be placed in the District of Columbia or its environs; 32 of these have been sited on land governed by the CWA. Of these works, 12 are in progress and 6 have lapsed authorizations. Table 1 lists commemorative works authorized by Congress since 1986 that are in progress or whose authorization has lapsed. <5. In-Progress Commemorative Works> Currently, 12 commemorative works are in various stages of development. These include the following: In-Progress Memorials Dwight D. Eisenhower Memorial; Memorials Being Designed Slaves and Free Black Persons Who Served in the Revolutionary War Memorial; Memorials Being Planned with a Site Location World War II Prayer plaque, World War I Memorial, Korean War Memorial Wall of Remembrance, Second Division Memorial modifications, Desert Storm and Desert Shield Memorial, and Peace Corps Memorial; Memorials Being Planned and Evaluating Site Locations Gold Star Mothers Memorial, John Adams and his Family's Legacy Memorial, Global War on Terrorism Memorial, and Emergency Medical Services Memorial. <5.1. Memorials Under Construction> Currently, one memorial authorized pursuant to the CWA is under construction the Dwight D. Eisenhower Memorial, which broke ground on November 2, 2017. The most recently dedicated memorial was the Victims of the Ukrainian Manmade Famine of 1932-1933 Memorial. <5.1.1. Dwight D. Eisenhower> In October 1999, Congress created a federal commission to "consider and formulate plans for ... a permanent memorial to Dwight D. Eisenhower, including its nature, design, construction, and location." In January 2002, Congress amended the initial statute to formally authorize the commission to create a memorial. In remarks during debate on additional amendments to the commission's statute in 2007, Representative Dennis Moore summarized Eisenhower's life and contributions to the United States: I am particularly proud to claim one of the greatest 20 th -century Americans as a fellow Kansan. He ranks as one of the preeminent figures in the global history of the 20 th century. Dwight Eisenhower spent his entire life in public service. His most well-known contributions include serving as Supreme Commander of the Allied Expeditionary Forces in World War II and as 34 th President of the United States, but Eisenhower also served as the first commander of NATO and as President of Columbia University. Dramatic changes occurred in America during his lifetime, many of which he participated in and influenced through his extraordinary leadership as President. Although Ike grew up before automobiles existed, he created the Interstate Highway System and took America into space. He created NASA, the Department of Health, Education, and Welfare, and the Federal Aviation Administration. He added Hawaii and Alaska to the United States and ended the Korean War. President Eisenhower desegregated the District of Columbia and sent federal troops into Little Rock, Arkansas, to enforce school integration. He defused international crises and inaugurated the national security policies that guided the nation for the next three decades, leading to the peaceful end of the Cold War. A career soldier, Eisenhower championed peace, freedom, justice and security, and as President he stressed the interdependence of those goals. He spent a lifetime fulfilling his duty to his country, always remembering to ask what's best for America. The memorial is to be located at Maryland Avenue and Independence Avenue, SW, between the National Air and Space Museum and the Lyndon B. Johnson Department of Education building. It is designed by architect Frank Gehry. On September 20, 2017, the CFA reviewed and approved the final design for the Eisenhower Memorial. On October 5, 2017, NCPC also approved the final memorial design. On November 2, 2017, a groundbreaking ceremony was held for the memorial. Figure 1 shows the final design for the Dwight D. Eisenhower Memorial as approved by NCPC and CFA. The Eisenhower Memorial is currently under construction. <5.2. Memorials Being Designed> <5.2.1. World War II D-Day Prayer> In June 2014, Congress authorized the placement of a plaque containing President Franklin D. Roosevelt's D-Day prayer at the "area of the World War II Memorial in the District of Columbia.... " During debate on the bill in the 112 th Congress ( H.R. 2070 ), Representative Bill Johnson summarized why he believed the prayer should be added to the World War II Memorial. This legislation directs the Secretary of the Interior to install at the World War II Memorial a suitable plaque or an inscription with the words that President Franklin Roosevelt prayed with the Nation on the morning of the D-day invasion. This prayer, which has been entitled "Let Our Hearts Be Stout,'' gave solace, comfort and strength to our Nation and our brave warriors as we fought against tyranny and oppression. The memorial was built to honor the 16 million who served in the Armed Forces of the United States during World War II and the more than 400,000 who died during the war ... I have no doubt that the prayer should be included among the tributes to the Greatest Generation memorialized on the National Mall, and I strongly urge all of my colleagues to support this legislation. The prayer plaque is to be located at the "Circle of Remembrance" on the northwest side of the World War II Memorial. The NCPC and the CFA both favor an "asymmetrical" design for the prayer plaque. Figure 2 shows the proposed location of the plaque at the Circle of Remembrance. <5.2.2. Slaves and Free Black Persons Who Served in the Revolutionary War> In December 2012, as part of the National Defense Authorization Act for Fiscal Year 2013, Congress authorized the National Mall Liberty Fund DC to establish a commemorative work "to honor the more than 5,000 courageous slaves and free Black persons who served as soldiers and sailors or provided civilian assistance during the American Revolution." Additionally, P.L. 112-239 repealed a 1986 authorization to the Black Revolutionary War Patriots Foundation to establish a commemorative work for black Revolutionary War veterans. In remarks introducing the 1986 legislation, Representative Mary Rose Oakar summarized the need, from her perspective, for a memorial to black Revolutionary War veterans: Mr. Speaker, as early as 1652 blacks were fighting as members of the Militia in Colonial America, thus beginning their history of achievement and heroism for our country. Yet, history books in American schools have for the most part omitted the contributions of black soldiers since the Revolutionary War, to our most recent conflict in Vietnam. This memorial to these black Americans is a small tribute to their bravery and valor, an important part of the founding of our country. Following its initial authorization in 1986, Congress approved the memorial's location in Area I on land that became part of the Reserve in 2003. Following the site designation, the memorial was reauthorized three times. Pursuant to P.L. 106-442 , the Black Revolutionary War Patriots Foundation's authorization for the memorial expired in 2005. In the Senate report accompanying the 2012 authorization ( S. 883 , 112 th Congress), the Senate Committee on Energy and Natural Resources summarized the importance of reauthorizing the memorial with a new sponsor. In 1986, Congress authorized the Black Revolutionary War Patriots Memorial Foundation to establish the Black Revolutionary War Patriots Memorial to honor the 5,000 courageous slaves and free Black persons who served as soldiers or provided civilian assistance during the American Revolution ( P.L. 99-558 ). In 1987 Congress enacted a second law, P.L. 100-265 , authorizing placement of that memorial within the monumental core area as it was then defined by the Commemorative Works Act. In 1988, the National Park Service, the Commission of Fine Arts, and the National Capital Planning Commission approved a site in Constitution Gardens for the Black Revolutionary War Patriots Memorial and, in 1996, approved the final design. Despite four extensions of the memorial's legislative authorization over 21 years, the Foundation was unable to raise sufficient funds for construction, the authority (and associated site and design approvals) finally lapsed in October 2005, and the Foundation disbanded with numerous outstanding debts and unpaid creditors. S. 883 would authorize another nonprofit organization, the National Mall Liberty Fund D.C., to construct a commemorative work honoring the same individuals as proposed by the Black Revolutionary War Patriots Memorial Foundation, subject to the requirements of the Commemorative Works Act. On September 26, 2014, President Obama signed H.J.Res. 120 to provide the memorial with a location in Area I. The sponsor group publicly expressed interest in three sites: the National Mall at 14 th Street and Independence Avenue, NW; Freedom Plaza; and Virginia Avenue and 19 th Streets, NW, with a strong preference for the National Mall site, which is currently under the jurisdiction of the U.S. Department of Agriculture. In the 114 th Congress (2015-2016), legislation was introduced to designate the Secretary of Agriculture as the officer "responsible for the consideration of the site and design proposals and the submission of such proposals on behalf of the sponsor to the Commission of Fine Arts and the National Capital Planning Commission" in order to apply the CWA to the memorial. No further action was taken on the measure. Figure 3 shows a memorial concept design. <5.2.3. World War I Memorial> In December 2014, as part of the FY2015 National Defense Authorization Act, Congress re-designated Pershing Park in the District of Columbia as "a World War I Memorial," and authorized the World War I Centennial Commission to "enhance the General Pershing Commemorative Work by constructing ... appropriate sculptural and other commemorative elements, including landscaping, to further honor the service of members of the United States Armed Forces in World War I." Pershing Park is located between E Street and Pennsylvania Avenue and 14 th and 15 th Streets, NW. Currently, the park contains a statue of General John J. Pershing. On January 26, 2016, the World War I Centennial Commission announced the winner of its design competition. Titled "The Weight of Sacrifice," the winning design envisions an "allegorical idea that public space and public freedom are hard won through the great sacrifices of countless individuals in the pursuit of liberty." On February 7, 2019, the commission presented the latest version of its design to the NCPC, and on May 16, 2019, to the CFA. Previously, a ceremonial groundbreaking for the memorial was held on November 9, 2017. Figure 4 shows a revised concept design for the World War I Memorial. <5.2.4. Korean War Memorial Wall of Remembrance> In October 2016, Congress authorized a wall of remembrance, which "shall include a list of names of members of the Armed Forces of the United States who died in the Korean War" to be added to the Korean War Memorial in the District of Columbia. The wall of remembrance is to be located "at the site of the Korean War Veterans Memorial." During debate on the bill ( H.R. 1475 , 114 th Congress) in the House, Representative Sam Johnson summarized why he believed it was important to add a wall of remembrance to the Korean War Veterans Memorial. My fellow Korean war veterans and I believe that the magnitude of this enormous sacrifice is not yet fully conveyed by the memorial in Washington, DC.... Similar to the Vietnam Veterans Memorial Wall, the Korean War Veterans Memorial Wall of Remembrance would eternally honor the brave Americans who gave their lives in defense of freedom during the Korean War. It would list their names as a visual record of their sacrifice. Figure 5 shows the concept design for the Korean War Memorial Wall of Remembrance. <5.2.5. Second Division Memorial Bench Additions> On March 23, 2018, as part of the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), modifications to the Second Division Memorial were authorized. The Second Division Memorial was initially dedicated on July 18, 1936, to commemorate the division's World War I casualties, and "two wings were dedicated on June 20, 1962, with significant battles of World War II inscribed on the west and of the Korean War on the east." P.L. 115-141 authorizes the placement of "additional commemorative elements or engravings on the raised platform or stone work of the existing Second Division Memorial ... to further honor the members of the Second Infantry Division who have given their lives in service to the United States." Figure 6 shows the current design of the Second Division Memorial. <5.2.6. Desert Storm and Desert Shield> In December 2014, as part of the FY2015 National Defense Authorization Act, Congress authorized the National Desert Storm Memorial Association to establish a National Desert Storm and Desert Shield Memorial in the District of Columbia to "commemorate and honor those who, as a member of the Armed forces, served on active duty in support of Operation Desert Storm or Operation Desert Shield." During debate on the House version of the bill ( H.R. 503 ), Representative Doc Hastings, chair of the House Natural Resources Committee, summarized the need for a memorial: Over 600,000 American servicemen deployed for Operations Desert Storm and Desert Shield and successfully led a coalition of over 30 countries to evict an invading army to secure the independence of Kuwait. This memorial will recognize their success, but it will also serve as a commemoration of those nearly 300 Americans who made the ultimate sacrifice on our behalf. On March 31, 2017, President Trump signed S.J.Res. 1 to provide the memorial with a location in Area I. The memorial will be located at the southwest corner of Constitution Avenue, NW, and 23 rd Street, NW. Figure 7 shows a rendering for the National Desert Storm Veteran's War Memorial. <5.2.7. Peace Corps> In January 2014, Congress authorized the Peace Corps Memorial Foundation to establish a commemorative work in the District of Columbia to "commemorate the mission of the Peace Corps and the ideals on which the Peace Corps was founded." During House debate on the bill ( S. 230 ), Representative Ra l Grijalva, ranking member of the House Natural Resources Committee, Subcommittee on Public Lands and Environmental Regulations, summarized his understanding of the aims of the Peace Corps Memorial: Last November, we marked the 50 th anniversary of President Kennedy's tragic assassination. Losing President Kennedy left a lasting scar on the American psyche, but his legacy lives on through his words and ideas, including the establishment of the Peace Corps, an institution that has sent over 200,000 Americans to 139 countries in its 52-year history. S. 230 authorizes construction of a memorial to commemorate the mission of the Peace Corps and the values on which it was founded. I cannot think of a better way to celebrate President Kennedy's legacy and the tremendous accomplishments of the Peace Corps. With the passage of S. 230 , we will be sending a worthwhile bill to the President's desk. I am glad we have been able to put our differences aside and pass such a meaningful bill in the first few weeks of the new year. To be located between 1 st Street, NW, Louisiana Avenue, NW, and C Street, NW, in the District of Columbia, the Peace Corps Memorial Foundation presented its design concept to the CFA and NCPC in early 2019. In March 2019, the CFA approved the memorial's concept design with comments to be addressed as the design moves forward toward a final design. In May 2019, the NCPC stated "that the proposed concept design does not adequately embrace the site's strengths or adequately respond to these challenges, particularly as they relate to visual resources, visitor use and experience, or natural resources." Figure 8 shows the concept design for the Peace Corps Memorial as presented to CFA and NCPC. <5.3. Site Locations to Be Determined> <5.3.1. John Adams and His Family's Legacy> In November 2001, Congress authorized the Adams Memorial Foundation to "establish a commemorative work on Federal land in the District of Columbia and its environs to honor former President John Adams, along with his wife Abigail Adams and former President John Quincy Adams, and the family's legacy of public service." In remarks during debate on the bill ( H.R. 1668 , 107 th Congress), Representative Joel Hefley summarized the importance of the Adams family to American history: Perhaps no American family has contributed as profoundly to public service as the family that gave the Nation its second President, John Adams; his wife, Abigail Adams; and their son, our sixth President, John Quincy Adams, who was also, by the way, a member of this body. The family's legacy was far reaching, continuing with John Quincy Adams's son, Charles Francis Adams, who was also a member of this body and an ambassador to England during the Civil War; and his son, Henry Adams, an eminent writer and scholar, and it goes on and on. In March 2019, as part of the enactment of the John D. Dingell, Jr. Conservation, Management, and Recreation Act, Congress created the Adams Memorial Commission. The Adams Memorial Commission replaces the Adams Memorial Foundation as the memorial's sponsor. Moving forward, the commission will be responsible for all aspects of the memorial's siting, design, and construction. Previously, in December 2013, the Adams Memorial Foundation's authorization expired. Prior to its lapse of authorization, the Adams Memorial Foundation was working with the NCMAC on the potential recommendation of Area I. While the commission had not endorsed any particular site location, it had recommended that the foundation continue its examination of numerous sites in the District of Columbia in order to find a suitable location. <5.3.2. Gold Star Mothers> In December 2012, as part of the National Defense Authorization Act for Fiscal Year 2013, Congress authorized the Gold Star Mothers National Monument Foundation to establish a commemorative work to "commemorate the sacrifices made by mothers, and made by their sons and daughters who as members of the Armed Forces make the ultimate sacrifice, in defense of the United States." In testimony before the House Committee on Natural Resources Subcommittee on National Parks, Forests, and Public Lands, the legislation's ( H.R. 1980 ) sponsor, Representative Jon Runyan, explained why he thought a memorial to Gold Star Mothers was needed: During World War I, mothers of sons and daughters who served in the Armed Forces displayed flags bearing a blue star to represent pride in their sons or daughters and their hope that they would return home safely. For more than 650,000 of these brave mothers, that hope was shattered, and their children never returned home. Afterwards many of them began displaying flags bearing gold stars to represent the sacrifice that their sons and daughters made in heroic service to our country. Over the years the gold star has come to represent a child who was killed while serving in the Armed Forces, during either war or peacetime. In December 2013, the Gold Star Mothers National Monument Foundation presented its site analysis to the National Capital Memorial Advisory Commission. In that informational presentation, they expressed a preference for a site location adjacent to Arlington National Cemetery. In January 2015, the NCPC expressed support for a site next to the Arlington National Cemetery Visitor's Center on Memorial Drive, and the CFA approved that site location. Figure 9 shows the Gold Star Mothers National Monument Foundation's concept design. <5.3.3. Global War on Terrorism Memorial> In August 2017, Congress authorized the Global War on Terrorism Memorial Foundation to establish a commemorative work in the District of Columbia to "commemorative and honor the members of the Armed Forces that served on active duty in support of the Global War on Terrorism." During debate on the bill ( H.R. 873 ) in the House, Representative Tom McClintock, chair of the Federal Lands Subcommittee of the House Committee on Natural Resources, stated why a memorial to the Global War on Terrorism is important, despite a statutory prohibition against war memorials for ongoing conflicts. The Commemorative Works Act requires that a war be ended for at least 10 years before planning can commence on a national memorial. There is good reason for this requirement: it gives history the insight to place the war in an historic context and to begin to fully appreciate its full significance to our country and future generations. But the war on terrorism has been fought in a decidedly different way than our past wars. We are now approaching the 16 th anniversary of the attack on New York and Washington. The veterans who sacrificed so much to keep that war away from our shores deserve some tangible and lasting tribute to their patriotism and altruism while they, their families, and their fellow countrymen can know it. The Gold Star families of our fallen heroes for whom the war will never end deserve some assurance that their sons and daughters will never be forgotten by a grateful Nation. We should remember that many of our Nation's heroes from World War II never lived to see the completion of the World War II Memorial, which was completed 59 years after the end of that conflict. For these reasons, this measure suspends the 10-year period in current law. It doesn't repeal it. It merely sets it aside for the unique circumstances of the current war on terrorism. <5.3.4. Emergency Medical Services Memorial> In October 2018, Congress authorized the National Emergency Medical Services Memorial Foundation to establish a commemorative work in the District of Columbia to "commemorate the commitment and service represented by emergency medical services." During House debate on the bill ( H.R. 1037 ), Representative Tom McClintock, chair of the Federal Lands Subcommittee of the House Committee on Natural Resources, stated why he considered a memorial to the emergency medical services providers to be important: Mr. Speaker, each year 850,000 EMS providers answer more than 30 million calls to serve 22 million patients in need at a moment's notice and without reservation. For these heroes who serve on the front lines of medicine, sacrifice is a part of their calling. EMTs and paramedics have a rate of injury that is about three times the national average for all occupations, and some pay the ultimate price in the service of helping others. The men and women of the emergency medical services profession face danger every day to save lives and help their neighbors in crisis. They respond to incidents ranging from a single person's medical emergency to natural and manmade disasters, including terrorist attacks. But while their first responder peers in law enforcement and firefighting have been honored with national memorials, EMS providers have not. <6. Commemorative Works with Lapsed Authorizations> Since 1986, six commemorative works authorized by Congress were not completed in the time allowed by the Commemorative Works Act and were not granted subsequent extensions by Congress. These memorials were to be constructed to honor Thomas Paine, Benjamin Banneker, Frederick Douglass, Brigadier General Francis Marion, to create a National Peace Garden, and to build a Vietnam Veterans Visitor Center. The following section describes the initial authorization for each of these memorials and congressional extensions of memorial authorization, if appropriate. <6.1. National Peace Garden> In June 1987, Congress authorized the Director of the National Park Service to enter into an agreement with the Peace Garden Project to "construct a garden to be known as the 'Peace Garden' on a site on Federal land in the District of Columbia to honor the commitment of the people of the United States to world peace." In remarks during debate on the bill ( H.R. 191 , 100 th Congress), Representative Steny Hoyer summarized the need for a memorial to peace: No one or nation can ever doubt the commitment of the American people to protecting our freedoms when threatened by foreign aggressors. Our Nation's Capital rightfully honors our heroic defenders of freedom Americans who served their country courageously, gallantly, and at great risk to their lives. Our citizens have also exhibited an equal commitment for world peace and international law and justice. The creation of a Peace Garden is an appropriate symbol of our efforts to continuing to seek peaceful resolution of world conflict and the institution of the rule of law. Certainly, this century has been one of bloodiest and most violent in man's history. We have seen countless battles, wars, rebellions, massacres, and civil and international strife of all kinds continuing examples of man's inhumanity toward his fellow man. At the same time, against this terrible backdrop, there have been encouraging strides toward world peace. As we honor those who have made sacrifices in war, through monuments, so, too, should we honor them by striving to ensure that the world they have left us will be a peaceful one. A garden would be a living monument to our efforts. In 1988, a site was approved for the Peace Garden at Hains Point in Southwest Washington, DC. Since its initial authorization in 1987, the National Peace Garden was reauthorized twice. The authorization expired on June 30, 2002. <6.2. Thomas Paine> In October 1992, Congress authorized the Thomas Paine National Historical Association to establish a memorial to honor Revolutionary War patriot Thomas Paine. In remarks summarizing the need for a memorial to Thomas Paine, Representative William Lacy Clay stated: Thomas Paine's writings were a catalyst of the American Revolution. His insistence upon the right to resist arbitrary rule has inspired oppressed peoples worldwide, just as it continues to inspire us. It is time that a grateful nation gives him a permanent place of honor in the capital of the country he helped build. Since its initial authorization in 1992, the authorization for the Thomas Paine memorial was extended once. Authorization for the memorial expired on December 31, 2003. <6.3. Benjamin Banneker> In November 1998, Congress authorized the Washington Interdependence Council of the District of Columbia to establish a memorial to "honor and commemorate the accomplishments of Mr. Benjamin Banneker." Adopted as part of a larger bill to create a national heritage area in Michigan, the authorization for the Benjamin Banneker Memorial passed the House and Senate without debate and by voice vote in October. In 2001, the National Park Service reported that the memorial was to be sited on the L'Enfant Promenade in Southwest Washington and be under the jurisdiction of the District of Columbia. Since its initial authorization, the Washington Interdependence Council has not been granted an extension to its original authorization, which expired in 2005. A bill ( S. 3886 ) was introduced in the 111 th Congress (2009-2010) to reauthorize a Benjamin Banneker Memorial. S. 3886 was referred to the Senate Committee on Energy and Natural Resources, but no further action was taken. <6.4. Frederick Douglass> In November 2000, Congress authorized the Frederick Douglass Gardens, Inc., "to establish a memorial and gardens on lands under the administrative jurisdiction of the Secretary of the Interior in the District of Columbia or its environs in honor and commemoration of Frederick Douglass." During debate, Representative James Hansen provided a summary of why a memorial to Frederick Douglass was important: Mr. Speaker, Frederick Douglass was one of the most prominent leaders of the 19 th century abolitionist movement. Born into slavery in eastern Maryland in 1818, Douglass escaped to the North as a young man where he became a world-renowned defender of human rights and eloquent orator, and later a Federal ambassador and advisor to several Presidents. Frederick Douglass was a powerful voice for human rights during the important period of American history, and is still revered today for his contributions against racial injustice. Early in 2001, the Frederick Douglass Memorial Gardens, Inc., expressed its preference for a site location near the Douglass Memorial Bridge in Southeast Washington, but no further action was taken by Congress to approve the site location. The Frederick Douglass Memorial's authorization expired in 2008. One attempt was made to reauthorize a Frederick Douglass Memorial during the 110 th Congress (2007-2008), but the bill was not reported by the House Committee on Natural Resources. <6.5. Brigadier General Francis Marion> In May 2008, Congress authorized the Marion Park Project to establish a commemorative work to honor Brigadier General Francis Marion. In testimony before the Senate Committee on Energy and Natural Resources, Subcommittee on National Parks, Daniel N. Wenk, deputy director for operations, National Park Service, supported the enactment of legislation authorizing a Brigadier General Francis Marion Memorial and explained why such a memorial meets criteria for commemoration in the District of Columbia. Brigadier General Francis Marion commanded the Williamsburg Militia Revolutionary force in South Carolina and was instrumental in delaying the advance of British forces by leading his troops in disrupting supply lines. He is credited for inventing and applying innovative battle tactics in this effort, keys to an ultimate victory for the American Colonies in the Revolutionary War. Additionally Brigadier General Marion's troops are believed to have been the first racially integrated force fighting for the United States. The Marion Park Project identified its preferred site location for the memorial at Marion Park in southeast Washington, DC. In December 2014, the National Capital Planning Commission expressed its support for the Marion Park site. Since its initial authorization, the Marion Memorial was reauthorized once. Authorization for the memorial expired on May 8, 2018. <6.6. Vietnam Veterans Memorial Visitors Center> In November 2003, Congress authorized the Vietnam Veterans Memorial Fund to create a visitor center at the Vietnam Veterans Memorial to "better inform and educate the public about the Vietnam Veterans Memorial and the Vietnam War." In the House report accompanying the legislation ( H.R. 1442 , 108 th Congress), the Committee on Resources summarized the need for a visitor center at the Vietnam Veterans Memorial: Since its dedication in 1982, the Vietnam Veterans Memorial, known to many as simply "The Wall," has done much to heal the nation's wounds after the bitterly divisive experience of the Vietnam War. For those who served, that year marked a sea change in the country's view of the Vietnam veteran. Americans began to understand and respect the Vietnam veterans' service and sacrifice. Today, over 4.4 million people visit The Wall every year making it the most visited Memorial in the Nation's Capital. Today, most visitors to The Wall were not alive during the "Vietnam Era." Many veterans' organizations and many others believe today's visitor is shortchanged in his/her experience. Many leave The Wall not fully understanding its message. To that end, a visitor center would provide an educational experience for visitors by facilitating self-guided tours, collecting and displaying remembrances of those whose names are inscribed on the Memorial, and displaying exhibits discussing the history of the Memorial and the Vietnam War. The visitor's center would eventually replace a 168-foot National Park Service kiosk currently at the site. The visitor center was to be constructed underground and located across the street from the Vietnam Veterans Memorial and the Lincoln Memorial. In 2015, the NCPC and CFA approved the visitor center's design. On September 21, 2018, the Vietnam Veterans Memorial Fund announced their intenti on not to seek an extension to its authorization to build the visitor center, which expired on November 17, 2018. At that time, legislation had been introduced, but not considered, to extend the fund's authorization into 2022. Previously, the fund had received two statutory extensions.

Under the Commemorative Works Act (CWA) of 1986, Congress may authorize commemorative works to be placed in the District of Columbia or its environs. Once a commemorative work has been authorized, Congress continues to be responsible for statutorily designating a memorial site location. This report provides a status update on 12 in-progress memorials and 6 memorials with lapsed authorizations. For each monument or memorial, the report provides a rationale for the work as expressed in the Congressional Record or a House or Senate committee report; its statutory authority; the group or groups sponsoring the commemoration; and the memorial's location (or proposed location), if known. A picture or rendering of each work is also included, when available. For more information on the Commemorative Works Act, see CRS Report R41658, Commemorative Works in the District of Columbia: Background and Practice, by Jacob R. Straus; CRS Report R43241, Monuments and Memorials in the District of Columbia: Analysis and Options for Proposed Exemptions to the Commemorative Works Act, by Jacob R. Straus; and CRS Report R43743, Monuments and Memorials Authorized and Completed Under the Commemorative Works Act in the District of Columbia, by Jacob R. Straus.

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<1. Introduction> The 2017 tax revision, P.L. 115-97 , often referred to as the Tax Cuts and Jobs Act, and referred to subsequently as the Act, was estimated to reduce taxes by $1.5 trillion over 10 years. The Act permanently reduced the corporate tax rate to 21%, made a number of revisions in business tax deductions (including limits on interest deductions), and provided a major revision in the international tax rules. It also substantially revised individual income taxes, including an increase in the standard deduction and child credit largely offset by eliminating personal exemptions, along with rate cuts, limits on itemized deductions (primarily a dollar cap on the state and local tax deduction), and a 20% deduction for pass-through businesses (businesses taxed under the individual rather than the corporate tax, such as partnerships). These individual provisions are temporary and are scheduled to expire after 2025. The Act also adopted temporary provisions allowing the immediate deduction for equipment investment and an increase in the exemption for estate and gift taxes. The Congressional Budget Office (CBO) estimated in April of 2018 that the Act would result in a $65 billion reduction in individual income taxes, a $94 billion reduction in corporate taxes, and a $3 billion reduction in other taxes, for a total of $163 billion (after rounding) for FY2018. Numerous effects of the Act were projected during consideration of the law and shortly after, including an increase in output and investment; an increase in the debt to GDP ratio; possible benefits for workers from tax cuts for businesses; the repatriation of income held abroad by U.S. subsidiaries in the form of dividends; and a decreased likelihood of inversions (U.S. companies moving their headquarters abroad). Some claimed that business investment would increase because of (1) the flow of investment from abroad due to the lower corporate tax rate and (2) no longer imposing a tax penalty on paying dividends from foreign subsidiaries would free up resources. This analysis examines the preliminary effects of the Act during the first year, 2018. In some cases it is difficult to determine the effects of the tax cuts (e.g., on economic growth) given the other factors that affect outcomes. In other cases, such as the level of repatriation and use of repatriated funds, the evidence is more compelling. This report discusses these potential consequences in light of the data available after the first year. <2. Effects on Output and Investment> <2.1. Projections of Output Effects> During consideration of the Act and subsequently, various claims were made about the growth effects of the tax change. A variety of organizations, including private and government forecasters, projected economic growth rates that tended to be modest. In its April 2018 report on the budget outlook, CBO projected the tax change to increase GDP by 0.3% in calendar year 2018. Prorating the FY2019 revenue loss estimate indicated that the tax cut in calendar year 2018 accounted for about 1.2% of GDP. Assuming a tax rate on marginal output of around 20%, this projection would imply a feedback effect of 5%. The Joint Committee on Taxation (JCT) also projected the economic effects of the proposal, and while it did not report year-by-year estimates, its revenue feedback effect for calendar year 2018 was larger than that suggested by the CBO numbers around 20%, which in turn indicates a projected increase in GDP four times larger, 1.2%. Given the baseline prior to the Act, that effect would have suggested a growth rate of 4.2% in 2018. The CBO output estimate (i.e., the amount of GDP growth attributed to the tax change) was compared with projections by other forecasters and organizations. Of the seven other forecasts projecting the effects of the Act for 2018, five ranged from 0.3% to 0.5%, one was for 0.1%, and another for 0.8%. CBO also disaggregated its output effect into an increase in potential GDP of 0.2%, with the remaining 0.1% reducing the gap between output with and without full employment. The increase in potential output reflects increases in investment and in the labor supply. The 0.1% increase might be characterized as a demand-side effect and the remainder as a supply-side effect. Because the economy was at full employment and most of the tax cut went to businesses and higher-income individuals who are less likely to spend the increases, a small demand-side effect would be expected. Demand-side effects are transitory, whereas supply-side effects are permanent. CBO and other organizations also produced longer-term forecasts. CBO projected output effects rising to 0.6% in 2019, then rising slightly and peaking in 2022, and finally declining, with an estimated 0.5% effect in 2028, the last year reported. The decline in later years might be partially traced to the expiration of some provisions. Compared with other forecasts for the average over the 10-year period 2018-2027, CBO's 0.7% effect was similar to other forecasts. For the 10 th year, 2027, CBO projected an effect of 0.6%; there was considerably more divergence in the estimates for this year, with one organization projecting a negative effect by that time. This divergence presumably reflected competing views of the effects on capital formation due to lower tax rates on returns to investment and crowding out of private investment due to accumulating debt. During the debate, some argued for much larger growth effects, including arguments that the tax cuts would produce so much growth that they would largely or entirely pay for themselves, or even raise revenues. These statements, however, were not supported by most of the published analysis. <2.2. Output Growth in 2018> In April 2018, CBO projected real GDP growth for the calendar year 2018 of 3.3% (indicating a projected 3% growth rate without the tax cut). According to the National Income and Product Accounts (NIPA), actual growth rate was 2.9%, which is consistent with a small effect of the tax revision, perhaps even smaller than projected by most analysts. Quarterly growth rates are shown in Figure 1 . The revenue loss from the tax cut without incorporated growth effects was estimated at about 1.2% of GBP in 2018. The 2.9% annual growth rate for 2018 was higher than the 2.2% growth rate in 2017 and the 1.6% growth rate in 2016. In previous years, output grew by 2.9% in 2015 and 2.5% in 2014, thus the increase in growth is in line with the trend in growth over the period examined in Figure 1 . Forecasters had already projected an increase in growth rates in most cases that was similar to CBO's. In addition to the effect from the tax cuts, there was also some stimulus due to the increase in spending enacted in the Consolidated Appropriations Act of 2018 ( P.L. 115-141 ) and the Bipartisan Budget Act of 2018 ( P.L. 115-123 ). Growth may have also been negatively affected by tariffs. The high rate of growth in the second quarter of 2018 shown in Figure 1 may have been due to the demand-side stimulus of the tax cuts, which began to be reflected in withholding beginning in the first quarter, as well as the possibly delayed receipt of tax refunds. On the whole, the growth effects tend to show a relatively small (if any) first-year effect on the economy. Although examining the growth rates cannot indicate the effects of the tax cut on GDP, it does tend to rule out very large effects in the near term. The data appear to indicate that not enough growth occurred in the first year to cause the tax cut to pay for itself. Assuming a tax rate of 18% (based on CBO estimates), and estimating the tax cut to reduce revenue in calendar year 2018 by about 1.2% of GDP, a 6.7% GDP increase due to the tax cuts alone would be required. Rather, the combination of projections and observed effects for 2018 suggests a feedback effect of 0.3% of GDP or less 5% or less of the growth needed to fully offset the revenue loss from the Act. <2.3. Contribution of Consumption Growth> Consumption grew at 2.6% in 2018 in real terms, as shown in Figure 2 , about the same as 2017 (which was 2.5%) and below 2014-2016 (although higher than 2013). As shown in Figure 2 , there was a drop in the first quarter followed by a rise in the second quarter that was unexpected by most forecasters and may have reflected a delay in tax refunds. The initial effect of a demand side is likely to be reflected in increased consumption and the data indicate little growth in consumption in 2018. Much of the tax cut was directed at businesses and higher-income individuals who are less likely to spend. Fiscal stimulus is limited in an economy that is at or near full employment. <2.4. Contribution of Investment Growth> Although it is difficult to determine the Act's overall first-year impact on GDP, other than to confirm that the evidence is consistent with a small projected first-year effect, it is possible to discuss supply-side effects on investment in more detail. CBO estimated that the 0.3% increase in growth from the Act is the result of a 0.4% increase in GDP due to private consumption and a 0.2% increase due to nonresidential fixed investment (with a negligible effect on residential investment and government consumption and investment). This 0.6% increase was projected to be offset by a decrease in net exports of 0.3% of GDP (from both a decline in imports and an increase in exports). This decrease is expected as a consequence of net capital flowing in from abroad to finance the deficit or due to capital inflows used for investment in response to tax changes. Given the shares of GDP that went to consumption (70%) and investment in nonresidential fixed investment (14%) in 2017, these growth contributions indicated an additional growth in consumption of 0.7% and in fixed nonresidential investment of 1.5%. In 2018, consumption grew at 2.6% and nonresidential investment grew at 7%. Such numbers might suggest a supply-side effect. There are reasons, however, not to necessarily view that growth as a supply-side effect of the tax change. First, the growth rates of investment and its subcomponents are much more volatile than the growth rates of GDP, as shown in Figure 3 , making it hard to assign causation. Second, the largest effects occurred in the first and second quarters of 2018, which allowed very little time to be the result of investments that must be planned in advance (even if the tax cut was anticipated in late 2017). Furthermore, structures growth rates were negative in the last two quarters. Third, real growth in the subcategories of equipment, structures, and intellectual property products is inconsistent with the incentive effects of the tax change. Over the entire year, intellectual property products grew at the fastest rate (7.7%), equipment at a slightly lower rate (7.5%), and structures at 5.0%. To assess the incentive effects of the tax changes (which included a lower tax rate and faster depreciation for equipment), consider the change in the user cost of capital (or rental price of capital). It is the equivalent of the "price" of capital as an input (just as the wage is the price of labor input). It includes two costs of using capital: the opportunity cost of using funds (i.e., the required pretax rate of return on the asset) and depreciation (i.e., the cost of using up the asset). The user cost reflects the required rate of return at the margin (i.e., for an investment that earns just enough to be worth making). Estimates indicate that the user cost of capital for equipment declined by 2.7% and the user cost of structures declined by 11.7%, but the user cost of R&D (intellectual property products) increased by 3.4%. (See the Appendix for details on the derivation of these results.) The user cost of capital for equipment declined by less than that of structures primarily because more of the cost for equipment is for depreciation. The decline in the required rate of return was somewhat smaller for equipment as well because it was already favorably treated (eligible for expensing half of the cost). The benefits of lower rates are also moderated by the use of debt-financed capital, where a lower tax rate reduces the subsidy (or negative tax rate) that applies to debt-financed investment because of the deduction of nominal interest by businesses. Thus, while it is possible that the Act increased the investment due to supply-side effects, it would be premature to conclude that the higher rate of growth of nonresidential fixed investment was due to the tax changes. Looking at changes in the user cost of capital, effects of investments in structures would be expected to be largest, with small (or negative) effects on intellectual property. To date this pattern has not been observed. <3. Effects on Revenues> Overall revenue changes were close to projections, with revenues only $9 billion smaller than projected, due to a $45 billion increase in individual income tax revenues, but a $7 billion decrease in payroll taxes, along with a $40 billion decline in corporate revenues. As noted above, data on GDP are not consistent with a large growth effect in 2018, and thus the tax cut is unlikely to provide enough growth to significantly offset revenue losses in 2018. Data from FY2018 suggest that the tax cut for corporations may have been larger than the $94 billion CBO projected in its April 2018 baseline. That baseline projected corporate revenues of $243 billion, but actual corporate revenues were $38 billion lower at $205 billion, 16% lower than projected. CBO's January 2019 report on the budget and economic outlook indicated that these lower corporate tax revenues could not be explained by economic conditions and stated that the causes will not be apparent until information from tax returns becomes available over the next two years. CBO also expected this decline in revenues to dissipate over time. With little evidence of whether the decline will actually be temporary or permanent, CBO may have relied on the historical tendency of unexplained changes to dissipate over time. It is also possible that estimated revenue losses from the corporate tax changes were too low in their earlier estimates. The overall revenues were close to those projected as the lower corporate revenues were offset by gains from other taxes: a $45 billion increase in individual income tax revenues and a $7 billion decrease in payroll taxes. These differences, particularly for payroll taxes, are much smaller as a percentage of revenue, and CBO does not indicate any need for an explanation of these changes outside of economic forces. <4. Effects on Effective Tax Rates> Effective tax rates fell, with corporate effective tax rates declining significantly and individual effective income tax rates by a small amount. <4.1. Effective Corporate Tax Rate> Much of the tax revision was focused on corporations. Although the statutory corporate tax rate was reduced from 35% to 21%, the average effective tax rate decline (taxes divided by profits) would be smaller because of existing tax benefits (which lead to a smaller initial effective tax rate) and base-broadening effects. Such an effective tax rate can be calculated using aggregate data from the national income and products accounts, which attempt to measure economic income. The effective average tax rate for corporations was 17.2% in calendar year 2017, and fell to 8.8% in calendar year 2018. This estimate includes worldwide income, but not worldwide taxes. Although actual data on the division of domestic and worldwide income are not available for 2018, using the ratios projected by CBO to eliminate foreign-source income from the measure results in an average effective tax rate of 23.4% in 2017, falling to 12.1% in 2018. Either scenario suggests that the ratio of effective to statutory tax rate dropped following the tax revision. The statutory tax rate dropped by 40%, but the effective rate dropped by 48% (although the percentage point drop was smaller for the effective tax rate). Another measure of effective rate is the marginal effective tax rate on income, a tax rate that is a component of the user cost of capital. These tax rates are prospective and capture the main elements of the tax code: tax rates, depreciation, and research credits. They also apply to domestic investment. Using a weighted average of equipment, structures, and intangibles, the effective marginal tax rate on equity investment was estimated to fall from 15.6% to 3.2% from 2017 to 2018. If the effects of reducing subsidies for debt-financed investment are accounted for, marginal tax rates are lower (actually slightly negative) and change less, from a -0.3% rate in 2017 to a -6.6% rate in 2018. Marginal tax rates are likely to be below average tax rates because they capture timing benefits (e.g., accelerated depreciation). Marginal effective tax rates are relevant to economic growth effects because they measure the incentive effects for investment. <4.2. Effective Individual Income Tax Rates> The individual income tax changes for 2018 were smaller than the corporate tax changes in absolute size and substantially smaller as a percentage of income. The effective individual tax rate for federal income taxes as a percentage of personal income is estimated at 9.6% in 2017 and 9.2% in 2018, based on data in the National Income and Product Accounts. This change constitutes a reduction in effective tax rate of 4%. The Treasury Department's Office of Tax Analysis estimates a larger reduction in effective tax rate as a percentage of adjusted family cash income, with the rate falling from 10.1% in 2017 to 8.9% in 2019, although this estimate is based on projected rather than actual data. Both of these declines are smaller than the corporate tax rate decline. As noted earlier, the increase in the standard deduction and child and dependent credit was roughly offset by the elimination of the personal exemption. Statutory rate reductions for individuals were relatively small compared with the corporate rate reduction (the top rate of 39.6% was reduced by 2.6 percentage points, compared with 14 percentage points for the corporate rate), and the benefits of rate reductions were offset by restrictions on itemized deductions. Business income was in some cases eligible for a 20% reduction, which was more significant (an additional 20% deduction at the 37% rate is 7.4 percentage points), but not all business income qualified. There are also effective marginal tax rates, although these are generally divided into rates on labor income and capital income. The marginal tax rate for labor income is typically above the average tax rates because of graduated tax rates and lack of timing benefits. CBO estimates that marginal tax rates on labor income fell from 29.4% to 27.2%. CBO also estimates the marginal tax rate for all capital income (which would include unincorporated businesses, owner-occupied housing, and taxes on interest, dividends, and capital gains, as well as corporate taxes). This value is estimated to fall from 16.5% to 14.7%. Although different from the marginal rates reported above for corporations, both estimated measures find small changes in marginal tax rates, which is consistent with an expected small behavioral response. <5. Effects on Wages> Distributional analyses of the tax change suggested that the tax revision favored higher-income taxpayers, in part because most of the tax cut benefited corporations and in part because the individual income tax cut largely went to higher-income individuals. During the debate about taxes, however, arguments were made that these corporate tax cuts would benefit workers due to growth in investment and the capital stock. After enactment, CBO projected these effects to be relatively small, with increases in labor productivity (which should affect the wage rate) negligible in 2018 and growing to 0.3% of GDP after 10 years. CBO projected that the total wage bill would grow because of the increase in employment and hours per worker of 0.2% in 2018. The labor supply response would rise through 2024, peaking at 0.8% and then decline as the individual tax cuts expired. A Council of Economic Advisors (CEA) October 2017 study suggested a corporate rate reduction from 35% to 20%, if enacted, would eventually increase the average household's income by a conservative $4,000 a year. This was a longer-run estimate, but the study also estimated that workers would immediately get a significant share (30%) of the profits repatriated from abroad due to tax changes. Another CEA October 2017 report suggested wages could increase by up to $9,000 with such a corporate rate change using more optimistic assumptions. While the CEA study with respect to the $4,000 to $9,000 amounts referred to a long-term effect, the study was portrayed by the Administration as indicating an immediate effect. The amounts associated with repatriation were short term. A $4,000 to $9,000 effect per household, given the 126 million households that were estimated at that time, would produce a total effect ranging from $504 billion to $1,134 billion, or between 2.5% and 5.7% of GDP in 2018. The corporate rate cut from 35% to 21% cost about $125 billion over a full year, and it would cost about $133 billion with the additional percentage point rate reduction (to 20%) considered at that time. Thus, in these scenarios, the effects of the tax cuts would be many times (3.8 to 8.5) larger than the costs. The projections for long-run growth in the CEA study relied on a range of empirical economics literature, including the effects of changes in user cost on investment cost and corporate tax incidence. The econometric estimates of corporate tax incidence are problematic for a number of reasons, and the effects on investment considering user cost did not appear to take into account the direct effect of the tax rate change on the interest. In the absence of the tax cuts, wages should grow with the economy and wage rates should grow as the capital stock grows. In addition, tight labor markets resulting from the approach to full employment should have put upward pressure on wage rates in any case. Evidence from 2018 indicated that labor compensation, adjusted to real values by the price indices for personal consumption expenditures, grew slower than output in general, at a 2.3% rate compared with a 2.9% growth rate overall. If adjusted by the GDP deflator, labor compensation grew by 2.0%. With labor representing 53% of GDP, that implies that the other components grew at 3.8%. Thus, pretax profits and economic depreciation (the price of capital) grew faster than wages. Figure 4 shows the growth rate of real wages compared with the growth rate of real GDP for 2013-2018, indicating that wage growth has sometimes been faster than GDP growth and sometimes slower. There is no indication of a surge in wages in 2018 either compared to history or relative to GDP growth. This finding is consistent with the CBO projection of a modest effect. The Department of Labor reports that average weekly wages of production and nonsupervisory workers were $742 in 2017 and $766 in 2018. Wages, assuming full-time work, increased by $1,248 annually. But this number must account for inflation and growth that would otherwise have occurred regardless of the tax change. The nominal growth rate in wages was 3.2%, but adjusting for the GDP price deflator, real wages increased by 1.2%. This growth is smaller than overall growth in labor compensation and indicates that ordinary workers had very little growth in wage rates. <6. Effects on Repatriation and International Investment Flows> One of the major sources of anticipated increased investment through supply-side effects is international capital flows, particularly in the short and medium term. Savings rates tend to be relatively unresponsive to changes in the rate of return and savings accumulate slowly. Thus the increased investment in the United States (in the aggregate) would need to come from abroad. Some expected foreign investment to flow due to the reduction in the user cost of capital. Some also argued that eliminating the tax barrier to repatriating funds (as was done with the tax revision) would lead to reinvestment in the United States of unrepatriated earnings held abroad in U.S. subsidiaries. Under prior law, these earnings would have been taxed at 35%, adjusted for credits on foreign taxes paid, if paid as dividends to the parent company. The tax change exempted dividends from tax, imposed a transition tax on deemed repatriations of existing untaxed earnings at a rate lower than the new corporate rate of 21% (15.5% on liquid assets and 8% on illiquid assets), and imposed a global minimum tax on intangible income. These changes meant paying dividends resulted in no tax consequences. Although estimates varied, they indicated close to $3 trillion of unrepatriated earnings. There were a number of criticisms of the possibility that repatriation of these earnings would stimulate investment, considering the evidence that a repatriation holiday in 2004 had not affected investment. Not all of these amounts were held in cash, as some were earnings reinvested in physical assets (such as plant and equipment) and some might be invested in other assets that were not cash equivalents. A Federal Reserve study estimated that $1 trillion was held in cash. A significant amount of repatriations occurred in 2018, as compared both to history and 2017. Dividends in the previous three years ranged from $144 billion to $158 billion, as shown in Figure 5 , whereas $664 billion was repatriated in 2018. Simultaneously, reinvested earnings declined sharply before returning to more normal levels in the 4 th quarter of 2018. It is important, however, to measure international capital flows in true terms that reflect the inflow of resources for capital investment and not by financial transactions, such as repatriation of income earned abroad through dividend payments from foreign subsidiaries. Capital investment involves resources that reflect actual investment in the United States. It could involve imports of investment goods directly, or it could involve imports of consumption goods that free up other resources for investment. In either case, the true capital invested in the United States is largely measured by the excess of exports over imports, or more precisely by the current account, which can also include a small amount of net income payments. In more fundamental terms, investment from abroad occurs in a real sense only when the amount of imported goods exceeds the amount of U.S. exports. To measure this aggregate change in net capital inflows, examine the balance on the current account, which is generally negative, indicating a net capital inflow (imports exceed exports, or a trade deficit). Adjusting these amounts by the GDP deflator and looking at the change, there was a small increase that amounted to 0.8% of private investment. This change is relatively small and is not out of line with historical fluctuations; see Figure 6 . Again, many factors can affect net capital inflows, including domestic borrowing by the government and domestic saving, but the evidence does not suggest a surge in investment from abroad in 2018. <7. Use of Funds for Worker Bonuses and Share Repurchase> Increased funds, whether accessed from abroad or through tax cuts, could be used in several ways: investment, paying down debt, increasing wages, paying wage bonuses, paying dividends, or repurchasing shares. During the passage of the tax revision and in the immediate aftermath, some argued that firms would use these funds to pay worker bonuses (as discussed in the previous section on wages). Subsequently, a number of firms announced bonuses, which in some cases they attributed to the tax cut. One organization that tracks these bonuses has reported a total of $4.4 billion. With US employment of 157 million, this amount is $28 per worker. This amount is 2% to 3% of the corporate tax cut, and a smaller share of repatriated funds. It is consistent with what most economists would expect that a small percentage of increased corporate profits or repatriated funds (if any) would be used to compensate workers, as economic theory indicates that firms would pay workers their marginal product, a result of fundamental supply and demand forces. The bonus announcements could have reflected a desire to pay bonuses when they would be deducted at 35% rather than 21% (in late 2017 for firms with calendar tax years but in 2018 for firms with different tax years). Worker bonuses could also be a result of a tight labor market and attributed to the tax cut as a public relations move. Much of these funds, the data indicate, has been used for a record-breaking amount of stock buybacks, with $1 trillion announced by the end of 2018. A similar share of repurchases happened in 2004, when a tax holiday allowed firms to voluntarily bring back earnings at a lower rate. <8. Effects on Inversions> During the discussion of corporate tax revision over a number of years, one important issue repeatedly raised was the effect of the current tax system on incentives for firms to relocate abroad, or "invert." Inversions involved firms relocating their headquarters to low-tax jurisdictions that generally had territorial taxes, allowing firms to shift profits out of their U.S. operations (so-called earnings stripping) as well as providing potential paths to repatriate earnings without taxes. The earliest of these inversions, beginning in the early 1980s, were called "naked inversions," where a company simply relocated its headquarters without otherwise changing its activities. A number of legislative and regulatory actions largely ended these types of inversions. In 2004, the American Jobs Creation Act ( P.L. 108-357 ) required that any firm in which the former U.S. owners owned 80% or more of the new firm would continue to be treated as a U.S. firm. Firms with 60% to 80% ownership by former shareholders of the U.S. firm were considered inverted firms and subject to certain penalty taxes. This legislation allowed naked inversions in cases where the firm had substantial business activity in the new headquarters country, but regulations issued in 2012 tightened these requirements after a series of inversions used this rule to relocate. In 2014, a new wave of inversions that involved mergers with smaller foreign firms began, with one of the most prominent being an announcement that Pfizer, the pharmaceutical company, would acquire Astra-Zeneca with a UK headquarters (although this merger never took place). These inversions gave rise to a number of legislative proposals, but also led to numerous regulatory proposals, which were released in 2014, 2015, and 2016. These regulations addressed a number of issues, including restricting the use of serial inversions to allow a firm to fall under the ownership limits, limiting the ability to access earnings of subsidiaries abroad, and limiting earnings stripping through locating debt in the United States. The 2017 Act contained several provisions that made inversions less attractive (aside from the lower corporate tax rate). One notable provision required firms that inverted in the next 10 years to pay a deemed repatriation tax at 35%, rather than at the lower rates of 8% for non-cash holdings and 15.5% for cash or cash equivalents. The Act introduced a new minimum tax to address international profit shifting, the base erosion and anti-abuse tax (BEAT), which adds back payments between related domestic and foreign companies to base income and then taxes that base at a lower rate. BEAT excludes payments which reduce gross receipts with the result that payment for the cost of goods sold is not included under BEAT. An exception applies for firms that invert after November 9, 2017, where payments to a foreign parent or any foreign firm in the affiliated group for cost of goods sold is included in BEAT. The legislation also contained some other provisions making inversions less attractive. The Act also modified asset attribution rules. The constructive ownership rules for purposes of determining 10% U.S. shareholders, whether a corporation is a Controlled Foreign Corporation (CFC), and whether parties satisfy certain relatedness tests, which can trigger certain tax provisions including restrictive ones, were expanded in the 2017 tax revision. Specifically, the new law treats stock owned by a foreign person as attributable to a U.S. entity owned by the foreign person (so-called "downward attribution"). As a result, stock owned by a foreign person may generally be attributed to (1) a U.S. corporation, 10% of the value of the stock of which is owned, directly or indirectly, by the foreign person; (2) a U.S. partnership in which the foreign person is a partner; and (3) certain U.S. trusts if the foreign person is a beneficiary or, in certain circumstances, a grantor or a substantial owner. The downward attribution rule was originally conceived to deal with inversions. In an inversion, without downward attribution, a subsidiary of the original U.S. parent could lose CFC status if it sold enough stock to the new foreign parent so the U.S. parent no longer had majority ownership. With downward attribution, the ownership of stock by the new foreign parent in the CFC is attributed to the U.S. parent, so that the subsidiary continues its CFC status, making it subject to any tax rules that apply to CFCs (such as Subpart F and repatriation taxes under the old law, and Subpart F and Global Low-Taxed Income (GILTI) under the new law). The Act also contained other provisions affecting stockholders and stock compensation. These provisions were intended to discourage inversions. Dividends (like capital gains) are taxed at lower rates than ordinary income. The rates are 0%, 15%, and 20% depending on the rate bracket that ordinary income falls into. Certain dividends received from foreign firms (those that do not have tax treaties and Passive Foreign Investment Companies (PFICs)) are not eligible for these lower rates. Dividends paid by firms that inverted after the date of enactment of P.L. 115-97 are added to the list of those not eligible for the lower rates. Also, in 2004, an excise tax of 15% was imposed on stock compensation received by insiders in an expatriated corporation; the 2017 Act increased it to 20%, effective on the date of enactment for corporations that first become expatriated after that date. These new laws did not change the definition of inverted firms but rather the consequences of inversions. Although the legislative changes in the 2017 Act contributed to making inversions less attractive, announced inversions had already slowed substantially following the regulatory changes implemented in 2014, 2015, and 2016. In addition, data released by the Bureau of Economic Analysis indicated that foreign acquisitions of US companies, which rose substantially in 2015, fell by 15% in 2016 and 32% in 2017 (data not available for 2018). Some of the largest declines were in inversion-associated countries, such as Ireland, where acquisitions fell from $176 billion in 2015, to $35 billion in 2016, and to $7 billion in 2017. <8.1. Appendix. The User Cost of Capital> The user cost of capital is the sum of the pretax required return for a marginal investment and the economic depreciation, or (1) C = R/(1-t)+d Where C is the user cost, R is the required after-tax return, t is the effective marginal rate, and d is the economic depreciation rate. Economic depreciation is the decline in the value of the asset in real terms, and belongs in the cost term because it compensates the investor for the wearing away, or using up, of the asset. The user cost calculations use a weighted pretax rate of return that reflects both debt and equity finance to simplify the analysis. The effective marginal tax rate, in turn, depends on the statutory tax rate, the present value of economic depreciation, the inflation rate, the return on equity, the share debt-financed, and the nominal interest rate. Table A-1 reports the effective tax rate for corporate and non-corporate investment before and after the 2017 changes for the basic types of nonresidential fixed capital. The overall user cost also depends on the economic depreciation rates and the relative sizes of each type of capital stock in the corporate and non-corporate sector. For equipment, the economic depreciation rate is 12.95% per year, and corporate equipment comprises 67% of all equipment. Structures are composed of two types: (1) public utility structures (accounting for 23% of the total) with a depreciation rate of 2.24% and (2) buildings with a depreciation rate of 2.8%. Within public utility structures, corporations account for 84%; within buildings, corporate structures account for 55%. Intangible assets have a depreciation rate of 17%, and corporations account for 86%. User costs and their percentage changes are shown in Table A-2 .

The 2017 tax revision, P.L. 115-97, often referred to as the Tax Cuts and Jobs Act, and referred to subsequently as the Act, substantially revised the U.S. tax system. The Act permanently reduced the corporate tax rate to 21%, made a number of revisions in business tax deductions (including limits on interest deductions), and provided a major revision in the international tax rules. It also substantially revised individual income taxes, including an increase in the standard deduction and child credit largely offset by eliminating personal exemptions, along with rate cuts, limits on itemized deductions (primarily a dollar cap on the state and local tax deduction), and a 20% deduction for pass-through businesses (businesses taxed under the individual rather than the corporate tax, such as partnerships). These individual provisions are temporary and are scheduled to expire after 2025. The Act also adopted temporary provisions allowing the immediate deduction for equipment investment and an increase in the exemption for estate and gift taxes. The Joint Committee on Taxation (JCT) estimated that these changes would reduce tax revenue by $1.5 trillion over 10 years. In 2018, gross domestic product (GDP) grew at 2.9%, about the Congressional Budget Office's (CBO's) projected rate published in 2017 before the tax cut. On the whole, the growth effects tend to show a relatively small (if any) first-year effect on the economy. Although growth rates cannot indicate the tax cut's effects on GDP, they tend to rule out very large effects particularly in the short run. Although investment grew significantly, the growth patterns for different types of assets do not appear to be consistent with the direction and size of the supply-side incentive effects one would expect from the tax changes. This potential outcome may raise questions about how much longer-run growth will result from the tax revision. CBO, in its first baseline update post enactment, initially estimated that the Act would reduce individual income taxes by $65 billion, corporate income taxes by $94 billion, and other taxes by $3 billion, for a total reduction of $163 billion in FY2018. Corporate revenues were about $40 billion less than projected whereas individual revenues were higher, with an overall revenue reduction of about $9 billion. From 2017 to 2018, the estimated average corporate tax rate fell from 23.4% to 12.1% and individual income taxes as a percentage of personal income fell slightly from 9.6% to 9.2%. Real wages grew more slowly than GDP: at 2.0% (adjusted by the GDP deflator) compared with 2.9% for overall real GDP. Such slower growth has occurred in the past. The real wage rate for production and nonsupervisory workers grew by 1.2%. Although significant amounts of dividends were repatriated in 2018 compared with previous years, the data do not appear to show a significant increase in investment flows from abroad. While evidence does indicate significant repurchases of shares, either from tax cuts or repatriated revenues, relatively little was directed to paying worker bonuses, which had been announced by some firms. Although the legislation contained a number of provisions that discouraged inversions (shifting headquarters of U.S. firms abroad), these inversions had apparently already been significantly slowed by regulations adopted in 2014, 2015, and 2016.

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<1. Introduction> While periodic, omnibus farm bills focus on agricultural and food policy, they also contain provisions addressing rural community and economic development. The U.S. Department of Agriculture (USDA), through its Rural Development agency (RD), administers a broad portfolio of programs focused on rural housing, rural infrastructure, and rural business and employment. Congress considers reauthorizing and amending many of these programs in periodic farm bills. The most recent is the Agriculture Improvement Act of 2018 (2018 farm bill, P.L. 115-334 ). The 2018 farm bill generally authorizes programs and funding levels for the period FY2019-FY2023, though some provisions apply to different periods, such as FY2019-FY2025. Since 1973, farm bills have included a title dedicated to rural development. The Rural Development title (Title VI) of the 2018 farm bill generally addresses (1) rural infrastructure, including housing, electrical generation and transmission, water and wastewater, and more recently, broadband deployment; (2) rural economic development; and (3) rural business creation and expansion. The Miscellaneous title (Title XII) also includes certain rural development provisions related to RD personnel, federal task forces or working groups, and other federal rural development programs. Programs authorized in other titles of P.L. 115-334 may benefit rural areas, especially rural areas with economies reliant on agriculture. However, most rural development provisions in the Rural Development and Miscellaneous titles specifically target rural areas. A number of issues influenced the rural development provisions of the 2018 farm bill. Many rural communities have experienced decreasing populations over the last decade. In addition, some rural residents struggle to access employment opportunities, especially in high-wage jobs. The ongoing opioid crisis and an increasing number of rural hospital closures have raised concerns about the health of rural residents. Aging infrastructure, such as electric or drinking water infrastructure, also presents a challenge to some rural communities. The digital divide lower rates of broadband access in rural areas compared to urban areas has raised concerns that rural residents may be less able to access opportunities and services such as distance learning, telemedicine, and e-commerce. In addition, policymakers and scholars have increasingly examined regional approaches to rural economic development rather than approaches focused on individual communities. The 2018 farm bill includes new provisions and programs related to rural broadband deployment, health care, and community development. The law also reauthorizes and amends existing programs related to broadband deployment, other rural infrastructure, and community development. P.L. 115-334 amends multiple definitions of rural used to determine eligibility for RD programs. The law also amends programs that address regional approaches to rural economic development. Further, P.L. 115-334 repeals some rural development programs and makes technical corrections to statutory language authorizing other programs. This report provides a brief overview of federal rural development programs. It then analyzes issues that influenced the development of rural development provisions in the 2018 farm bill. Next, the report details new rural development programs and entities created and changes made to existing rural development programs, in P.L. 115-334 . The Appendix provides a side-by-side comparison of each provision in the Rural Development title, as well as each rural development provision in the Miscellaneous title, of the 2018 farm bill with prior law. <2. Federal Rural Development Programs> The Rural Development Policy Act of 1980 ( P.L. 96-355 ) named USDA as the lead federal agency for rural development. RD is the mission area within USDA responsible for rural infrastructure and economic development assistance. Three agencies comprise RD: the Rural Business-Cooperative Service, the Rural Housing Service, and the Rural Utilities Service (RUS). RD programs are largely loan and grant programs that assist communities with small populations to finance development projects. Many RD programs have statutory authority in the Consolidated Farm and Rural Development Act of 1972 (the ConAct, P.L. 87-128) or the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.). RD programs typically rely on annual appropriations for funding, but omnibus farm bills also authorize mandatory funding for some RD programs. The most recent of these, the 2018 farm bill, reauthorizes or amends existing RD programs and authorizes new RD programs by amending the ConAct, the Rural Electrification Act, or other authorizing legislation. The 2018 farm bill also authorizes some rural development programs or entities administered outside USDA. For example, the law authorizes the Federal Communications Commission (FCC) to establish a new task force on precision agriculture connectivity. It also reauthorizes federal regional commissions, such as the Appalachian Regional Commission. <3. Issues Influencing the 2018 Farm Bill's Rural Development Provisions> A number of economic and social issues in rural America influenced the rural development provisions of the 2018 farm bill. Rural policy issues that influenced the 2018 farm bill include: rural population decline; rural underemployment; rural health issues, including the ongoing opioid crisis and an increasing rate of hospital closures in rural areas; aging rural infrastructure and a lack of access to broadband internet in rural areas; and a shift among some scholars and policymakers towards supporting regional approaches to rural economic development. Between 2010 and 2017, the number of people living in nonmetropolitan counties declined by approximately 223,000. Additionally, over 1,300 nonmetropolitan counties experienced population loss ( Figure 2 ). While the overall U.S. rural population declined, rates of population change varied among rural areas. Populations declined in many rural counties dependent on agriculture and manufacturing, while populations increased in many rural counties dependent on recreation. Population decline results from a combination of out-migration, declining birth rates, and increased mortality. Research has attributed rural out-migration to many factors, including lack of employment opportunities and less access to education, health care, and cultural amenities. Congress sought to address rural population decline in the 2018 farm bill through rural infrastructure, business development, and community development. Historically, agriculture and rural policy were closely linked due to the high percentage of rural Americans employed in agriculture. This link has weakened due to the changing nature of rural employment. In 2017, the agriculture sector accounted for 5.6% of rural jobs, down from 6.8% in 2001. In addition, USDA estimates that approximately 80% of total farm household income in 2019 will come from off-farm activities. Manufacturing has also been an important source of employment in rural areas, being responsible for a larger share of jobs in rural counties than in urban counties. In 2017, manufacturing employed 10.8% of the rural workforce, declining from 14.1% in 2001. Congress sought to address rural employment in the 2018 farm bill through entrepreneurship, business development, broadband deployment, and access to credit. Rural health issues also influenced the 2018 farm bill's rural development provisions. Policymakers continue to look for solutions to address the opioid epidemic that began in the 1990s. Though this epidemic has affected urban, suburban, and rural areas, the drug overdose death rate in rural areas increased at a faster rate than in urban areas between 1990 and 2015. In addition, many scholars and interest groups have asserted that the federal government's approach to mitigating the opioid crisis in rural areas should differ from the strategy for urban areas. While federal, state, and local governments have addressed the epidemic, drug overdose rates remain high. In addition, a rise in the number of rural hospital closures has increased concerns about access to health care in rural areas. According to the U.S. Government Accountability Office (GAO), 64 rural hospitals closed between 2013 and 2017, more than twice as many as during the previous five-year period. These hospital closures will likely result in rural residents having to travel greater distances for emergency medical care. In the 2018 farm bill, Congress included provisions related to refinancing of rural hospital debt, funding for opioid abuse prevention and treatment, and coordination of federal rural health efforts. Aging infrastructure continues to be a concern for rural areas. According to GAO, "many rural communities face significant challenges in financing the costs of replacing or upgrading aging and obsolete drinking water and wastewater infrastructure." Because communities typically pay for drinking water infrastructure through rates charged to users, more sparsely populated communities have difficulty financing major infrastructure construction or upgrades. Some rural communities also lack the resources to assess infrastructure needs. Similar challenges exist to upgrading and maintaining rural housing and electricity infrastructure. The 2018 farm bill includes provisions related to rural infrastructure loan and grant programs, technical assistance for infrastructure planning, and prioritizing water infrastructure funding to address a public health crisis. Additionally, scholars and policymakers have asserted that access to broadband internet is important for economic and community development in rural areas. According to the most recent FCC deployment data, as of December 2017, 26% of Americans in rural areas and 32% of Americans on tribal lands lack access to broadband at speeds of at least 25 megabits per second (Mbps) download and 3 Mbps upload. In comparison, 1.7% of Americans in urban areas lack access to broadband at 25/3 Mbps. The 2018 farm law includes provisions related to broadband deployment, federal program coordination, and the use of broadband for precision agriculture. Some scholars and policymakers increasingly support a regional approach to rural economic development. Rather than focus on individual towns or communities, which may compete for jobs and residents, a regional approach draws on the strengths and opportunities of different localities within a region and involves coordination across communities. The 2018 farm bill contained provisions related to federal regional commissions, technical assistance for regional planning, and prioritizing projects that support a strategic community development plan. <4. Rural Development Provisions in the Agriculture Improvement Act of 2018 (P.L. 115-334)> This section summarizes the rural development provisions in the 2018 farm bill. It provides an overview of new rural development provisions. It also summarizes provisions that reauthorize or amend federal statutes related to existing rural development programs and requirements. In addition to amending programs, the farm bill authorizes programs to receive mandatory or discretionary funding. Congress controls the level of discretionary funding through the subsequent enactment of annual appropriations. Congress controls the level of mandatory funding outside of the appropriations process based on payments made as a direct consequence of statutory requirements. Most RD programs rely on discretionary funding. <4.1. New Provisions in the 2018 Farm Bill> Section 6101 directs USDA to set aside at least 20% of annual funds appropriated for the Distance Learning and Telemedicine Program for FY2019-FY2025 for telemedicine projects that provide substance use disorder treatment services. It also directs USDA to prioritize funding for Community Facilities Direct Loans and Grants and Rural Health and Safety Education Grants for projects that provide substance use disorder treatment, education, and prevention. The provision also authorizes the Secretary of Agriculture to temporarily prioritize assistance under certain RD programs to help rural communities respond to a significant public health disruption . Section 6202 of the 2018 farm bill authorizes a new rural broadband deployment program to fund middle mile infrastructure . Middle mile infrastructure is infrastructure that does not connect directly to an end user (such as a business or household) but rather connects a local network to the larger internet backbone. The provision authorizes $10 million per year for loans and grants for FY2019-FY2023, subject to annual appropriations. Section 6208 adds a new section to the Rural Electrification Act that addresses environmental reviews for rural broadband programs. The new language authorizes USDA to obligate, but not disburse, loan or grant funds before the completion of an environmental, historical, or other review. The funds may be obligated if USDA determines that a subsequent review will be adequate and easily accomplished. Section 6213 authorizes USDA to use existing regulations for the Rural Broadband Access and Community Connect programs for up to one year until USDA issues a final rule implementing the 2018 farm bill changes. Section 6212 establishes procedures for federal broadband program coordination . It directs the National Telecommunications and Information Administration (NTIA) at the U.S. Department of Commerce to assist USDA with verifying applicant eligibility for USDA rural broadband programs. The provision also directs USDA and the FCC to coordinate before providing broadband assistance to prevent duplication. It requires USDA, NTIA, and the FCC to submit a report to Congress within one year of the farm bill's enactment on how to best coordinate federal broadband programs and activities. Section 6214 establishes a Broadband Integration Working Group to conduct a survey of all current federal assistance for broadband deployment. The provision also directs the working group to make recommendations to address regulatory barriers and incentivize investment in broadband deployment and adoption. The working group includes numerous federal agencies. The administrator of RUS, Assistant Secretary for Communications and Information at the Department of Commerce, director of the National Economic Council, and director of the Office of Science and Technology Policy at the White House co-chair the working group. Section 12511 directs the FCC to establish a task force on precision agriculture . Duties of the task force include identifying and measuring current gaps in broadband internet access on agricultural land and making policy recommendations to promote broadband deployment on unserved agricultural land. Section 6419 authorizes USDA to make grants to eligible entities to provide technical assistance and training to support applications for Rural Business-Cooperative Service programs . Eligible entities may use grants to assist communities in planning for business and economic development needs, identifying public and private financing options, and preparing applications and materials to request financial assistance. The law authorizes appropriations of $5 million per year for the program for FY2019-FY2023. Section 6302 directs USDA to provide technical assistance to t ribal entities to improve the entities' access to RD programs. The provision requires technical assistance to address the unique challenges faced by tribal governments, producers, businesses, and tribally designated housing entities in accessing RD programs. Section 12510 directs USDA to establish Tribal Promise Zones that are to receive priority consideration for federal grant programs and initiatives. Criteria for Tribal Promise Zones include unemployment rates, poverty rates, vacancy rates, household income, and the effectiveness of a competitiveness plan submitted by nominating entities. Prior to the 2018 farm bill's enactment, the federal government had designated certain tribal areas as Tribal Promise Zones under an existing Promise Zones initiative at the Department of Housing and Urban Development (HUD). Section 12510 directs the Secretary of Agriculture to re-designate any previously designated Tribal Promise Zone. Section 6424 establishes a new Rural Innovation Stronger Economy Grant Program to establish job accelerators in rural regions. Grant awards may be between $500,000 and $2 million, and applicants must provide at least 20% of project funds. Eligible applicants may use funds for a variety of purposes, including linking rural communities and entrepreneurs to markets, facilitating the repatriation of high-wage jobs to the United States, and identifying and building assets in rural communities. The provision authorizes annual appropriations of $10 million per year for FY2019-FY2023. Section 6306 creates a Council on Rural Community Innovation and Economic Development , comprised of various executive branch departments and agencies, to coordinate federal engagement with rural stakeholders and make recommendations to streamline and leverage federal investments in rural areas. The provision also establishes a Rural Smart Communities Working Group and a Jobs Accelerator Working Group within the council. Section 6103 authorizes USDA to use loans or loan guarantees under certain rural business or infrastructure programs to refinance rural hospital debt . Congress permits USDA to assist a rural hospital with refinancing debt if "the assistance would help preserve access to a health service in a rural community, meaningfully improve the financial position of the hospital, and otherwise meet the financial feasibility and adequacy of security requirements of the Rural Development Agency." Section 12409 directs USDA to establish a Rural Health Liaison who would integrate rural health activities across USDA, coordinate with the Secretary of Health and Human Services, and provide technical assistance to USDA outreach, extension, and county offices. <4.2. Other Major Provisions> <4.2.1. Broadband and Telecommunications> Section 6201 reauthorizes and makes a number of amendments to the Rural Broadband Access Program (also known as the Farm Bill Loan Program): Increases authorized funding for the program from $25 million to $350 million per year for the period FY2019-FY2023. Authorizes 3%-5% of annual program funding for technical assistance and training to applicants applying to provide broadband service to communities that lack broadband at speeds of at least 10/1 Mbps. Adds a grant component to the program to the existing direct and guaranteed loan components. To be eligible for a grant, at least 90% of households in the proposed service area the area in which an applicant proposes to deploy broadband must lack access to broadband at minimum speeds. Applicants must provide matching funds of 25%-75% of the project cost, depending on the population density of the proposed service area. Amends the eligibility criteria for loans to require at least 50% of households in proposed service areas to lack access to broadband service at minimum speeds. Under prior law, this threshold was 15% of households. Increases the minimum acceptable broadband speeds for the program from 4/1 Mbps to 25/3 Mbps. These minimum speeds determine both eligibility criteria and buildout requirements. USDA uses the minimum speeds to determine whether areas lack sufficient broadband service and are therefore eligible for program funding (see above two bullet points). USDA also requires all loan or grant recipients to provide broadband service that meets the minimum speeds. Directs USDA to prioritize applications that serve communities with a population of fewer than 10,000 residents; serve communities experiencing out-migration; provide broadband to cropland and ranchland for use in precision agriculture; and were developed with, and received funding from, community stakeholders, among other prioritization criteria. Increases the maximum time to complete buildout of broadband infrastructure to five years. Under prior law, the maximum buildout time was three years from when USDA made assistance available. Directs USDA to establish broadband buildout requirements the level of internet service an applicant must provide for the duration of a project agreement. Section 6201 also directs USDA to project minimum acceptable service standards for projects with agreements of 5-10, 11-15, 16-20, and more than 20 years. Applicants must demonstrate the ability to furnish or improve service in order to meet the broadband buildout requirements. The conference report contains language further explaining congressional intent. Authorizes USDA to provide payment assistance for certain loan and grant recipients. This includes reduced interest rates or allowing borrowers to defer payments. Directs USDA to charge fees to lenders in amounts that reduce the cost of subsidies for guaranteed loans but are not a barrier to program participation. Moves certain provisions regarding notice requirements, default and deobligation, and service area assessment to other sections of the Rural Electrification Act and makes amendments to these relocated provisions. These provisions still apply to the Rural Broadband Access Program. Section 6201 also removes language regarding paperwork reduction, the preapplication process, and the number of application evaluation periods per year. Section 6102 reauthorizes the Distance Learning and Telemedicine Program through FY2023 and increases the authorization for annual appropriations from $75 million to $82 million per year. Section 6204 codifies the Community Connect Program and authorizes funding of $50 million per year for FY2019-FY2023. Previously, Congress had authorized the program in annual Agriculture appropriations bills. Section 6203 reauthorizes the Rural Gigabit Network Pilot Program and renames it the Innovative Broadband Advancement Program . Congress authorizes USDA to provide loans or grants to decrease the cost of broadband deployment and increase broadband speeds. Eligible applicants must agree to complete project buildout within five years and increase broadband speeds to at least the minimum broadband buildout requirements established for the Rural Broadband Access Program. Congress authorizes appropriations of $10 million per year for FY2019-FY2023. Section 6205 establishes criteria for outdated broadband systems . Beginning October 1, 2020, USDA must consider any portion of a service territory that is subject to an outstanding USDA grant agreement to be unserved if broadband speeds in that portion of a service territory are less than 10/1 Mbps. The provision includes an exception for broadband service providers that have constructed, or begun to construct, broadband facilities that meet the minimum speeds for the Rural Broadband Access Program. As mentioned earlier in this section, Section 6201 set minimum broadband speeds for the Rural Broadband Access Program at 25/3 Mbps. Section 6207 creates a new section of the Rural Electrification Act that addresses public notices, service area assessments, and reporting requirements under USDA rural broadband programs. The provision includes both new language and language moved from other sections of the Rural Electrification Act. It moves language related to public notice requirements, service area assessments, and reporting from the section of the Rural Electrification Act that authorizes the Rural Broadband Access Program to this newly created section. Moving this language makes it applicable to certain other programs authorized in the Rural Electrification Act in addition to the Rural Broadband Access Program. Section 6207 also makes the following amendments: Directs USDA to publish information on applications and funding awards for rural broadband programs in a searchable database on the RUS website. The database must be available to the public. Gives internet service providers at least 45 days to respond to a public notice of application, in contrast to at least 15 days under prior law. Providers may submit information on any broadband service the provider currently offers in the area identified in an application. This information helps USDA determine whether a proposed area meets program eligibility requirements. Exempts from certain Freedom of Information Act requirements information submitted by internet service providers in response to public notices. Includes language regarding assessing unserved communities for Rural Broadband Access Program eligibility. Under the program, USDA gives priority to unserved communities communities that lack residential broadband service at speeds of at least 10/1 Mbps. Section 6207 directs USDA to coordinate with the FCC and NTIA, obtain data from any other relevant source, and perform site-specific testing to verify that communities given priority are eligible for program funding. Requires loan or grant recipients to report annually to USDA, rather than semiannually as under prior law. The provision also adds reporting requirements for middle mile projects. It directs USDA to submit a single report to Congress each year detailing assistance provided under all USDA rural broadband loan and grant programs. Authorizes not less than 3% and not more than 5% of funding appropriated for certain rural broadband programs be set aside for oversight, reporting, and accountability measures. Section 6210 authorizes recipients of certain RD loans, loan guarantees, or grants authorized by the Rural Electrification Act or the ConAct to use up to 10% of the award amount for rural broadband infrastructure projects . Recipients can use funding only for projects in areas that lack broadband service at speeds of at least 25/3 Mbps. The provision also directs USDA not to provide funding if it would result in competitive harm to another recipient of RD loans or grants. Section 6206 moves language regarding default and deobligation from the section authorizing the Rural Broadband Access Program to a new section of the Rural Electrification Act. It also authorizes USDA to establish a deferral period of not shorter than the project buildout period in order to support the financial feasibility of a project. Section 6209 moves existing language regarding refinancing telecommunications loans to a new section of the Rural Electrification Act and amends this language. Prior law allowed a loan recipient to use any USDA telecommunications loan to refinance another USDA telecommunications loan if refinancing would support broadband deployment in rural areas. The amended language allows a loan recipient to refinance any outstanding loan that would have been used for an eligible telecommunications purpose under the Rural Electrification Act. Sections 6211 and 6502 of P.L. 115-334 amend Section 922 of the Rural Electrification Act, which authorizes USDA to make loans for rural telephone service . Section 6211 authorizes telephone loans to be used to refinance other loans authorized by the Rural Electrification Act. It removes the limit that 40% or less of the telephone loan may be used to refinance other loans. Section 6502 removes the word rural from the section title of the Rural Electrification Act, amending it to read, "Loans for telephone service." Section 6502 also removes the requirement for loan applicants to submit to USDA a certificate of convenience from a state regulatory body. <4.2.2. Rural Infrastructure> Section 6403 amends the Water and Wastewater Revolving Loan Fund Program . It increases the maximum project award amount from $100,000 to $200,000 and decreases the authorization of annual appropriations from $30 million to $15 million per year for FY2019-FY2023. Section 6404 amends the Rural Water and Wastewater Technical Assistance Program . It increases the authorization of annual appropriations to between 3%-5% of annual appropriations for Water and Waste Disposal Grants, as opposed to 1%-3% under prior law. It also amends eligible projects to include addressing the long-term sustainability of water and wastewater systems and contamination of drinking and surface water. Section 6405 reauthorizes the Rural Water and Wastewater Circuit Rider Program. It also increases the authorization of annual appropriations from $20 million to $25 million per year for FY2019-FY2023. Section 6408 reauthorizes grants for water systems for rural and Native villages in Alaska . It amends the eligible grant recipients to include Native villages, as defined in the Alaska Native Claims Settlement Act, and consortiums formed pursuant to the Department of Interior and Related Agencies Appropriations Act, 1998 ( P.L. 105-83 ). Section 6408 authorizes USDA to set aside up to 2% of annual program funds for consortiums to provide training and technical assistance for water and waste disposal operation and management. Section 6409 reauthorizes and amends the Household Well Water Systems Grant Program . It also authorizes subgrants, as well as previously authorized subloans. It limits subloans and subgrants to a maximum of $15,000 for each water well system or decentralized wastewater system. Section 6409 amends the definition of eligible individual to include one whose household incomes does not exceed 60% of the median nonmetropolitan household income for the state or territory. It also increases the authorization of annual appropriations from $5 million to $20 million per year for FY2019-FY2023. Section 6407 reauthorizes the Emergency and Imminent Community Water Assistance Grant Program . The law funds this program through both a set-aside of Rural Water and Wastewater Grant funding and a standalone appropriation. Section 6407 increases the set-aside from 3%-5% to 5%-7% of annual Rural Water and Wastewater Grant funding. It also increases the authorization for the standalone appropriation from $35 million to $50 million per year for FY2019-FY2023. This provision also directs USDA to prioritize projects that address water contamination posing a threat to human health or the environment. It increases the maximum grant amount from $500,000 to $1 million for projects that respond to a significant decline in water quality or quantity. Section 6407 also establishes an Interagency Task Force on Rural Water Quality to examine drinking water and surface water contamination in rural communities, particularly those in close proximity to active or decommissioned military installations in the United States. The task force must be composed of representatives from certain federal agencies and state and community stakeholders. The task force is to submit a report to relevant committees and make recommendations to address water contamination issues. Section 6303 amends the Rural Energy Savings Program to authorize financing of off-grid and renewable energy storage systems. It also directs USDA to streamline borrower accounting requirements and to publish an annual report on the program. It increases the maximum interest rate for program loans from 3% to 5%. It also directs USDA to exclude any debt incurred under the program in the calculation of a borrower's eligibility for other loans made under the Rural Electrification Act. The provision also reauthorizes annual appropriations of $75 million per year for FY2019-FY2023. Section 6501 authorizes USDA to refinance electric and telephone loans made by RUS. It also directs USDA to enter into a memorandum of understanding with the Department of Energy, under which the Department of Energy will provide technical assistance to USDA on making electric and telephone loans. Section 6505 reauthorizes USDA's ability to guarantee payments on bonds and notes issued for electrification or telephone purposes . It amends the purpose of bond or note guarantees to be for financing utility infrastructure. It also adds terms for bond or note guarantees, including a 30-year maximum length. Section 6505 removes the prohibition on guarantees for bonds or notes that will finance electricity generation. It also directs USDA to continue carrying out specified sections of the Rural Electrification Act until the full implementation of any new regulations required by the 2018 farm bill. Section 6506 reauthorizes the use of certain telecommunications loans for expansion of 911 access . It also amends the eligible loan purposes to include multiuse emergency communications networks that provide critical transportation-related information services. Section 6507 authorizes USDA to make or guarantee electric loans for cybersecurity and grid security improvements . Section 6418 authorizes USDA to collect loan fees for certain loans authorized by the ConAct in such amounts as to bring down the costs of loan subsidies. It also specifies that loan fees shall be consistent with current practices in the marketplace and shall not act as a barrier to participation in the loan programs. The 2018 farm bill also reauthorizes additional programs through FY2023. Section 6406 reauthorizes Tribal College and University Essential Community Facilities Grants, Section 6410 reauthorizes Solid Waste Management Grants, and Section 6412 reauthorizes grants for National Oceanic and Atmospheric Administration Weather Radio Transmitters. <4.2.3. Business and Community Development> Section 6422 reauthorizes the Rural Microentrepreneur Assistance Program through FY2023. It eliminates mandatory funding for the program (previously $3 million per year) and decreases the authorization of appropriations from $40 million to $20 million per year for FY2019-FY2023. It also adds a minimum grant amount of 20% of the total outstanding balance of microloans made by the intermediary, subject to availability of funding. Section 6412 reauthorizes the Rural Cooperative Development Grant Program through FY2023. It also directs academic institutions conducting research under the program to include economic census data in their research on the economic impacts of cooperatives. Section 6427 reauthorizes appropriations of $20 million per year for the Rural Business Investment Program through FY2023. Section 6426 amends the program by revising the definitions of development venture capital and equity capital . The provision also removes the $500 maximum amount for fees, replacing it with language authorizing USDA to charge "such fees as the Secretary [of Agriculture] considers appropriate, so long as those fees are proportionally equal for each rural business investment company." It also prohibits rural business investment companies from investing in entities that are not otherwise eligible for Farm Credit System financing if a Farm Credit System institution holds more than 50% of the shares of the investment company. Under prior law, this threshold was 25%. Section 6426 also prohibits USDA from requiring that an entity applying to be a rural business investment company provide investment or capital beyond the requirements listed in statute. Section 6416 reauthorizes appropriations of $25 million per year through FY2023 for the Intermediary Relending Program . The provision also sets a maximum loan amount that an intermediary may make for a project at the lesser of $400,000 or 50% of the loan made by USDA to the intermediary. It adds criteria for evaluating applications, directs USDA to establish a schedule for the return of equity contributions, and directs USDA to reduce the administrative requirements on intermediaries. Section 6503 amends the Cushion of Credit Program to terminate all deposit authority into cushion of credit accounts effective December 20, 2018. It reduces the interest rate for borrowers from 5% per year to 4% per year for FY2021 and then to the applicable one-year Treasury rate thereafter. The provision allows a borrower to reduce the cushion of credit account balance in order to prepay loans made or guaranteed under the Rural Electrification Act. Borrowers may make these prepayments through September 2020. The provision prohibits collection of prepayment premiums from borrowers. Section 6503 also authorizes such sums as necessary from the U.S. Treasury to cover any loan modification costs. Section 6504 reauthorizes and amends the Rural Economic Development Loan and Grant Program . It moves language regarding the program from the section of the Rural Electrification Act authorizing the Cushion of Credit Program to a new section of the act. Section 6504 authorizes annual appropriations of $10 million per year for FY2019-FY2023. It also provides for mandatory funding, financed through the Commodity Credit Corporation, of $5 million per year for FY2022 and FY2023. Section 12608 reauthorizes the Rural Emergency Medical Service Training and Equipment Assistance Program and authorizes annual appropriations of such sums as necessary for FY2019-FY2023. It amends eligibility to include only emergency medical service agencies operated by a local or tribal government and tax-exempt emergency medical services agencies. It also amends eligible grant activities to include public education concerning first aid, illness prevention, and emergency preparedness. The provision amends prioritization criteria and decreases the matching requirement for grants from 25% to 10% of the grant amount. It also amends the definition of emergency medical services to include medical care delivered outside of a medical facility under emergency conditions resulting from a natural disaster. The 2018 farm bill also reauthorizes the following programs through FY2023. Section 6411 reauthorizes Rural Business Development Grants, Section 6413 reauthorizes Loans for Locally or Regionally Produced Agricultural Food Products, Section 6414 reauthorizes the Appropriate Technology Transfer for Rural Areas Program, and Section 6423 reauthorizes Delta Health Care Services Grants. <4.2.4. Definition of Rural> The 2018 farm bill includes three provisions that amend the definition of rural for certain RD programs. USDA uses population thresholds to determine whether an area is rural for the purposes of RD programs. Rural population thresholds vary across RD programs. Section 6301 amends the ConAct to direct USDA to exclude individuals incarcerated on a long-term or regional basis and the first 1,500 individuals residing on a military base when determining whether an area is a rural area for certain RD programs . It also amends the Rural Electrification Act and the Food, Agriculture, Conservation, and Trade Act of 1990 to exclude the same populations when determining whether an area is a rural area for certain RD broadband programs . Section 6305 amends the definition s of rural and rural area in the Housing Act of 1949 . The amended definition allows any area classified as rural or a rural area prior to 1990 to remain so until the next decennial census, if the area has a population between 10,000 and 35,000 and has "a serious lack of mortgage credit for lower and moderate-income families." Section 6402 amends the definition of rural for determining eligibility for guaranteed loans under the Water and Waste Disposal and the Community Facilities programs. It increases the population threshold for guaranteed loans to 50,000 or fewer. Under prior law, the population thresholds were 10,000 or fewer for Water and Waste Disposal Guaranteed Loans and 20,000 or fewer for Community Facilities Guaranteed Loans. Section 6402 also directs USDA to prioritize guaranteed loan applications for areas with a population of 10,000 or fewer for the Water and Waste Disposal Program and 20,000 or fewer for the Community Facilities Program. The population thresholds for grant and direct loan eligibility remain unchanged at 10,000 or fewer for the Water and Waste Disposal Program and 20,000 or fewer for the Community Facilities Program. <4.2.5. Regional Development> Section 6401 amends the Strategic Economic and Community Development provision of the ConAct. This provision allows USDA to prioritize funding under certain RD programs for projects that support multijurisdictional strategic community development plans. Section 6401 expands the provision to apply to all RD programs as determined by the Secretary of Agriculture. It increases the portion of funding USDA may reserve for projects under this section from 10% to 15% of program funding made available for a fiscal year. Section 6401 also authorizes annual appropriations of $5 million for FY2019-FY2023 for technical assistance to rural communities in developing strategic community investment plans. Sections 6425 and 6304 reauthorize and amend federal regional commissions and authorities. Section 6425 reauthorizes the Delta Regional Authority through October 1, 2023. It also reauthorizes annual appropriations of $30 million per year for the authority for FY2019-FY2023. Section 6304 reauthorizes three federal regional commissions the Southeast Crescent Regional Commission, the Southwest Border Regional Commission, and the Northern Border Regional Commission and increases authorized appropriations for each commission from $30 million to $33 million per year through FY2023. Federal statute directs the commissions to set aside 40% of grant funding in a given fiscal year for certain eligible activities, including transportation, telecommunications, or other public infrastructure. Section 6304 adds promoting development of renewable and alternative energy sources as an eligible activity for set-aside funding. The 2018 farm bill did not reauthorize the Northern Great Plains Regional Authority . Section 6304 also authorizes a new State Capacity Building Grant Program for the Northern Border Regional Commission . Congress authorizes the commission to provide grants to Maine, New Hampshire, New York, or Vermont for economic development activities. An eligible state must submit to the commission an annual work plan that includes the purpose of the grant. Section 6304 authorizes appropriations of $5 million per year for FY2019-FY2023 for the grant program. Section 6415 reauthorizes the Rural Economic Area Partnership (REAP) Program through FY2023. USDA has established REAP Zones to address critical issues related to economic growth, employment, and isolation. REAP Zones typically consist of multiple counties within a state and receive technical assistance and funding from USDA for strategic planning and community development activities. Section 6420 reauthorizes the National Rural Development Partnership through FY2023. This partnership, coordinated by USDA, includes state rural development councils and a national coordinating committee. State rural development councils facilitate collaboration among local government, private sector, and nonprofit entities in planning and implementing programs related to rural development. The national coordinating committee oversees and provides support for state rural development council activities. <4.2.6. Other Provisions> Section 12407 amends the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994 ( P.L. 103-354 ) to reestablish the Under Secretary of Agriculture for Rural Development as a permanent position within USDA. USDA eliminated the Under Secretary position in a 2017 reorganization, replacing it with an Assistant to the Secretary for Rural Development who reported directly to the Secretary of Agriculture and was not a Senate-confirmed position. The Under Secretary position reports to the Deputy Secretary of Agriculture and requires Senate confirmation. USDA asserted that the 2017 reorganization "recognizes and promotes the importance of rural development by placing it under the direct oversight of the Secretary." However, some stakeholder organizations opposed eliminating the Under Secretary position. For example, a letter to the House and Senate Agriculture Appropriations subcommittees signed by 578 organizations stated that RD "needs the time and attention of a management team led by an Under Secretary who is empowered to direct and administer rural development programs and field staff." Section 6417 grants the Secretary of Agriculture and the Secretary's designees access to certain information from the Department of Health and Human Services in order to verify income for individuals participating in certain Rural Housing Service programs . Prior law granted the HUD Secretary access to certain information to verify income of participants for certain HUD housing programs. Section 6417 allows the Secretary of Agriculture and the Secretary's designees access to the same information, subject to the same requirements, as the HUD Secretary. Sections 6601 through 6603 repeal certain rural development programs. Section 6602 repeals the Rural Telephone Bank. Section 6603 repeals all sections of the Launching our Communities' Access to Local Television Act of 2000 (Title X of H.R. 5548 , as enacted by Section 1(a)(2) of P.L. 106-553 ) except Section 1008 of the act. Section 6601 of the 2018 farm bill repeals the following programs, which were previously authorized in the ConAct or the Rural Electrification Act: Multijurisdictional regional planning organizations (Section 306(a)(23) of the ConAct), Grants to broadcasting systems (Section 310B(f) of the ConAct), Rural telework organizations (Section 379 of the ConAct), Historical barn preservation (Section 379A of the ConAct), Grants to train farm workers in new technologies and to train farm workers in specialized skills necessary for high-value crops (Section 379C of the ConAct), Grants to the Delta Regional Agricultural Economic Development Program (Section 379D of the ConAct), Grants for expansion of employment opportunities for individuals with disabilities in rural areas (Section 379F of the ConAct), Regional rural collaborative investment program (Subtitle I of the ConAct), Certain electric and telephone loans (Section 314 of the Rural Electrification Act), and The National Center for Rural Telecommunications Assessment (Section 602 of the Rural Electrification Act). <4.2.7. Technical Corrections> Sections 6701 and 6702 make technical corrections to the ConAct and Rural Electrification Act. Section 6701 amends the ConAct to correct the reference to the definition of Indian tribe for the Community Facilities Loan and Grant Program. It also clarifies the eligible activities for Rural Business Development Grants. Further, Section 6701 amends the ConAct to include Alabama as a participating state in the Delta Regional Authority. Congress initially made this amendment in the Consolidated Appropriations Act, 2001 ( P.L. 106-554 , 1(a)(4)). However, the amendment did not take effect at the time because it referred to the incorrect authorizing legislation. Section 6701 of the 2018 farm bill directs the correction to take effect as if included in P.L. 106-554 . Section 6702 corrects misspellings in the Rural Electrification Act. <4.2.7.1. Appendix. Comparison of Rural Development Provisions in Titles VI and XII of the 2018 Farm Bill (P.L. 115-334) with Prior Law>

The U.S. Department of Agriculture's (USDA) Rural Development agency (RD) administers programs to support rural infrastructure and economic development. This includes programs focused on rural housing, rural business development, rural water and energy infrastructure, and, more recently, rural broadband deployment. Congress considers reauthorizing these programs in periodic omnibus farm bills. In December 2018, President Trump signed the 2018 farm bill (Agriculture Improvement Act of 2018, P.L. 115-334 ) into law. This legislation reauthorizes and amends RD programs, establishes new rural development programs and initiatives, and repeals other programs. Economic trends and social issues prevalent in rural America during the drafting of a farm bill typically influence the law's rural development provisions. Issues that influenced the rural development provisions of the 2018 farm bill include: rural population decline; the changing nature of rural employment, especially the decline in agriculture and manufacturing employment; rural health challenges, including an increasing number of rural hospital closures and increasing rates of drug overdose deaths related to opioids; aging rural infrastructure and a lack of access to broadband internet in rural areas; and a shift among some scholars and policymakers toward regional approaches to rural economic development. The 2018 farm bill establishes new rural development programs and initiatives. Among the new provisions, the law directs USDA to temporarily prioritize funding under certain rural development programs for projects that address substance use disorder. It also authorizes USDA to make similar temporary prioritizations in the future, to respond to public health disruptions in rural areas. P.L. 115-334 also establishes a new rural broadband program to finance middle mile infrastructure —infrastructure that connects a local network to the internet backbone. The law also authorizes a new grant program to support high-wage jobs and new businesses in rural areas. P.L. 115-334 directs USDA to establish Tribal Promise Zones, which are to receive priority consideration for certain federal grant programs. Other new rural development provisions relate to broadband deployment, precision agriculture, and rural community development. P.L. 115-334 reauthorizes and amends a number of existing rural development programs. It adds a grant component to the Rural Broadband Access Loan Program and increases the authorization of appropriations from $25 million to $350 million per year for FY2019-FY2023. To be eligible for newly authorized grants, at least 90% of households in a service area must lack access to sufficient broadband service. The law also amends eligibility criteria for program loans, raising the percentage of households in an eligible service area that must lack access to sufficient broadband service from 15% to 50% of households. P.L. 115-334 codifies the Community Connect Grant Program and authorizes appropriations of $50 million per year for FY2019-FY2023. It also increases the authorizations of appropriations for the Emergency and Imminent Community Water Assistance Program, the Rural Decentralized Water Systems Program (formerly the Household Well Water Systems Program), and water and wastewater technical assistance and training programs. The law also amends the Cushion of Credit Program to terminate deposit authority and incrementally reduce the interest rate that accrues to borrowers. P.L. 115-334 amends certain definitions of rural used to determine eligibility for RD programs. It amends the definition of rural for certain housing and broadband programs to exclude incarcerated populations and the first 1,500 people residing on a military base. It also increases to 50,000 the maximum population of communities eligible for guaranteed loans under the Community Facilities and Water and Waste Disposal programs. The law reestablishes the position of Under Secretary of Agriculture for Rural Development as a permanent position within USDA, subject to Senate confirmation. USDA had eliminated the position in 2017 and replaced it with the Assistant to the Secretary for Rural Development, a position that did not require Senate confirmation. The 2018 farm bill also repeals the Rural Telephone Bank and grants to rural broadcasting systems, among other programs.

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<1. Introduction> This report identifies selected current major trade issues for U.S. agriculture that may be of interest in the second session of the 116 th Congress. It provides background on individual trade issues and attempts to bring perspective on the significance of each for U.S. agricultural trade. Each trade issue summary concludes with an assessment of its status. The report begins by examining a series of overarching issues. These include U.S. agricultural trade and its importance to the sector; a brief description of the trade policy being pursued by the Trump Administration in 2020 and its ramifications for U.S. agricultural exports; an update on the Administration's 2019 trade policy actions; a discussion of the ongoing and proposed new trade negotiations planned for 2020; and an update on World Trade Organization (WTO) agricultural issues related to the United States including the Administration's 2020 plans to engage in reforming the institution. The report then reviews a number of ongoing trade policy concerns to U.S. agriculture, including non-tariff measures, and trade barriers and disputes involving specialty crops, livestock, and dairy issues. The format for these trade issues is similar, consisting of background and perspective on the issue at hand and an assessment of their current status. <2. Overview of U.S. Agricultural Trade1> 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. In recent years, the value of farm exports has remained below the record level of $152 billion reached in FY2014. The U.S. Department of Agriculture (USDA) reports U.S. agricultural exports in FY2019 of $136 billion (see Figure 1 ). The FY2019 export total represents an $8 billion decline from FY2018. The decline in the value of farm exports since FY2014 initially reflected lower market prices for bulk commodities, such as soybeans and corn. Agricultural prices and U.S. exports of certain commodities, such as soybeans, were further affected by retaliatory tariffs imposed on U.S. agricultural imports by China and some other countries since 2018 in response to the Trump Administration's imposition of tariffs on certain imports from China and on U.S. imports of steel and aluminum from selected countries. In FY2019, U.S. agricultural imports were $131 billion, up $3 billion from FY2018, resulting in an agricultural trade surplus of $5 billion. This is below the surplus of $16 billion in FY2018 and below the record high in nominal dollars of $43 billion in FY2014. Agricultural exports are important both to farmers and to the U.S. economy. During the calendar years 2017 and 2018, the value of U.S. agricultural exports accounted for 8% and 9% of total U.S. exports, respectively. USDA's Economic Research Service (ERS) estimates that in 2017 U.S. agricultural exports generated about 1,161,000 full-time civilian jobs, including 795,000 jobs outside the farm sector. Exports account for around 20% of total farm production by value and are a major outlet for many farm commodities, absorbing over three-fourths of U.S. output of cotton and about half of total U.S. production of wheat and soybeans. Although feed crops and wheat account for most exports by volume, the high value product (HVPs) category which includes live animals, meat, dairy products, fruits and vegetables, nuts, fats, hides, manufactured feeds, sugar products, processed fruits and vegetables, and other processed food products accounted for 68% of the value of agricultural exports in FY2019. All states export agricultural commodities, but a minority of states account for a majority of farm export sales. In calendar year 2018, the 10 leading agricultural exporting states based on value California, Iowa, Illinois, Minnesota, Texas, Nebraska, Kansas, Indiana, North Dakota, and Missouri accounted for 58% of the total value of U.S. agricultural exports that year. In December 2018, Congress reauthorized major agricultural export promotion programs through FY2023 with the 2018 farm bill ( P.L. 115-334 ). Title III of the farm bill includes provisions covering export credit guarantee programs, export market development programs, and international science and technical exchange programs designed to develop agricultural export markets in emerging economies. Among other provisions, the 2018 farm bill permits funding to operate two U.S. agricultural export promotion programs in Cuba the Market Access Program and the Foreign Market Development Cooperator Program. <3. Trump Administration Trade Priorities for 202014> In establishing policy for U.S. participation in international trade, the Trump Administration has emphasized reducing U.S. bilateral trade deficits; focusing on renegotiating existing trade agreements that it viewed as being "unfair;" initiating new bilateral agreements; and responding to the trade practices of U.S. trading partners that it viewed as unfair, in violation of international trading commitments, or threatening to U.S. industry. Under various provisions of law, the Administration imposed punitive tariffs on U.S. imports of steel and aluminum from certain countries and on U.S. imports of selected products from China. These countries in turn, responded with retaliatory tariffs on U.S. exports, particularly agricultural products. During the second session of the 116 th Congress, the Trump Administration's agenda may focus on the following priorities: <3.1. Trade Agreement Implementation and Monitoring> <3.1.1. U.S.-Mexico-Canada Agreement (USMCA)> Legislation implementing a new trade agreement among the United States, Mexico, and Canada was enacted on January 29, 2020. The agreement awaits ratification by Canada, and certification by the United States that all parties have completed the necessary steps for entry into force. The U.S.-Mexico-Canada agreement replaces the North American Free Trade Agreement (NAFTA), which took effect in 1994. <3.1.2. "Stage One" U.S.-Japan Trade Agreement (USJTA)> On October 7, 2019, the Trump Administration signed the "Stage One" trade agreement with Japan, which included significant market access improvements in Japan for U.S. agricultural exports. The agreement took effect on January 1, 2020. Because it dealt only with tariffs and other market access issues, pursuant to P.L. 114-26 , the agreement did not require congressional approval. The Administration has indicated that it hopes to negotiate a second trade agreement with Japan that addresses a broader range of issues. Such an agreement might require congressional approval. <3.1.3. U.S.-China Phase One Agreement> On January 15, 2020, President Trump signed a "Phase One" executive agreement with China on trade and investment issues, including agriculture. This agreement, which entered into force on February 14, 2020, did not require congressional approval as it consisted largely of commitments by China. The Administration has stated its intent to negotiate a second phase of the agreement with China. Depending on the scope of such a negotiation, the Administration could be required under law to consult with Congress in advance and to submit an eventual agreement for congressional approval. <3.2. Ongoing and Proposed Negotiations> The Office of the U.S. Trade Representative (USTR) has indicated that the United States may also pursue new trade agreements with the European Union (EU), India, Kenya, the United Kingdom (UK), and a number of other countries. The Administration has stated that the U.S.-Kenya and the U.S.-UK negotiations will be "comprehensive," dealing with other trade-related issues in addition to market access. In those cases, the Administration might be required to consult with Congress in advance of negotiations and to submit any agreements for congressional approval. <3.3. Multilateral Trading System Reforms> USTR has indicated interest in WTO institutional reform. The upcoming WTO Ministerial Conference in June 2020 in Kazakhstan presents the United States and WTO members with an opportunity to address reform efforts, which are expected to include consideration of the WTO's treatment of agricultural trade. Some Members of Congress have indicated WTO reform to be a priority for 2020. <4. Agricultural Trade Disputes and Negotiations26> Since early 2018, Canada, China, the EU, India, Mexico, and Turkey targeted U.S. food and agricultural products with retaliatory tariffs in response to tariffs imposed by the United States on imports of steel and aluminum and certain imports from China. To facilitate ratification of USMCA, the United States removed tariffs on steel and aluminum imports from Canada and Mexico and these countries removed their retaliatory tariffs on U. S. agricultural imports in May 2019. The retaliatory tariffs made imports of U.S. agricultural products relatively more expensive compared to similar products from competitor nations. Initially, the announcements of retaliatory tariffs led to an increase in U.S. agricultural exports as importing countries built stocks in anticipation of the tariffs. U.S. agricultural exports increased slightly in 2018. In 2019, however, U.S. agricultural exports declined about 2%, due to lower global demand for affected U.S. agricultural products and downward pressure on prices of some commodities. In the short run, retaliatory tariffs contributed to price declines for certain U.S. agricultural commodities and to a reduction in exports, particularly for soybeans. Declining prices and export sales, combined with rising input and farm machinery costs, contributed to a 16% decrease in U.S. net farm income in 2018, which prompted USDA to provide trade aid payments to the farm sector in 2018 and 2019. <4.1. Negotiations with China> Imports from China have been subject to U.S. tariff increases on steel and aluminum under Section 232 of the Trade Expansion Act, which allows the President to impose tariffs on imports that "threaten to impair the national security." Additionally, U.S. imports of certain other Chinese products are subject to tariff increases under Section 301 of the Trade Act of 1974, which allows tariffs in response to trade practices that are determined to be unfair and injurious to a U.S. industry. China first retaliated in April 2018, by raising tariffs on certain U.S. imports, including agricultural products such as pork, fruit, and tree nuts. These retaliatory tariffs are in addition to existing Most Favored Nation (MFN) tariffs that China levies on imports from all countries including the United States. By September 2019, China had levied retaliatory tariffs on almost all U.S. agricultural products, ranging from 5% to 60%. After the imposition of retaliatory tariffs on U.S. products, U.S. agricultural exports to China experienced a 53% decline from $19.5 billion in 2017 to $9.2 billion in 2018. The Chinese market is important for several U.S. agricultural products. For example, in 2016 and 2017, the United States supplied over one-third of China's total soybean imports, almost all of China's distillers' grain imports (primarily used as animal feed), and most of China's sorghum imports. With the retaliatory tariffs in effect, U.S. soybean exports to China in 2018 declined in value to $3 billion (8 billion metric tons [MT]) from $12 billion (32 billion MT) in 2017. Similarly, the value of U.S. exports of sorghum and distillers dry grain declined about 40% and 30% respectively from 2017 to 2018. Most other U.S. agricultural exports to China also declined in 2018. Negotiations to resolve the U.S.-China dispute began in the fall of 2019 and resulted in a "Phase One" executive agreement (that does not require congressional approval) on trade and investment issues, including agriculture, signed in January 2020. Under the agreement, China is to import $32 billion worth of additional U.S. agricultural products over a two-year period. This implies an average annual increase of two-thirds from a 2017 base of $24 billion. Products mentioned in the agreement include oilseeds, meat, cereals, cotton, and seafood. China has not committed to tariff exemptions or import levels for any specific products, but it may grant tariff exclusions on U.S. imports on a case-by-case basis. On February 18, 2020, China released a list indicating that it may be willing to grant one-year tariff exemptions on most agricultural products. China agreed to improve its administration of tariff-rate quotas (TRQs) on wheat, corn, and rice to comply with a WTO ruling in favor of the United States in a dispute case regarding China's TRQ administration. Changes in China's TRQ administration would be expected to improve market access for these U.S. grains. <4.1.1. Other Provisions of the Phase One agreement> Domestic support : China agreed to improve the transparency of its domestic agricultural support measures. Sanitary and phytosanitary measures: China agreed to implement science- and risk-based food safety regulations. China also agreed to finalize phytosanitary protocols for U.S. avocadoes, blueberries, potatoes, barley, alfalfa pellets and cubes, almond meal pellets and cubes, hay, and California nectarines, and to implement a transparent, predictable, efficient, science- and risk-based regulatory process for the evaluation and authorization of products of agricultural biotechnology. In exchange, the United States agreed to complete its regulatory notice process for imports of Chinese fragrant pears, citrus, and jujube, and to complete a phytosanitary protocol for bonsai. L ivestock and fish: China agreed to improve access for U.S. beef products, including eliminating age restrictions on cattle slaughtered for export, eliminating traceability requirements, and establishing maximum residue levels for three hormones that are approved for use in livestock in the United States. It agreed to engage in technical discussions to import U.S. live cattle for breeding. China agreed to broaden the list of pork products that are eligible for importation, and to conduct a risk assessment for the veterinary drug ractopamine, which is allowed in U.S. beef and pork production. With respect to poultry, after having lifted a five-year ban on imports of U.S. poultry in November 2019, China agreed to adopt import regulations consistent with the World Organization for Animal Health Terrestrial Animal Health Code; this would potentially limit future import bans imposed due to avian influenza to poultry from the affected U.S. region rather than the entire country. China also agreed to approve for importation 26 aquatic species from the United States, and to streamline its procedures for registering U.S. seafood facilities and products. Technical Barriers to Trade: China agreed to implement the USDA Public Health Information System, an electronic system to provide export health certificates to an importing country in advance of shipment arrival. It also made commitments to provide regulatory certainty and market stability regarding U.S. dairy and infant formula products, rice, distillers' dried grains with solubles, feed additives, and pet foods. It agreed not to undermine market access for U.S. exports that use trademarks and generic terms by recognizing geographical indications (GI) in international agreements. GIs are place names used to identify products that come from certain regions or locations. Status and Outlook : The U.S.-China Phase One agreement is expected to improve opportunities for certain U.S. exporters; however, it may not create notable new market demand. Instead, it may produce a rearrangement of trading patterns between China and its various import suppliers, in which case the market price effects may be limited. Additionally, the coronavirus outbreak is expected to slow China's economic growth in the near-term, and may reduce Chinese overall import demand for agricultural products. It has also been disrupting global supply chains going in and out of China. Therefore, U.S. agricultural exports to China could fall short of the target of $32 billion additional exports to the 2017 base over a two-year period. The agreement provides China some flexibility to meet its purchase commitment. Both the United States and China "acknowledge that purchases will be made at market prices based on commercial considerations and that market conditions, particularly in the case of agricultural goods, may dictate the timing of purchases within any given year" (Chapter 6, Article 6.2.1 of the Phase One agreement). Under the agreement, China is not required to repeal any tariffs, but it has reduced certain retaliatory tariffs and will grant one-year tariff exclusions for various agricultural products in order to reach a target level of U.S. imports. Effective February 14, 2020, China halved the additional 5% and 10% retaliatory tariffs that it had imposed on U.S. products in August 2019. Nevertheless, tariffs imposed in April and July 2018, ranging from 2.5% to 55%, remain in place. USDA and USTR have stated that China has also taken a number of other actions to begin implementing its agriculture related commitments. Both China and the United States have indicated they expect to engage in further negotiations on trade during 2020. <4.2. Negotiations with Canada and Mexico42> Soon after taking office in January 2017, the Trump Administration announced its desire to renegotiate the North America Free Trade Agreement (NAFTA) among the three countries. Nonetheless, the United States imposed tariffs on steel and aluminum imports from Canada and Mexico in 2017. The United States also threatened tariffs on imported passenger vehicles, an action that would have a significant impact on both Canada and Mexico. In June 2018, Mexico retaliated against the steel and aluminum tariffs with a 15% tariff on U.S. sausage imports; a 20% tariff on other pork products, certain cheeses, apples, potatoes, and cranberries; and a 25% tariff on whey, blue-veined cheese, and whiskies. The following month, Canada imposed a retaliatory tariff of 10% on certain U.S. products, including dairy, poultry and beef products; coffee, chocolate, sugar and confectionery; prepared food products; condiments; bottled water; and whiskies. A new trade agreement, referred to as the United States-Mexico-Canada Agreement (USMCA), was announced in 2018. The U.S. implementing legislation was enacted on January 29, 2020. Mexico has ratified the USMCA and the Canadian Parliament has begun deliberations on the agreement. After ratification by all three countries, and certification by the United States that all parties have taken actions required under the agreement, the agreement would enter into force. The agricultural provisions of USMCA are summarized below. All food and agricultural products that had zero tariffs under NAFTA is to remain at zero under USMCA. This includes all agricultural imports from Mexico and almost all from Canada excepting certain dairy and poultry products. Canada is to increase market access for U.S. dairy products via TRQs. U.S. dairy imports within a TRQ is to enter Canada duty-free, while imports beyond the quota level face higher over-quota tariff rates of over 200% in many cases. Canada is to replace poultry TRQs under NAFTA with new TRQs. These are expected to lead to greater imports of U.S. eggs, turkey meat, and eggs, but reduce the quantity of U.S. chicken meat that can be imported into Canada duty free. Imports of U.S. poultry products above the set quotas is to face tariffs exceeding 200%. The United States, agreed to provide additional access to Canadian dairy products, sugar, peanuts and peanut products. Canada is to provide treatment and price to U.S. wheat equivalent to those of Canadian wheat if the U.S. wheat variety is registered as being similar to a Canadian variety. Currently, U.S. wheat exports to Canada are graded as feed wheat, and as such command a lower price. Four Members of Congress have requested USTR to work closely with Canada, through the Consultative Committee on Agriculture, to expedite the process for the registration of U.S. wheat varieties in Canada. The United States, Canada, and Mexico are required to treat the distribution of each other's spirits, wine, beer, and other alcoholic beverages as they do for products of national origin. The agreement establishes listing requirements for a product to be sold, along with specific limits on cost markups. Regarding sanitary and phytosanitary measures (SPS), USMCA requires greater transparency in rules and regulatory alignment among the three countries. It also would establish a new mechanism for technical consultations to resolve SPS issues. USMCA includes procedural safeguards for recognition of new geographical indications. USMCA would protect the GIs for food products that Canada and Mexico have already agreed to in trade negotiations with the EU, and would lay out transparency and notification requirements for recognition of any proposed new GIs. In a side letter accompanying the agreement, Mexico confirmed a list of 33 terms for cheese that would remain available as common names for U.S. cheese producers to use in exporting cheeses to Mexico. The list includes some terms that are protected as GIs by the EU. USMCA provisions also would protect certain U.S., Canadian, and Mexican spirits as distinctive products. USMCA signatories agreed to protect the confidentiality of proprietary formula information in the same manner for domestic and imported products. USMCA includes provisions for a Working Group for Cooperation on Agricultural Biotechnology to facilitate information exchange on policy and trade-related matters associated with agricultural biotechnology, an issue that was not covered under NAFTA. Status : The United States removed the tariffs it had imposed on steel and aluminum imports from Canada and Mexico on May 17, 2019, and, in turn, these countries removed their retaliatory tariffs on U.S. imports. USMCA requires ratification by Canada to enter into force. <4.3. "Stage One" U.S. Japan Trade Agreement (USJTA)49> On October 7, 2019, the United States and Japan signed the U.S.-Japan Trade Agreement (USJTA), which provides for limited tariff reductions and quota expansions to improve U.S. access to Japan's market, including for agricultural products. The agreement, which entered into force January 1, 2020, also provides for reciprocal U.S. tariff reductions, largely on industrial goods. Japan previously negotiated agricultural market access provisions with the United States in the context of the Trans-Pacific Partnership (TPP), a 2016 agreement among 12 Pacific-facing nations that the United States did not ratify. Those provisions were folded into the agreement that the remaining TPP countries agreed upon TPP-11 that went into force for Japan on December 30, 2018. As Japan began to improve market access for TPP-11 countries, various U.S. agricultural exports to Japan became less competitive compared to products from TPP-11 countries. Under the USJTA, Japan provides the same level of market access to U.S. products included in the USJTA as it provides to exports from TPP-11 member countries. Japan agreed to eliminate or reduce tariffs for certain U.S. agricultural exports and to provide preferential quotas for other U.S. agricultural products. Some products included in TPP-11 such as rice and certain dairy products are not included in the USJTA. Key agricultural provisions of USJTA are provided below. Japan is to reduce tariffs on meat products such as beef and pork or gradually eliminate them. Upon entry into force, tariffs were eliminated for certain products, including almonds, walnuts, blueberries, cranberries, corn, sorghum, and broccoli. Japan is to phase out tariffs in stage s for products such as cheeses, processed pork, poultry, beef offal, ethanol, wine, frozen potatoes, oranges, fresh cherries, egg products, and tomato paste. Japan agreed to provide country-specific quotas (CSQ) to all products that the United States had negotiated CSQs for under TPP, excepting for rice. Products covered by CSQs include wheat, wheat products, malt, whey, processed cheese, glucose, fructose, corn starch, potato starch, and inulin. Japan agreed to reduce the mark-ups on U.S. products that Japanese state trading enterprises import under quotas and sell in the domestic market with an additional price mark-up that makes them more expensive that the domestic product. Under Japan's WTO market access schedule, it reserves the right to temporarily increase tariffs on imports of sensitive agricultural products when they exceed a set threshold, or when the price of the imported product is below a set threshold. Under USJTA, Japan agreed to restrict the use of these additional tariffs (known as safeguards) on U.S. beef, pork, whey, oranges and race horses. Under TPP, the United States had negotiated market access under TRQs that were open to all TPP members, for barley and barley products other than malt; butter; skim and other milk powder; cocoa products; evaporated and condensed milk; edible fats and oils; vegetable preparations; coffee, tea and other preparations; chocolate, candies and confectionary; and sugar. No corresponding U.S. access to these TPP-wide TRQs is included in USJTA. The United States agreed to reduce tariffs on imports of certain perennial plants and cut flowers, persimmons, green tea, chewing gum, certain confectionary products, and soy sauce. The United States also agreed to provid e Japan the opportunity to export more beef by fold ing a country-specific quota for Japan of 200 MT into a larger TRQ designated for "other countries." Status: The Administration took a staged approach to U.S. negotiations with Japan in order to facilitate expedited market access improvements for U.S. agricultural products in Japan. The first stage agreement (USJTA) is much more limited than a traditional U.S. free trade agreement, allowing the USJTA ( P.L. 114-26 ) to take effect without approval by Congress. In consequence, the text does not address non-tariff issues such as sanitary and phytosanitary measures, agricultural biotechnology, technical barriers to trade, or geographical indications. These issues are expected to be covered in a further negotiation, which may commence in 2020. In February 2019, after the USJTA entered into force, Japan reached a trade agreement with the EU under which Japan agreed to recognize more than 200 EU GIs. If USTR were to determine that any of these European GIs poses a barrier to U.S. agricultural exports to Japan, the lack of legal text regarding geographical indications and the absence of a formal dispute settlement mechanism could limit U.S. ability to challenge such a barrier under the USJTA. Both the United States and Japan are members of the WTO, so the United States could challenge potential new trade barriers as inconsistent with Japan's WTO commitments. <4.4. U.S.-EU Agricultural Trade54> The Trump Administration's decision to impose tariffs on steel and aluminum affected imports from the EU. In June 2018, the EU responded to the steel and aluminum tariffs by imposing a 25% tariff on imports of U.S. corn, rice, sweetcorn, kidney beans, certain breakfast cereals, peanut butter, orange juice, cranberry juice, whiskies, cigars, and other tobacco products, and a 10% tariff on certain essential oils. The EU also could be affected if the United States were to impose tariffs on passenger vehicles, and could respond with further punitive tariffs against U.S. exports. On October 18, 2019, the United States imposed additional tariffs on $7.5 billion worth of U.S. imports from the EU. The action, authorized by WTO dispute settlement procedures, came after USTR determined that the EU and certain EU member states had not complied with a WTO Dispute Settlement Body ruling recommending the withdrawal of subsidies on the manufacture of large civil aircraft. USTR has indicated that additional tariffs initially will be limited to 10% of the product value on large civil aircraft and 25% on agricultural and other products from the EU. In total, 561 agricultural tariff lines are affected, including cheeses, biscuits, pork products, fish products, fruit products, olives, whiskies, liquors, and wine. The UK, which left the EU in January 2020, is included among the affected countries, and 56 tariff lines of UK products are subject to additional 25% tariffs. <4.4.1. Limited Expected Role of Agricultural Issues in Upcoming Trade Talks> Against this background, in October 2018, USTR officially notified the Congress of the Trump Administration's plans to enter into formal trade negotiations with the EU. This action followed a July 2018 U.S.-EU Joint Statement by President Trump and then-European Commission President Jean-Claude Juncker announcing that they would work to reduce tariffs and other trade barriers, address unfair trading practices, and increase U.S. exports of soybeans and certain other products. Previously, in 2016, U.S.-EU negotiations to create a Transatlantic Trade and Investment Partnership (T-TIP) under the Obama Administration stalled after 15 rounds. Among the areas of contention were certain regulatory and administrative differences between the United States and the EU on issues of food safety, public health, and product naming schemes for some types of food and agricultural products. The United States and the EU are the world's largest trade and investment partners. While food and agricultural trade between the United States and the EU27 accounts for less than 1% of the value of overall trade in total goods and services, the EU27 remains a leading export market for U.S. agricultural exports. It accounted for about 8% of the value of all U.S. exports and ranked as the fifth largest market for U.S. food and farm exports in 2019 after Canada, Mexico, China, and Japan. In 2019, U.S. exports of agricultural and related product exports to the EU27 totaled $12.4 billion, while U.S. imports of agricultural and related product imports from the EU27 totaled $29.7 billion, resulting in a U.S. trade deficit of approximately $17.3 billion. This is the reverse of U.S. trade surpluses with the EU27 during the 1990s. Leading U.S. agricultural exports to the EU27 were corn and soybeans, tree nuts, distilled spirits, fish products, wine and beer, planting seeds, tobacco products, and processed foods. Leading U.S. agricultural imports from the EU27 were wine, distilled spirits, beer, drinking waters, olive oil, cheese, baked goods, processed foods, and cocoa products. In January 2019, USTR announced its negotiating objectives for the agricultural portion of a U.S.-EU trade agreement following a public comment period and a hearing involving several leading U.S. agricultural trade associations. The objectives include greater market access, changes to EU administration of tariff-rate quotas, and changes to a variety of EU regulations. Among regulatory issues, key U.S. objectives include harmonizing regulatory processes and standards to facilitate trade, including sanitary and phytosanitary standards, and establishing specific commitments for trade regarding agricultural biotechnologies. The U.S. objectives also include addressing geographical indications by protecting generic terms for common use. U.S. agricultural interests generally support including agriculture as part of the U.S. negotiating objectives for a U.S.-EU trade agreement. The EU negotiating mandate, however, states that a key EU goal is "a trade agreement limited to the elimination of tariffs for industrial goods only, excluding agricultural products." Several Members of Congress have stated their opposition to the EU's decision to exclude agricultural policies in their negotiating mandate. The U.S.-EU trade negotiations come amid heightened U.S.-EU trade frictions. In response to U.S. Section 232 tariffs on steel and aluminum imports, the EU had retaliated in June 2018 by imposing a tariff increase of 25% on imports of certain U.S. food and beverage products. The value of U.S. agricultural exports to the EU28 (included the UK) targeted by these additional tariffs is approximately $1.2 billion in 2018, or about 9% of total U.S. agricultural exports to the EU28. In October 2019, U.S.-EU trade tensions escalated further when the United States imposed additional tariffs on $7.5 billion worth of certain U.S. imports from the EU, including food products. This action authorized by the WTO followed a USTR investigation initiated in April 2019 under Section 301 of the Trade Act of 1974. Aside from ongoing trade tension, some of the same issues that stalled U.S.-EU agricultural talks in the T-TIP negotiations could prove to be equally intractable today. For food and agricultural products, a series of non-tariff issues stem in part from commercial and cultural practices often enshrined in EU laws and regulations that vary from those of the United States namely differences involving SPS and technical barriers to trade, broadly covering laws and regulations measures intended to protect public health as well as differences involving GIs. Status: The outlook for the new U.S.-EU trade talks remains uncertain, given ongoing trade tensions. Whether or not the talks will include food and agriculture is also uncertain, as there continues to be disagreement between the two trading partners about the scope of the negotiations, particularly the EU's intent to exclude agriculture from the talks. Perhaps the overarching goal for the U.S. side is addressing the U.S. trade deficit in agricultural products with the EU. Public statements by U.S. and EU officials in early 2020 signaled that the U.S.-EU trade talks might include SPS and regulatory barriers to agricultural trade. It is not clear, however, that both sides agree which specific types of non-tariff trade barriers might actually be part of the talks. Some press reports indicate that USDA officials have said that selected SPS barriers as well as GIs would need to be addressed. Specific SPS issues important to the U.S. side include the EU's prohibitions on the use of hormones in meat production (see " U.S.-EU Beef Hormone Dispute ") and pathogen reduction treatments for poultry (see section " U.S.-EU Dispute Over Pathogen Reduction Treatments (PRTs) "), and EU restrictions on the use of biotechnology (see section " Agricultural Biotechnology "). Other press reports, however, indicate that some EU officials have downplayed the extent that certain non-tariff barriers such as biotechnology product permits, approval of certain pathogen rinses for poultry, regulations on pesticides or food standards would be part of the talks. The United States continues to push for additional concessions from the EU. More formal discussions are expected in spring 2020. <4.4.2. Limited Expected Role of Agricultural Issues in Upcoming Trade Talks> Against this background, in October 2018, USTR officially notified the Congress of the Trump Administration's plans to enter into formal trade negotiations with the EU. This action followed a July 2018 U.S.-EU Joint Statement by President Trump and then-European Commission President Jean-Claude Juncker announcing that they would work to reduce tariffs and other trade barriers, address unfair trading practices, and increase U.S. exports of soybeans and certain other products. Previously, in 2016, U.S.-EU negotiations to create a Transatlantic Trade and Investment Partnership under the Obama Administration stalled after 15 rounds. Among the areas of contention were certain regulatory and administrative differences between the United States and the EU on issues of food safety, public health, and product naming schemes for some types of food and agricultural products. The United States and the EU are the world's largest trade and investment partners. While food and agricultural trade between the United States and the EU27 accounts for less than 1% of the value of overall trade in total goods and services, the EU27 remains a leading export market for U.S. agricultural exports. It accounted for about 8% of the value of all U.S. exports and ranked as the fifth largest market for U.S. food and farm exports in 2019 after Canada, Mexico, China, and Japan. In 2019, U.S. exports of agricultural and related product exports to the EU27 totaled $12.4 billion, while U.S. imports of agricultural and related product imports from the EU27 totaled $29.7 billion, resulting in a U.S. trade deficit of approximately $17.3 billion. This is the reverse of U.S. trade surpluses with the EU27 during the 1990s. Leading U.S. agricultural exports to the EU27 were corn and soybeans, tree nuts, distilled spirits, fish products, wine and beer, planting seeds, tobacco products, and processed foods. Leading U.S. agricultural imports from the EU27 were wine, distilled spirits, beer, drinking waters, olive oil, cheese, baked goods, processed foods, and cocoa products. In January 2019, USTR announced its negotiating objectives for the agricultural portion of a U.S.-EU trade agreement following a public comment period and a hearing involving several leading U.S. agricultural trade associations. The objectives include greater market access, changes to EU administration of tariff-rate quotas, and changes to a variety of EU regulations. Among regulatory issues, key U.S. objectives include harmonizing regulatory processes and standards to facilitate trade, including sanitary and phytosanitary standards, and establishing specific commitments for trade regarding agricultural biotechnologies. The U.S. objectives also include addressing geographical indications by protecting generic terms for common use. U.S. agricultural interests generally support including agriculture as part of the U.S. negotiating objectives for a U.S.-EU trade agreement. The EU negotiating mandate, however, states that a key EU goal is "a trade agreement limited to the elimination of tariffs for industrial goods only, excluding agricultural products." Several Members of Congress have stated their opposition to the EU's decision to exclude agricultural policies in their negotiating mandate. The U.S.-EU trade negotiations come amid heightened U.S.-EU trade frictions. In response to U.S. Section 232 tariffs on steel and aluminum imports, the EU had retaliated in June 2018 by imposing a tariff increase of 25% on imports of certain U.S. food and beverage products. The value of U.S. agricultural exports to the EU28 (included the UK) targeted by these additional tariffs is approximately $1.2 billion in 2018, or about 9% of total U.S. agricultural exports to the EU28. In October 2019, U.S.-EU trade tensions escalated further when the United States imposed additional tariffs on $7.5 billion worth of certain U.S. imports from the EU, including food products. This action authorized by the WTO followed a USTR investigation initiated in April 2019 under Section 301 of the Trade Act of 1974. Aside from ongoing trade tension, some of the same issues that stalled U.S.-EU agricultural talks in the T-TIP negotiations could prove to be equally intractable today. For food and agricultural products, a series of non-tariff issues stem in part from commercial and cultural practices often enshrined in EU laws and regulations that vary from those of the United States namely differences involving SPS and technical barriers to trade, broadly covering laws and regulations measures intended to protect public health as well as differences involving GIs. Status: The outlook for the new U.S.-EU trade talks remains uncertain, given ongoing trade tensions. Whether or not the talks will include food and agriculture is also uncertain, as there continues to be disagreement between the two trading partners about the scope of the negotiations, particularly the EU's intent to exclude agriculture from the talks. Perhaps the overarching goal for the U.S. side is addressing the U.S. trade deficit in agricultural products with the EU. Public statements by U.S. and EU officials in early 2020 signaled that the U.S.-EU trade talks might include SPS and regulatory barriers to agricultural trade. It is not clear, however, that both sides agree which specific types of non-tariff trade barriers might actually be part of the talks. Some press reports indicate that USDA officials have said that selected SPS barriers as well as GIs would need to be addressed. Specific SPS issues important to the U.S. side include the EU's prohibitions on the use of hormones in meat production (see " U.S.-EU Beef Hormone Dispute ") and pathogen reduction treatments for poultry (see section " U.S.-EU Dispute Over Pathogen Reduction Treatments (PRTs) "), and EU restrictions on the use of biotechnology (see section " Agricultural Biotechnology "). Other press reports, however, indicate that some EU officials have downplayed the extent that certain non-tariff barriers such as biotechnology product permits, approval of certain pathogen rinses for poultry, regulations on pesticides or food standards would be part of the talks. The United States continues to push for additional concessions from the EU. More formal discussions are expected in spring 2020. <5. Trade Aid in Response to Trade Retaliation89> During 2018 and 2019, the Secretary of Agriculture used his authority under the Commodity Credit Corporation Charter Act to initiate two ad hoc trade assistance programs in response to foreign trade retaliation targeting U.S. agricultural products. The trade aid packages were part of the Administration's effort to provide short-term assistance to farmers for the temporary loss of important international markets. On July 24, 2018, USDA announced the first "trade aid" package, which targeted production of selected agricultural commodities in 2018 and was valued at up to $12 billion. On May 23, 2019, USDA announced a second package, which targeted production of an expanded list of commodities and was valued at up to an additional $16 billion. Thus, the two years of combined trade assistance were valued at up to $28 billion. Both trade aid packages included (1) a Market Facilitation Program (MFP) of direct payments to producers of commodities most affected by the trade retaliation, (2) a Food Purchase and Distribution Program (FPDP) designed to partially offset lost export sales of affected commodities, and (3) an Agricultural Trade Promotion (ATP) program to expand foreign markets. The largest part of the aid is two years of MFP payments initially valued at a combined $24.5 billion (up to $10 billion in 2018 and $14.5 billion in 2019). Status: As of February 10, 2020, USDA estimates that it has spent $8.6 billion under the 2018 MFP and $14.2 billion under the 2019 MFP. Payments of this magnitude could attract international attention about whether they are consistent with WTO rules and U.S. commitments on domestic support, as some WTO member countries are questioning whether this additional aid violates U.S. spending limits under the WTO. The trade aid packages raise other potential questions as well. For instance, if the U.S.-China Phase One trade agreement does not produce the commodity purchases promised by China, or if commodity prices remain relatively low, should another trade aid package, or some alternative compensatory measure, be provided in 2020, and possibly beyond? If MFP payments are provided in the future, should USDA revise its payment formulation to provide a broader distribution of payments across the U.S. agricultural sector? <6. Future Trade Negotiations95> <6.1. India> India is the world's second most populous country after China. Since 2000, its economy has been the fastest growing in the world. Given the rapid growth in population and income among a large segment of the population, demand for higher-value food products such as fruits, nuts, dairy products, and other livestock products, is expected to increase among Indian consumers. While India is among the world's largest producers and consumers of a range of crop and livestock commodities, USDA projects India will continue to be an important importer of dairy products, vegetable oils, pulses, tree nuts, and fruit, and that it will continue to be a major exporter of rice, cotton and buffalo meat. U.S. agricultural exports to India have increased since 2015, reaching $1.6 billion in 2017 ( Figure 2 ). In 2018, U.S. exports declined to $1.5 billion, coinciding with India's imposition of retaliatory tariffs on imports of U.S. almonds, walnuts, apples, chickpeas, and lentils, but U.S. exports rebounded to $1.8 billion in 2019 due to increased sales of cotton and tree nuts (largely pecans, pistachios, and dried coconut). Tree nuts (mainly almonds), cotton, and fresh fruit are key U.S. exports to India. However, other U.S. high-value products are registering rapid growth. For example, U.S. dairy exports to India grew by almost 300% from $16 million in 2015 to $60 million in 2019. In 2019, the United States imported agricultural products valued at $2.6 billion from India. Spices, rice, essential oils, tea, processed fruit and vegetables, and other vegetable oils are the leading U.S. imports from India. U.S.-India trade negotiations follow a period of trade tensions. In March 2018, the United States levied additional tariffs on steel and aluminum imports from India. India responded by identifying certain U.S. food products for retaliatory tariffs but did not levy them until June 16, 2019, after the United States terminated preferential treatment for India under the Generalized System of Preferences (GSP). India's retaliatory tariffs range from 10% to 25% on imports of U.S. chickpeas, shelled almonds, walnuts, apples, and lentils. Both countries' tariffs are likely to become an issue if the United States and India undertake a major trade negotiation, as USTR has proposed. <6.1.1. Trade Policy Issues> India's tariffs and non-tariff barriers have prevented greater market penetration of U.S. agricultural products. India maintains very high tariffs on many products, for example 60% on flowers, 100% on raisins, and 150% on alcoholic beverages. Since 2017, a system of annual import quotas on pulses has restricted U.S. exports of pulses to India. U.S. exports of wheat and barley to India are currently restricted due to its zero-tolerance standard for certain pests and weeds, and restrictions also exist on imports of livestock genetic material. Similarly, processed products, including ethanol, are subject to various restrictions that prevent U.S. exports to India. India bans imports of tallow, fat, and oils of animal origin. India's complex requirements for U.S. dairy products have been a barrier for expanding U.S. exports. In 2015, India revised its health certificate requirement for pork imports. Since then, the United States has been seeking approval to export pork to India. USTR asserts that India's customs regulations are not transparent or predictable. India's approval process for genetically engineered products are slow and not transparent. India maintains a large and complex program for public food stockholding, both to distribute food to poor consumers and to stabilize market prices, essentially subsidizing domestic production. India provides a broad range of support to its agricultural sector. In May 2018, the United States argued at the WTO that India was under-reporting its price supports for rice and wheat. In November 2018, the United States questioned India's price support for cotton, while Australia has questioned India's price support for sugarcane. Status : In 2019, in response to various U.S. concerns over India's trade barriers, the United States revoked India's eligibility for preferential tariff treatment under the U.S. GSP. Total value of U.S. imports of agricultural products from India were down 1% in 2019 from $2.7 billion in 2018 to $2.6 billion in 2019. USTR has stated that it hopes to reach an agreement in 2020 that will, among other things, provide greater access to the Indian market for U.S. agricultural products, potentially in exchange for U.S. restoration of India's eligibility under GSP. <6.2. Kenya> On February 6, 2020, the Trump Administration announced that the United States intends to negotiate a comprehensive trade agreement with Kenya using the authority under P.L. 114-26 . The Administration asserts that such a trade agreement will complement Africa's regional integration efforts, including as part of the African Continental Free Trade Area (AfCFTA), to which the United States has pledged support. Kenya hosts three international agricultural research centers that focus on innovations, including agricultural biotechnology, to sustainably improve global food security. These institutions are the International Livestock Research Institute, the World Agroforestry Center, and the International Centre of Insect Physiology and Ecology. Kenya is an emerging middle-income country, home to more than 47 million people with an estimated population growth rate of 2.5% in 2017. USDA projects Kenya's real GDP per capita to grow at an annual rate of about 4% though 2031. With anticipated growth in population and per capita income, Kenya has the potential to increase its imports of food and other agricultural products. Kenya's top five agricultural imports are wheat, palm oil, sugar, corn and rice. Its top exports from the United States are wheat, vegetable oils excluding soybean oil, pulses, coarse grains, and other products that include many prepared food products ( Figure 3 ). <6.2.1. Trade Policy Issues> Kenya is a beneficiary of the African Growth and Opportunity Act, most recently extended in P.L. 114-27 , under which it has duty-free access to the U.S. market for 6,400 products including agricultural products. In 2019, the United States imported agricultural products valued at $126 million from Kenya, with major products being macadamia and cashew nuts, coffee, tea, roses, and non-edible vegetable and nut oils. Kenya's MFN tariffs rates that apply to imports from the United States are relatively high. For example, simple average MFN tariffs for animal products are 23.1%, dairy products are 51.7%, fruit and vegetables are 22%, cereals and preparations are 22.2%, sugar is 40%, and fish products are 24.8%. Other concerns raised by USDA include a Kenyan ban on imports of genetically engineered (GE) agricultural products (although it has approved field trials for GE cotton and drought and insect resistant corn), bans on imports of U.S. whole peas and lentils, and had a ban on wheat from the U.S. Pacific Northwest over concerns regarding a certain fungus. In February 2020, Kenya adopted a phytosanitary protocol that allows wheat growers in Washington State, Oregon, and Idaho access to Kenya's wheat market, potentially allowing increased U.S. wheat exports to Kenya. Status : USTR has said it plans to officially notify Congress of its intent to start negotiations following consultations with Congress as required by the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 ( P.L. 114-26 ). Subsequently, USTR is to publish notices in the Federal Register requesting public comment on the direction, focus, and content of the trade negotiations with Kenya. USTR is to publish objectives for the negotiations at least 30 days before trade negotiations begin. Some Members of Congress have expressed their support for a free trade agreement with Kenya. <6.3. United Kingdom (UK)> In January 2020, the UK left the EU. It remains a member of the EU customs union, so U.S.-UK trade continues to be governed by agreements between the United States and the EU in addition to WTO rules. However, the UK has announced its intention to withdraw from the EU customs union on December 31, 2020. Thereafter, U.S.-UK trade will occur under WTO rules unless a separate agreement is reached between the United States and the UK. The UK entered the WTO as a member of the EU, and does not have its own schedule of commitments under the WTO. U.S.-UK trade would thus continue to be governed by the EU WTO schedule, with some confusion regarding what share of quota and subsidy commitments made by the EU will henceforth apply to the UK. Therefore, some Members of Congress have indicated that a comprehensive U.S.-UK trade agreement should be a priority for the United States. The UK has accounted for about 1.3% of total U.S. agricultural exports from 2015 to 2019. Major U.S. exports are wine and beer, tree nuts, prepared food, soybeans, live animals and other products ( Figure 4 ). The United States does not export notable quantities of meat products to the UK, and the Trump Administration and some Members of Congress and U.S. agricultural industry would like to expand exports of these products in the post-Brexit environment. As a member of the EU, the UK posed the same set of trade barriers to U.S. agricultural exports as those discussed under " U.S.-EU Agricultural Trade ". In particular, hormone treated beef, chlorine-washed poultry, and bio-engineered food products have faced restrictions in accessing EU markets. The UK has sent mixed signals regarding these issues and has hinted that it may allow imports of genetically engineered U.S. agricultural products. At the same time, some reports indicate the UK will not allow imports of chlorine-washed chicken meat. Among other goals for U.S. agricultural trade, USTR has identified reducing or eliminating tariffs, providing adjustment periods for U.S. import-sensitive products before initiating tariff reduction, eliminating non-tariff barriers that discriminate against U.S. agricultural goods, improving UK's TRQ administration, promoting regulatory compatibility, and establishing commitments for trade in agricultural biotechnology products. USTR has also articulated specific goals regarding sanitary and phytosanitary provisions, customs and trade facilitation, rules of origin, and technical barriers to trade. Some Members of Congress have requested that improved market access for U.S. rice be an objective of U.S. negotiators. Status : On October 16, 2018, the Trump Administration notified Congress of proposed trade agreement negotiations with the UK. The UK could not formally negotiate or conclude a new agreement until it exited the EU, which occurred on January 31, 2020, and any agreement could not take effect until the UK exits the EU single market and customs union. Given the proposed scope of the negotiations, any resulting agreement would likely be subject to ratification by Congress. <7. WTO and U.S. Agriculture128> The World Trade Organization is an international organization that administers the rules and agreements negotiated among its 164 members to eliminate trade barriers and govern trade. It also serves as an important forum for resolving trade disputes through its committee structures and its Dispute Settlement Body, which approves reports issued by panels of legal experts and a separate Appellate Body. The United States was a major force behind the establishment of the WTO in 1995. Under the WTO's Agreement on Agriculture (AoA), agreed in 1995, national agricultural policies including domestic farm support, agricultural export subsidies, and restrictive import controls were placed under a multilaterally agreed-upon set of disciplines for the first time. WTO members agreed to reform their domestic agricultural support policies, increase access to imports, and reduce export subsidies. The disciplines on these three "pillars" of agricultural policy involved freezing (or "binding") protective measures and subsidies at base period levels, then instituting annual reductions from the bound levels. Article 15 of the AoA granted developing and least-developed countries special rights or extra leniency termed "special and differential treatment" in the implementation of their policy commitments. Specifically, they had longer periods over which to reduce subsidies and to improve market access. They were also allowed to retain certain subsidies that were prohibited for other countries. During the AoA's early years, Article 13, known as the Peace Clause or "due restraint" clause, provided additional impetus for reform. The Peace Clause provided temporary protection for market-distorting domestic support and export subsidy measures from challenges under other WTO provisions, as long as these measures complied with certain requirements. However, such subsidies would be open to challenge after the Peace Clause expired around January 2004. The AoA was envisioned as a first step in the process of global market liberalization in the agricultural sector. The impending expiration of the Peace Clause coupled with Article 20's directive to continue the reform process led WTO members to launch the Doha Round of negotiations in 2001. But, the Doha Round failed to reach consensus on formulas to reduce tariffs and agricultural subsidies, due in part to disagreements among developing countries that wished to retain their special and differential treatment under the AoA and wealthier countries that wanted to limit such preferences. The Doha Round has been at an impasse since 2009. The WTO's effectiveness as a negotiating body for broad-based trade liberalization and its role in resolving trade disputes therefore have come under intensified scrutiny in recent years. The WTO has struggled to address newer issues, such as digital trade and regulations affecting services. In addition, the Appellate Body is effectively non-functional due to the United States' decision to block the nomination of members, which prevents it from having a quorum needed to resolve disputes. Status: USTR has stated that WTO institutional reform is a priority in 2020. Some Mof Congress have voiced their agreement. The WTO's chair for agricultural negotiations may circulate a negotiating framework for the June 2020 meeting of WTO trade ministers in Kazakhstan that includes rules designed to increase sustainable agricultural production. The meeting may also consider a proposal by a group representing 19 countries, known as the Cairns Group, to "cap and reduce by at least half the current sum of global agricultural trade- and production-distorting domestic support entitlements by 2030." <7.1. 2018 Farm Bill, Trade Aid, and WTO Compliance138> Under the AoA, the United States has committed to limit its domestic support program spending deemed most trade-distorting (referred to as "amber box" outlays) to $19.1 billion per year. The AoA spells out the rules for countries to determine whether their policies are potentially trade-distorting, how to calculate the costs of any distortion using a specially defined indicator, the "Aggregate Measure of Support" (AMS), and how to report those costs to the WTO in a public and transparent manner. While the AMS is subject to a spending limit, the AoA provides four potential exemptions from the AMS spending limit. First, if a program's outlays are considered to be minimally trade distorting or non-trade distorting (in accordance with specific criteria listed in Annex 2 of the AoA), then they may qualify as "green box" programs and not be included in the AMS. Second, if program spending is trade-distorting but has offsetting features that limit the production associated with support payments, then they may qualify as "blue box" programs and not be included in the AMS. Third, if AMS outlays for a specific commodity are sufficiently small relative to the output value of that commodity (product-specific de minimis), they may be exempted. Finally, if aggregate AMS outlays are small relative to the value of total agricultural production (non-product-specific de minimis) then they may be exempted. Any AMS left over after applying these four exemptions constitutes the amber box. Since the WTO's establishment, the United States has generally met its WTO amber box spending commitment. However, in some years U.S. compliance has hinged on judicious use of de minimis exemptions, which permit it to exclude certain spending from being considered under its amber box limit (see Figure 5 ). To date, no WTO member has challenged these exemptions. Since 2010, U.S. outlays on potentially market-distorting farm programs have been trending upward ( Figure 5 ). From 2011 through 2016, AMS outlays (amber box plus de minimis exemptions) averaged $14.6 billion per year. However, several policy developments since 2016 have created uncertainty about whether the United States will remain in compliance with the rules and spending limits for domestic support programs that it has agreed to in the WTO. These developments are, first, farm program changes under both the 2018 farm bill ( P.L. 115-334 ), which expanded payment eligibility and eliminated certain programs from payment limits, and, second, USDA trade aid programs implemented in 2018 and 2019 under other statutory authorities in response to foreign trade retaliation targeting U.S. agricultural products (see " Trade Aid in Response to Trade Retaliation "). U.S. AMS spending is estimated to have been higher in 2017 through 2019, based on CRS compilation of USDA program data. Outlays in 2017 are estimated to have been $16.5 billion; however, the classification of $10.1 billion in program spending as de minimis exemptions would limit amber box outlays to $6.3 billion. The addition of the Administration's two MFP "trade aid" payments, valued at $8.6 billion in 2018 and approximately $10.7 billion in 2019, are estimated to push total AMS outlays above the U.S. amber box spending limit to $22.4 billion in 2018 and $23.6 billion in 2019. Whether the United States will violate its spending commitment or not would be expected to depend on the extent that de minimis exemptions apply for those two years. The United States has yet to notify spending to the WTO under any of the trade assistance programs, so the exact WTO spending classification is currently unknown. However, past practice can serve as a guide for the likely notification. The FPDP and ATP programs for 2018 and 2019 are expected to have been implemented in a similar manner during both years. USDA outlays under food purchase and distribution programs have historically been notified to the WTO as green box compliant and thus not subject to any spending limit. Trade promotion programs, such as ATP, are not notified under domestic support, because they do not involve direct payments to producers. Thus, the FPDP and ATP programs are not expected to affect the United States' ability to meet its WTO commitments. Payments under the two MFP programs were structured differently during 2018 and 2019. As a result, they are likely to be notified under different WTO classifications. The specific manner of determining how payments are made to individual producers is likely to determine their WTO status. Potential AMS classifications are: USDA's MFP payments for 2018 were based on each farm's harvested production of eligible crops during 2018 times a fixed per-unit payment rate. Payments to dairy were based on historical production, while hog payments used mid-year inventory data. Under this specification, 2018 MFP payments are likely to be notified as coupled, product-specific AMS and would count against the U.S. annual spending limit of $19.1 billion (unless they are exempted under the product-specific de minimis exemption). USDA's MFP payments for 2019 were coupled to a producer having planted at least one eligible commodity within the county, but they are independent of which commodity or commodities were planted. Under this specification, the 2019 MFP payments would appear to be coupled to planted acres a producer has to plant an eligible crop to get a payment but are non-product-specific, thus possibly notifiable as non-product-specific AMS. Status: Most recent studies suggest that, for U.S. program spending to exceed the $19.1 billion cumulative spending limit, even with the addition of large MFP payments and higher traditional program support levels, a combination of events would have to occur that would broadly depress commodity prices. Perhaps more relevant to U.S. agricultural trade is the concern that, because the United States plays such a prominent role in most international markets for agricultural products, any distortion resulting from U.S. policy could be both visible and potentially vulnerable to challenge under WTO rules. <7.2. U.S. Challenges to Farm Support Spending of WTO Members146> Since the inception of the WTO in 1995, the United States has initiated 46 WTO dispute cases related to agriculture. Of these cases, 34 were fully or partially decided in favor of the United States by the WTO panel hearing the case. <7.2.1. U.S. Challenges of China's Agricultural Domestic Support> In September 2016, USTR filed a dispute settlement case (DS511) at the WTO over China's domestic agricultural support policies, alleging they were inconsistent with WTO rules and commitments. USTR contended that the level of support that China provided for rice, wheat, and corn had exceeded by nearly $100 million from 2012 through 2015 the level to which China had committed to when it joined the WTO. USTR also asserted that China's price support for domestic production had been above the world market prices since 2012, thereby creating an incentive for Chinese farmers to increase production of the subsidized crops, which in turn displaced imports from the United States and elsewhere. In December 2016, USTR requested that the WTO establish a dispute settlement panel to examine China's domestic support levels for these crops. On February 28, 2019, the WTO dispute settlement panel found that China had exceeded its domestic support limits for wheat and rice in each year between 2012 and 2015 and therefore was not in compliance with its WTO commitment. The panel made recommendations that China change its calculations of reference prices and domestic support in order to comply with its WTO commitments. The panel did not make a ruling on corn because China had already made changes to its support for corn that were found to be less trade distorting than the method used prior to 2015. Status: Under the U.S.-China Phase One trade agreement, China stated that it will respect its WTO obligations and publish in its official journal its laws, regulations and other measures pertaining to its domestic support programs and policies. <7.2.2. U.S. Challenges to China's Agricultural Market Access Policy> On December 15, 2016, USTR filed another WTO dispute settlement case (DS517) against China, alleging that China administered its TRQs for wheat, rice, and corn in such a way that the duty-free quotas were never filled, even when imported grains were priced lower than domestic grains. USTR stated that China's TRQ administration appeared to restrict imports and failed to provide sufficient information to permit the processing of quota applications and importation. On September 22, 2017, a WTO dispute settlement panel was established on China Tariff Rate Quotas for Certain Agricultural Products . On April 18, 2019, the panel ruled in favor of the United States, stating that "China's administration of its TRQs for wheat, rice and corn were inconsistent with its obligations under the WTO to administer TRQs on a transparent, predictable and fair basis." The panel recommended that China make changes to its TRQ administration to conform to its WTO obligations. Status : In the U.S.-China Phase One trade agreement, China stated that it will ensure that its TRQ measures conform with the WTO panel ruling. <7.2.3. U.S. Challenges to India's Domestic Agricultural Support> In May 2018, the United States asserted at the WTO that India had not accurately notified the WTO of its spending on its market price support for rice and wheat for the marketing years 2010/11 through 2013/14. The United States alleged that India's market price support for wheat and rice exceeded its allowable levels of trade distorting domestic support under the WTO. In November 2018, the United States also challenged India's domestic support for cotton at the WTO, stating that it exceeded its allowable level under its WTO commitments. At about the same time, Australia, Brazil, and Guatemala challenged India's level of domestic support for sugar, charging that India had violated its WTO commitment levels. In February 2019, the United States further challenged India at the WTO, stating that it had substantially underreported its market price support for chickpeas, pigeon peas, black matpe (a type of black lentil), mung beans, and lentils. According to USTR, when calculated using the AoA methodology, India's market price support for each of these pulses has exceeded the allowable levels of trade-distorting domestic support under India's WTO commitments. The United States' challenge to India's domestic support for rice and wheat was raised at the May 2018 WTO Committee on Agriculture meeting. USTR raised the issue concerning India's cotton price support during the November 2018 committee meeting, and the challenge against India's domestic support for pulses was raised at the February 2019 meeting. Status: USTR may continue challenging India's domestic support for agriculture at upcoming WTO Committee on Agriculture (COA) meetings and, if necessary, could pursue these concerns through WTO's dispute settlement mechanism. India's domestic support for agriculture could be an issue during U.S.-India trade negotiations or during the discussions related to WTO reform on agriculture. <7.3. Foreign Challenges to U.S. Farm Support156> The U.S. shift toward greater use of domestic trade laws and less reliance on the WTO to address concerns about other countries' trade policies could also produce unintended consequences as trading partners consider responding to a pattern of increasing U.S. farm support outlays over the past decade. For example, in lieu of using the WTO's dispute settlement process to have an independent panel resolve disputes, countries may choose to use trade remedy investigations performed by their national authorities to impose anti-dumping (AD) duties on products found to be sold below cost and countervailing duties (CVD) on imports found to be unfairly subsidized or otherwise traded unfairly. Under the Article 13 of the 1995 WTO Agreement on Agriculture (AoA), a provision known as the Peace Clause kept members from taking action against domestic subsidies of WTO members who complied with their AoA commitments. Article 13's protection expired in January 2004, making countries with subsidies to their agricultural sectors vulnerable to AD or CVD actions by their trading partners. Since then, a number of challenges to U.S. imports have involved repeated or multiple investigations into the same products (examples include Mexican investigations into apples and the Peruvian investigation into corn). Large trade aid payments to the U.S. farm sector in 2018 and 2019 have raised new questions from some WTO members, who may perceive these payments as providing an unfair advantage for the U.S. agricultural sector. When a country initiates an AD or a CVD investigation of U.S. agricultural exports, the U.S. government and the affected industries may participate in the investigation by providing evidence, such as showing that any subsidies were permissible under WTO rules or that the imposition of duties is not justified. U.S. exporters may also challenge an AD or CVD ruling under free trade agreements, such as NAFTA or USMCA in the future. A third option is for the United States to bring a claim via the WTO dispute settlement process, alleging that the trading partner has violated the WTO Anti-Dumping Agreement or the Agreement on Subsidies and Countervailing Measures. However, the WTO Appellate Body, which hears appeals of cases from WTO dispute settlement panels, currently lacks a sufficient number of judges to issue rulings, because the United States has blocked the appointment of judges to replace those whose terms have expired. This means that the Appellate Body is unable to adjudicate disputes. Peru currently imposes countervailing duties on U.S. ethanol imports. In May 2019, Colombia imposed preliminary duties on U.S. ethanol for a four-month period during a countervailing duty investigation. In 2018, Peru initiated a similar investigation into U.S. corn, and China launched an investigation into U.S. sorghum, although neither case has resulted in countervailing duties to date. Status : Over the years, trading partners have expanded the scope of U.S. programs that they considered to be "actionable" that is, potentially subject to punitive duties. In some cases, programs other than those that the United States reports to the WTO under its amber box commitments have been the subject of foreign government investigations. These have included direct payments to farmers, subsidies for biodiesel and ethanol, export credit guarantees, farm ownership and operating loans, and Market Access and Foreign Market Development Programs operated by the Foreign Agricultural Service. In 2019, a European Parliament report suggested that perhaps the U.S. Environmental Quality Incentives Program could be considered an unfair subsidy to the U.S. farm sector. Given the WTO's limited ability to resolve disputes though legal procedures at present, the United States may have difficulty challenging duties levied on U.S. agricultural products by a country with which the United States does not have a trade agreement that includes dispute resolution provisions. <8. Non-Tariff Trade Barriers> <8.1. Sanitary and Phytosanitary (SPS) and Other Non-Tariff Barriers162> SPS measures are laws, regulations, standards, and procedures that governments employ as "necessary to protect human, animal or plant life or health" from the risks associated with the spread of pests, diseases, or disease-carrying and causing organisms, or from additives, toxins, or contaminants in food, beverages, or feedstuffs. Examples include product standards, requirements that products be produced in disease-free areas, quarantine and inspection procedures, sampling and testing requirements, residue limits for pesticides and drugs in foods, and limits on food additives. Technical barriers to trade (TBTs) cover both food and non-food traded products. TBTs in agriculture include SPS measures, but also include other types of measures related to health and quality standards, testing, registration, and certification requirements, as well as packaging and labeling regulations. Both SPS and TBT measures regarding food safety and related public health protection are addressed in various multilateral trade agreements and are regularly notified to and debated within both the SPS Agreement and TBT Agreement within the WTO. Under the agreements, countries are encouraged to observe established and recognized international standards, and avoid any improper use of SPS and TBT measures that might create barriers to trade that are not supported by science. Examples of prominent U.S. trade concerns involving SPS and TBT issues include restrictions in some global markets on the use of agricultural biotechnology (see section " Agricultural Biotechnology "), EU prohibitions on the use of hormones in meat production (see " U.S.-EU Beef Hormone Dispute "), and the use of pathogen reduction treatments for poultry (see section " U.S.-EU Dispute Over Pathogen Reduction Treatments (PRTs) "). Bilateral and regional free trade agreements (FTAs) between the United States and other countries address SPS and TBT matters. Provisions in most U.S. FTAs have generally reaffirmed rights and obligations of both parties under the WTO SPS and TBT agreements. Some FTAs have resulted in the establishment of a standing bilateral committee to enhance understanding of each other's measures and to consult regularly on related matters. Some FTAs have included side letters or agreements for the parties to continue to cooperate on scientific and technical issues, which in some cases may be related to certain specific market access concerns. However, to date, most FTAs have not addressed specific non-tariff trade concerns directly. In the early 2010s, as part of the lead up to negotiations , with the EU and with Asia-Pacific countries, there were active efforts to "go beyond" the rules, rights, and obligations in the WTO SPS and TBT Agreements, as well as beyond commitments in existing U.S. FTAs. These efforts were often referred to as "WTO-Plus" rules, or alternatively, as "SPS-Plus" and "TBT-Plus" rules, and they were intended to address concerns that trade negotiations might not adequately address SPS concerns and cover "all significant barriers in a single comprehensive agreement." Related issues involved the need to more effectively address enhanced regulatory cooperation and coherence between trading partners in an FTA. Many in Congress also continued to call for "effective rules and enforceable rules to strengthen the role of science" to resolve international trade differences in FTA negotiations. Status: Statements by USDA and EU officials in early 2020 signaled that issues involving SPS barriers and regulatory cooperation could become part of the U.S.-EU Trade Agreement negotiations. Other statements by USDA officials further indicated that certain long-standing SPS disputes including the EU's continued ban on the use of hormones and certain pathogen reduction treatments in meat production might also be part of the negotiations. These and other non-tariff barriers continue to be actively debated as part of the official U.S. trade agenda. Among U.S. concerns involving the application of such measures in some countries is the perception that their use may not be based on accepted science or on international standards, and that they instead constitute disguised protectionist barriers to U.S. exports. In recent developments, both USMCA and the U.S.-China Phase One trade agreement incorporated policy changes regarding SPS and TBT measures that go beyond the rules, rights, and obligations in the WTO. Those changes also go beyond commitments in existing U.S. trade agreements. Specifically, according to the U.S. International Trade Commission, USMCA "goes further [than previous agreements] in requiring transparency and encouraging harmonization or equivalence of SPS measures" and incorporates all of the proposed enhanced TPP disciplines "in the areas of equivalence, science and risk analysis, transparency, and cooperative technical consultations." Some industry representatives claim USMCA "goes beyond TPP in establishing deadlines for 'import checks,' by requiring importing parties to inform exporters or importers within five days of shipments being denied entry." The final U.S.-China Phase One trade agreement also requires both parties to "engage each other cooperatively" on agriculture-related technical and SPS measures, including "risk communication." It further requires that China implement a phytosanitary protocol to allow the importation of U.S. agricultural crops, and establish various protocols and certificate requirements. Both of these U.S. FTAs are notable in that they specifically address agricultural biotechnology in the agreement. <8.2. Ongoing Trade Issues Involving SPS Measures174> Outside of the FTA negotiation process, various U.S. federal agencies regularly address trade concerns involving SPS and TBT measures as part of their day-to-day oversight and regulatory responsibilities. For example, the United States maintains ongoing interagency processes and mechanisms to identify, review, analyze, and address foreign government standards-related measures that may function as barriers to trade. These activities are coordinated through the USTR-led Trade Policy Staff Committee, which comprises representatives from several federal agencies, including USDA, the Department of Commerce (DOC), and the State Department. USTR also chairs an interagency group (i.e., both USDA and non-USDA agencies with SPS and TBT responsibilities) that meets weekly to review SPS and TBT measures involving globally traded goods that are notified to the WTO, as required under the SPS and TBT agreements. These agency officials also work with their international counterparts on an ongoing basis on various trade concerns involving SPS and TBT measures. USTR tracks issues related to SPS and TBT measures as part of a series of ongoing annual reports. In addition, USDA's Animal and Plant Health Inspection Service (APHIS) administers various regulatory and control programs pertaining to animal and plant health and quarantine, humane treatment of animals, and the control and eradication of pests and diseases. APHIS also oversees SPS certification requirements for imported and exported agricultural goods. This work is ongoing. Status: While specific SPS and TBT issues regarding individual agricultural commodities generally fall outside most formal FTA negotiations, statements by USDA officials in early 2020 have signaled that certain issues that arise from normal day-to-day operations within the Executive Branch could become part of the U.S.-EU trade agreement negotiations. Press reports indicate that such issues could include EU concerns involving phytosanitary certificates for U.S. imports of apples and pears from some EU countries as well as post-arrival requirements for U.S. imports of sheep and goat semen from the EU. U.S. concerns include the EU's restrictions on the use of agricultural chemicals and biotechnology, animal cloning, pesticide maximum residues limits, and import requirements for live cattle and animal byproducts. <8.3. Agricultural Biotechnology181> Agricultural biotechnology refers primarily to the commercial development of plants and animals through recombinant DNA techniques to provide certain desired characteristics, primarily herbicide tolerance and pest resistance. More recently, the term has come to encompass a range of new technologies that manipulate genetic material through targeted in vivo or in vitro techniques, popularly referred to as genomic "editing" (e.g., CRISPR-Cas9) rather than just recombinant DNA techniques. U.S. soybean, corn, cotton, and sugar beet producers have rapidly adopted genetically engineered (GE) varieties of these crops since commercialization began in the mid-1990s. Globally, the United States leads in cultivating GE crops, accounting for nearly 40% of total acres growing GE crops worldwide. Elsewhere in the world, the adoption and cultivation of GE crops by both producers and consumers are mixed. Argentina and Brazil, for example, are major cultivators and exporters of GE corn and soybeans. India is a major cultivator of GE cotton. EU policy is more complicated. Through labeling requirements, strict traceability rules for imported food and commodities, and comparatively strong democratic pressures from the public at local levels, the EU has made cultivation and sale of GE foods and crops very difficult. Moreover, while the European Commission (EC) has approved varieties of GE commodities for import and marketing, individual member states may maintain bans. This opposition in the EU has also been a factor in opposition to GE crops in less developed countries. Many African countries have largely followed the EU in restricting or banning the commercial cultivation of GE crops, confining cultivation mostly to field trials and greenhouse containment. In March 2018, the U.S. Secretary of Agriculture stated that the United States will not regulate plants created through genomic editing as long as they are developed without using a plant pest as the donor or vector, and are not plant pests themselves. In contrast, the European Court of Justice ruled in July 2018 that organisms obtained by mutagenesis are genetically modified organisms (GMOs) and are, in principle, within the scope of the GMO Directive, which governs the deliberate release of GMOs into the environment. The European Court considers the risks posed by new mutagenic techniques such as gene editing (CRISPR-Cas9), to be similar to crops created from transgenesis, where GE crops have genetic material from other, unrelated organisms introduced into the host plant. China's reluctance to approve GE crops or GE imports remains a source of frustration for U.S. agricultural interests. Nonetheless, U.S.-developed GE varieties appear to be grown in China despite Chinese laws banning their cultivation. In September 2016, China agreed to improve its agricultural biotechnology approval process and, in January 2019, it announced approval of five new GE traits in imported crops for processing, the first new approvals since June 2017. At the same time, the ministry amended regulations on safety assessment, import approval, and labeling of agricultural GMOs without notifying the changes to the WTO, nor soliciting comments from stakeholders. In the U.S.-China Phase One trade agreement, China agreed to establish a predictable and risk-based regulatory regime with respect to its safety evaluation of agricultural biotechnology. With respect to GE products for animal feed or further processing, China also agreed to reduce the time between submission of applications for authorization and a final decision to approve or disapprove. For the first time in an FTA, the USMCA specifically includes provisions to improve transparency and coordination in approving and bringing to market products of agricultural biotechnology. USMCA provisions will cover crops produced with all biotechnology methods, including recombinant DNA and gene editing. Trade negotiations concerning agricultural biotechnology also involve labeling issues and other provisions that address the unintended presence of unapproved GE products in food and commodity imports. In 2016, Congress enacted P.L. 114-216 , comprehensive legislation to govern the mandatory labeling of bioengineered foods, a term defined in the act and similar to the terms GE foods and GMOs . USDA's Agricultural Marketing Service established the National Bioengineered Food Disclosure Standard to regulate the mandatory disclosure of bioengineered foods and food ingredients to consumers. Food manufacturers, retailers, and importers are responsible for making disclosures. Importers are responsible for ensuring that all imported bioengineered foods comply with the new regulation. Implementation of the labeling standard began on January 1, 2020, and compliance is voluntary until January 1, 2022, when it becomes mandatory. The labeling standard does not require refined products derived from bioengineered crops (e.g., refined soy oil, high-fructose corn syrup) to be labeled if the modified genetic material is not detectable in the food product. The Agricultural Marketing Service stated that it does not expect the new regulation to disrupt foreign trade. Status: A key objective of U.S. trade negotiations has been to establish a common framework for GE approvals and adoption. This includes labeling practices consistent with the U.S. guidelines and harmonized regulatory procedures concerning GE presence in products that are consistent with the Codex Alimentarius Commission Annex on Food Safety Assessment in Situations of Low-Level Presence of Recombinant-DNA Plant Material in Food. This general policy was reiterated through publication of the June 2019 Executive Order on Modernizing the Regulatory Framework for Agricultural Products . For the first time in an FTA, the USMCA specifically includes provisions to improve transparency in approving and bringing to market products of agricultural biotechnology. The Phase One trade agreement with China has resulted in China's agreement to establish a predictable and risk-based regulatory regime regarding its safety evaluation of agricultural biotechnology. <8.4. Geographical Indications (GIs)190> GIs are geographical names that act to protect the quality and reputation of a distinctive product originating in a certain region. The term GI is most often applied to wines, spirits, and agricultural products. Some food producers benefit from the use of GIs because their products gain recognition for their distinctiveness, thereby differentiating them in the marketplace. In this manner, GIs can be commercially valuable. GIs may also be eligible for relief from acts of infringement or unfair competition. While the use of GIs may protect consumers from deceptive or misleading labels, they also have the potential to impair trade when the use of names that are considered common or generic in one market are protected in another. Examples of registered or established GIs include Parmigiano Reggiano cheese and Prosciutto di Parma ham from the Parma region of Italy, Roquefort cheese from France, Champagne from the region of the same name in France, Irish whiskey, Darjeeling tea, Florida oranges, Idaho potatoes, Vidalia onions, Washington State apples, and Napa Valley wines. GIs are protected by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which obligates WTO members to recognize and protect GIs as intellectual property. The United States is a signatory of TRIPS and is subject to its rights and obligations. Accordingly, under TRIPS, the United States and EU have committed to providing a minimum standard of protection for GIs (i.e., protecting GI products to avoid misleading the public and prevent unfair competition) and an "enhanced level of protection" to wines and spirits that carry a GI, subject to certain exceptions. However, the United States considers some EU GIs to be generic or semi-generic terms. For example, in the United States, feta is considered the generic name for a type of cheese; however, it is protected as a GI in Europe. As such, cheese produced in the United States may not be exported for sale as feta cheese in the EU, since only feta produced in countries or regions currently holding GI registrations may be sold there commercially. Laws and regulations governing GIs differ markedly between the United States and EU, which further complicates this issue. More than 3,300 product names registered and protected in the EU for foods, wine, and spirits originating in both EU member states and other countries. In addition, registered products often fall under GI protections in certain third-country markets, and some EU GIs have been trademarked in some non-EU countries pursuant to those countries' trade agreements with the EU. For example, Canada has agreed to recognize a list of 143 EU GIs in Canada, and Japan has agreed to recognize more than 200 EU GIs in Japan. These GI protections could limit U.S. sales of certain products to these countries. The EU is in the process of negotiating trade agreements with several other U.S. trading partners, including Mexico, Australia, New Zealand, and the Mercosur states (Argentina, Brazil, Paraguay, and Uruguay). Each of these efforts include a selected list of GIs that would become protected under the proposed trade agreement. In December 2019, the EU also entered into an agreement with China regarding GIs that would protect a reported 100 EU GIs in China. Some Members of Congress, particularly those with dairy constituencies, have claimed that EU protections for GIs are being misused to create market and trade barriers. Much of this debate is focused on expanding restrictions on the use of certain terms used by cheesemakers, such as "parmesan," "asiago," and "feta," which are generally regarded as generic names in the United States. Some U.S. industry groups, however, are trying to institute GI protections to promote distinctive American agricultural products. For example, the American Origin Products Association, which represents certain U.S. potato, maple syrup, ginseng, coffee, and chili pepper producers and certain U.S. winemakers, seeks to work with federal authorities to "create of a list of qualified U.S. distinctive product names, which correspond to the GI definition." Status: Statements by USDA officials in early 2020 have signaled that concerns about GIs could resurface as part of the U.S.-EU trade talks. In addition, both USMCA and the U.S.-China Phase One trade agreement address GIs in ways that could further complicate future U.S.-EU discussions. Specifically, USMCA includes language regarding the transparency of GI applications, approvals, and cancellations, along with guidelines for determining whether a term is customary in common use. USMCA also includes a side letter between the United States and Mexico regarding more than 30 cheese terms. These provisions may prove to be incompatible with GI provisions that are likely to be part of a trade agreement between the EU and Mexico, as well as existing provisions in the EU-Canada Comprehensive Economic and Trade Agreement. The U.S.-China Phase One trade agreement requires China to "not undermine market access for U.S. exports to China of goods," and provides the United States with "necessary opportunities to raise disagreement" regarding GIs, among other provisions. These provisions may also prove to be incompatible with provisions agreed to in the 2019 EU-China agreement which protect certain EU GIs in China. <8.5. U.S.-EU Beef Hormone Dispute205> The United States and the EU have engaged in a long-standing trade dispute over the EU's ban on hormone-treated meat. The EU adopted restrictions on livestock production in the early 1980s, limiting the use of natural hormones to therapeutic purposes, banning the use of synthetic hormones, and prohibiting imports of animals and meat from animals that have been administered the hormones. In response, the United States, which maintains that beef produced using hormones is safe for consumers, suspended trade concessions with the EU in 1999 by imposing retaliatory tariffs of 100% ad valorem on selected EU food products. Despite an ongoing series of WTO dispute settlement proceedings and decisions, the United States and the EU continue to disagree on a range of legal and procedural issues, as well as the scientific evidence and consensus affirming the safety of hormone-treated beef. In January 2009, USTR announced its intent to make changes to the list of EU products subject to increased tariffs under the dispute, including changes to the EU countries and products affected, with additional tariffs on some products. The EU claimed that this action constituted an "escalation" of the dispute. In May 2009, following a series of negotiations, the United States and the EU signed a memorandum implementing an agreement specifying actions intended to resolve this dispute over the next several years, and the United States suspended its retaliatory tariffs for imported EU products under the dispute. As part of the 2009 memorandum, the EU agreed to expand market access to U.S. exports of beef raised without hormones as part of its High-Quality Beef (HQB) TRQ. The EU's HQB quota is set at 45,000 MT annually and assessed a tariff of 20%. However, as the HQB quota is open to other beef-exporting nations, this has effectively limited the ability for U.S. beef producers to fully benefit under the quota. According to USTR and the U.S. beef industry, most of the HQB quota was being filled by countries other than the United States, and the EU has been unwilling to consider an allocation that would reserve a significant part of the HQB quota for the United States. In December 2016, USTR proposed reinstating retaliatory tariffs on EU products under the U.S.-EU beef hormone dispute, given the U.S. contention that the U.S.-specific allocation of the EU's HQB import quota for hormone-free beef had not expanded pursuant to the 2009 memorandum. In February 2017, USTR convened a hearing to review this possible retaliatory action. In late 2018, the EU agreed to review its existing HQB quota and renegotiate its quota with the United States with the expectation that a revised HQB agreement would be implemented in early 2019. The United States ultimately did impose retaliatory tariffs in connection with the dispute. Status: The U.S. and the EU reached an agreement in principle regarding U.S.-specific allocation of the EU's HQB import quota for hormone-free beef in June 2019. The agreement provides that the United States would be allocated 35,000 MT of the 45,000 HQB quota (about 78%), phased-in over a seven year period. Starting January 1, 2020, the phased-in quota allocations are as follows: 18,500 MT (2020), 23,000 MT (2021), 25,400 MT (2022), 27,800 (2023), 30,200 MT (2024), 32,600 MT (2025), 35,000 (2026 and subsequent years). During this time, the remaining amount of the quota each year would be available to other exporting countries. Current substantial users of EU's HQB quota Australia, Argentina, and Uruguay all had to agree to the reallocation in order for the agreement to be compliant with WTO rules. The EU continues to impose bans and restrictions on meat produced using hormones, beta agonists, and other growth promotants, and it allows only imports of beef produced without hormones subject to the EU's HQB quota. The EU's restrictions involving meat production continues to be actively debated as part of the official U.S. trade agenda, as these types of practices are common in U.S. meat production. Statements by USDA officials in early 2020 have signaled that this issue could resurface as part of the U.S.-EU trade agreement negotiations. <8.6. U.S.-EU Dispute Over Pathogen Reduction Treatments (PRTs)217> In January 2009, the United States escalated a long-running dispute with the EU over its refusal to accept imports of U.S. poultry that are subject to certain pathogen reduction treatments (PRTs). PRTs are antimicrobial rinses that have been approved for use by the USDA in poultry production to reduce the amount of microbes on meat. Meat and poultry products processed with PRTs are judged safe by the United States and also by European food safety authorities. However, the EU prohibits the use of PRTs and the importation of poultry treated with these substances. The EU generally opposes such chemical interventions and asserts that its own poultry producers follow much stricter production and processing rules that are more effective in reducing microbiological contamination than simply washing poultry products. In general, EU consumer groups argue that the use of such treatments compensates for poor hygiene in the supply chain. The United States requested WTO consultations with the EU on the matter, a prerequisite first step toward the establishment of a formal WTO dispute settlement panel. A WTO panel was subsequently established in November 2009, but this case has not moved forward. In 2013, USDA submitted an application for the approval of peroxyacetic acid as a PRT for poultry. Although the EU initially put forward a proposal to authorize the PRT, it withdrew its proposal in December 2015, citing the European Food Safety Authority's (EFSA) opinion of insufficient evidence of peroxyacetic acid's efficacy against campylobacter. EFSA cleared lactic acid for reducing pathogens on beef carcasses, cuts, and trimmings in 2011. In 2013, the EU lifted its ban on the use of lactic acid in beef PRTs on beef carcasses, half-carcasses, and beef quarters in the slaughterhouse. In 2017, the National Pork Producers Council submitted an application to EFSA to approve organic lactic and acetic acid for use on pork carcasses and cuts. EFSA's panel report, issued in October 2018, concluded that use of the treatments does not pose a safety concern provided that the substances comply with EU specifications for food additives and that their use is efficacious compared to untreated meat. However, EFSA raised questions about whether lactic and acetic acid were more efficacious than water treatment for certain applications. Status: The United States continues to maintain that PRTs are a "critical tool during meat processing that helps further the safety of products being placed on the market" and continues to seek EU approval of certain PRTs for beef, pork, and poultry. To date, the United States and the EU have not been able to agree on a number of issues related to veterinary equivalency, and the EU continues to prohibit any substance other than water to remove contamination from animal products unless the EU approves the substance. Statements by USDA officials in early 2020 have signaled that this issue could resurface as part of the U.S.-EU trade agreement negotiations. <8.7. Trade Restrictions on Ractopamine Use226> Ractopamine, an animal drug that increases animal weight gain and meat yield, is approved by the U.S. Food and Drug Administration (FDA) for use in U.S. cattle, hog, and turkey production. It is also approved for use in countries such as Canada, Japan, Mexico, and South Korea, but many other countries ban the use of ractopamine in meat production. In 2012, the Codex Alimentarius the international food standards organization that sets guidelines to protect public health and ensure fair practices in the food trade set maximum residue levels for ractopamine in beef and pork. However, several of the largest markets for U.S. meat exports have restricted imports of meat produced with ractopamine, despite U.S. adherence to the residue standards established by Codex. USTR, in its "2019 National Trade Estimate Report on Foreign Trade Barriers," states that the EU, China, Taiwan, and Thailand continue to restrict U.S. meat exports produced with ractopamine. According to USDA's Food Safety and Inspection Service, U.S. meat exports particularly pork may be shipped to markets with ractopamine restrictions if the exported product is raised without ractopamine and is certified through USDA's Never Fed Beta Agonists Program. U.S. exports to markets that have ractopamine restrictions are subject to increased certification and testing costs, potentially affecting competitiveness and dampening market opportunities. Status : USDA and USTR continue to encourage trading partners to accept international standards on the use of ractopamine. Under the U.S.-China Phase One trade agreement, China agreed to consult with U.S. experts and conduct a risk assessment of ractopamine that is consistent with Codex standards. The assessment is to be based on conditions and use in the United States. The countries are to set up a working group to discuss steps to follow based on a risk assessment of ractopamine. The United States exported 250% more pork to China in 2019 than 2018 largely because of China's African Swine Fever outbreak. An agreement on a ractopamine maximum residue limit (MRL) should facilitate more U.S. pork shipments to China going forward. <9. Selected Trade Issues Involving Specialty Crops> The United States has gone from being a net exporter of fresh and processed fruits and vegetables in the early 1970s to being a net importer of fruits and vegetables today. Although U.S. fruit and vegetable exports totaled $9.2 billion in 2018, U.S. imports of fruits and vegetables were $24.8 billion, resulting in a gap between imports and exports of $15.6 billion (excludes nuts). Several factors have contributed to this trade imbalance including a relatively open import regime and lower average tariffs in the United States, increased competition from low-cost or government-subsidized producing countries, and non-tariff trade barriers to U.S. exports in some countries. Additionally, other market factors, such as exchange rate fluctuations and structural changes in the U.S. food industry, as well as increased U.S. overseas investment and diversification in market sourcing by U.S. companies, have contributed to the trade imbalance. Increased domestic and year-round demand for fruits and vegetables as well as opportunities for counter-seasonal supplies through imports have also contributed to this trade situation. Despite U.S. efforts to address some of these issues as part of recent FTA discussion, a number of these issues are unresolved. Other U.S. concerns include import competition regarding seasonal produce from Mexico, long-standing suspensions agreements between the U.S. and Mexico involving fresh tomatoes, and regulatory requirements regarding retail wine sales in Canada. <9.1. Import Competition of Seasonal Produce from Mexico231> Mexico remains the largest foreign supplier of U.S. imports of vegetables and fruits (excluding bananas). Production of some Mexican fruits and vegetables tomatoes, peppers, cucumbers, berries, and melons has increased in recent years in part due to Mexico's investment in large-scale greenhouse production facilities and other types of technological innovations. Reportedly, protected (greenhouse/shade) production in Mexico has risen to nearly 101,000 acres in 2016, up from about 19,500 acres in 2000. According to researchers, Mexican growers benefit from a combination of relatively lower labor costs and subsidies invested in the specialty crop sector under various government programs, including Mexico's Agriculture Promotion Program and its AgriFood Productivity and Competiveness Program. These programs are generally focused on increasing the infrastructure capacity of Mexico's agricultural sector. The Florida Fruit and Vegetable Association (FFVA) claims that Mexico's produce industry benefits from subsidies paid by the Mexican government and that it prices its products below fair market value, and therefore should be subject to both AD duties and CVD on U.S. imports of some fruits and vegetables. Trade concerns by U.S. growers have primarily centered on imported tomatoes, peppers, and berries. One of the Trump Administration's initial agriculture-related objectives in the renegotiation of NAFTA included a proposal to establish new rules for seasonal and perishable products, such as fruits and vegetables. The proposal would have established a separate domestic industry provision for perishable and seasonal products in AD and CVD proceedings, making it easier for a group of regional producers to initiate an injury case and to prove injury, thereby resulting in CVD or AD duties on the imported products responsible for the injury. This could protect certain U.S. seasonal produce growers in some regions by making it easier to initiate trade remedy cases. The U.S. International Trade Commission (USITC) has previously reviewed trade remedy cases involving perishable agricultural products namely, Fall-harvested Round White Potatoes from Canada and Spring Table Grapes from Chile that proved difficult to settle. As noted by USTR, current trade laws "are really not set up for seasonal product," making it difficult to prove injury over a period of time. Support for seasonal produce protections through changes to U.S. trade laws is mixed. Some Members of Congress supported including seasonal protections as part of NAFTA's renegotiation. Others opposed including such protections, contending that seasonal production complements rather than competes with U.S. growing seasons. Others worried it could open the door to an "uncontrolled proliferation of regional, seasonal, perishable remedies against U.S. exports." Most U.S. food and agricultural sectors, including some fruit and vegetable producer groups, opposed including seasonal protections as part of the renegotiation. Some worried that efforts to push for seasonal protections would derail the renegotiation. Others claimed that such efforts would favor a few "politically-connected, wealthy agribusiness firms from Florida" at the expense of others in the U.S. produce industry and at the expense of both consumers and growers in other fruit and vegetable producing states, such as California. The Agricultural Technical Advisory Committee for Trade in Fruits and Vegetables (F&V ATAC) supported not including seasonal provisions in the NAFTA renegotiation. In January 2018, F&V ATAC passed a resolution supporting the withdrawal of the seasonal and perishable trade remedy proposal from the U.S. negotiating objectives. Changes to USMCA released in October 2018 did not alter U.S. trade remedy laws to address seasonal produce trade. USTR claimed it tried to include such provisions but was unable to do so. In response, the Agricultural Trade Improvement Act of 2018 ( S. 3510 ; H.R. 7015 ) was introduced in the House and the Senate. These bills were reintroduced in the 116 th Congress but renamed as Defending Domestic Produce Production Act of 2019 ( S. 16 ; H.R. 101 ). Status: USMCA does not include changes to U.S. trade remedy laws to address seasonal produce trade. Although lawmakers from Florida and Georgia continued to push USTR for seasonal produce provisions in USMCA, others in Congress continued to oppose such changes. In January 2020, USTR announced that it planned to investigate trade practices by Mexico's produce industry, hold field hearings in Florida and Georgia, and engage the help of U.S. International Trade Commission (USITC) and DOC to monitor imports, among other actions. One Member of Congress claimed USTR's plan would "sidestep the issue and install policies" that could result in future trade conflicts; another encouraged USTR to "consider data from a variety of sources" when examining the issue. Some in Congress have raised concerns about the possible negative impacts of imported fruits and vegetables on U.S. growers more broadly. Legislation introduced in the 116 th Congress ( S. 564 ) would establish a task force to identify countervailable subsidies and dumping practices to counter perceived unfair trade practices involving imports within the U.S. produce market. <9.2. U.S.-Mexico Tomato Suspension Agreements253> The U.S.-Mexico Tomato Suspension Agreement is an agreement between DOC and signatory producers/exporters of fresh tomatoes grown in Mexico that suspends the U.S. AD investigation into whether Mexican fresh tomatoes were sold into the U.S. market at less than fair value. Fresh tomatoes imported from Mexico have been governed by suspension agreements since 1996. The first suspension agreement became effective in November 1996. The Mexican signatory growers and the United States entered into new agreements in 2002, 2008, and 2013. Under the 2013 agreement, the signatories agreed to suspend the AD investigation and monitor compliance with the agreement. The basis for the suspension agreement was a commitment by each signatory producer/exporter to sell tomatoes at or above the stated reference price in order to eliminate the injurious effects of exports of fresh tomatoes to the United States. The agreement set different floor prices for Mexican fresh tomatoes during the summer and winter and specifies prices for open field/adapted-environment and controlled-environment production. These price floors covered all types of fresh or chilled tomatoes from Mexico. The agreement did not cover tomatoes that are for processing. In early 2018, DOC initiated consultations with the Mexican tomato growers and exporters to negotiate possible revisions to the 2013 agreement. DOC also initiated its five-year sunset review of the suspended AD investigation and published the preliminary and final results of its analysis in late 2018. DOC's analysis indicated that dumping of fresh tomatoes was likely to occur/recur and calculated weighted-average dumping margins of up to 188%. In November 2018, the Florida Tomato Exchange requested that the United States withdraw from the suspension agreement, eliminate the reference prices, and resume the related initial 1996 AD investigation. They claim the pricing agreements failed to ensure that Mexico did not undercut U.S. growers, costing the Florida tomato industry $3.4 billion to $6.8 billion per year in lost sales. Several Members of Congress expressed support for withdrawing from the agreement. Among the groups that opposed withdrawal were the Fresh Produce Association of the Americas and other groups representing Mexican growers and exporters as well as businesses, various associations, and local and county governments. These groups claim the U.S. lost sales because Mexico offers more variety of tomatoes that appeal to consumers and commercial users. DOC initially announced its intention to withdraw from the agreement in February 2019 following its periodic review of the agreement, which concluded that Mexican fresh tomatoes have been sold into the U.S. market at less than fair value. In May 2019, the United States terminated the 2013 agreement and announced it would resume collecting tariffs on chilled and fresh tomatoes from Mexico, and later set a preliminary dumping margin of 25.28%. Mexican tomato grower filed a suit at the Court of international Trade requesting an injunction against the reimposed tariffs. The Mexican government claimed that the new duties would cost its tomato industry more than $350 million annually. USITC resumed its AD investigation of Mexican tomatoes, and concluded that U.S. growers are "threatened with material injury" from imports. Status: Between May and September 2019, the United States and Mexican tomato growers considered various proposals regarding a possible revised agreement. On September 19, 2019, DOC signed a new suspension agreement with Mexico's growers and exporters of fresh tomatoes. DOC and USITC suspended their respective AD investigations. The new suspension agreement sets increased minimum prices for specialty and organic tomatoes at certain times of the year, and establishes new inspections requirements of tomato shipments crossing the border to prevent low-quality tomatoes from entering the United States where they might undercut domestic prices. More recently, there have been growing concerns that a virus (brown rugose) found in tomatoes imported from Mexico could be harmful to U.S.-grown tomatoes and peppers. Increased inspections have reportedly caused border delays of product shipments, and have led to complaints from Mexican officials that such detentions are "unjustified." During the last two months of 2019, the United States reportedly returned 43 tomato shipments inspected at the U.S.-Mexico border. <9.3. Regulatory Requirements Regarding Retail Wine Sales in Canada270> In Canada, the authority to import and distribute alcohol rests with the provincial governments. Starting in 2015, British Columbia (BC) initiated a series of policies and regulations that provide BC wine exclusive access to retail channels and grocery store shelves, while imported wine may be sold in grocery stores only through a "store within a store" that is, a space that is physically separated from the main retail outlet with separate cash registers. In 2016, Quebec the largest wine-importing province in Canada enacted policies that would streamline provincial approval for Quebec wines. Most wine in Quebec is distributed through retail outlets owned by its provincial liquor authority, the Soci t des alcools du Qu bec. The rules allow Quebec small wine producers to bypass the provincial liquor board. Regulations are also in place in Ontario requiring that 50% of the wine on display at a grocery store meet certain requirements that some claim make it difficult for imported products to compete with like domestic products. According to the U.S.-based Wine Institute, Canada is the leading export market for California wine the leading wine producing state in the United States accounting for $448 million in sales in 2018. In January 2017, the Obama Administration initiated trade enforcement action against Canada at the WTO regarding Canada's BC wine measures. Subsequent actions by the Trump Administration, in September 2017, led to the United States requesting formal consultations with Canada regarding BC wine measures. USTR states that "discriminatory regulations implemented by British Columbia are unfairly keeping U.S. wine off of grocery store shelves" and that the measures are inconsistent with Canada's commitments and obligations under the WTO. The United States reiterated its concerns as part of a second complaint issued in this case in July 2018. Argentina, Australia, New Zealand, and the EU joined the consultation. The WTO case remains active. Status: The USMCA includes a side letter addressing U.S. concerns about Canada's BC wine measures. As outlined in the side letter, Canada would modify certain measures that provide preferential grocery store shelf space to wines produced within the province and "implement any changes no later than November 1, 2019." At this time, it is unclear whether Canada has taken additional action to address U.S. concerns about the status of BC's regulations. The USMCA side letter does not address potential market barriers to U.S. wine in Quebec and Ontario. Canada's wine regulations in certain provinces continues to be a concern to some in Congress. <10. Issues Related to Livestock and Meat Trade280> In 2019, exports of U.S. livestock and poultry products totaled $24.1 billion, and imports totaled $14.2 billion. Foreign demand for U.S. animals and products supports prices of domestic livestock and poultry producers, while imports supplement U.S. consumer demand for a variety of livestock and poultry products. Recent trade agreements with Canada and Mexico, China, and Japan will facilitate increased livestock and poultry product exports to these four markets, which accounted for 65% of the value of total U.S. exports of these products in 2019. The U.S.-Japan agreement lowers tariffs for U.S. beef and pork products, and adjusts beef and pork safeguards. These measures offer U.S. livestock producers benefits that competing exporters have enjoyed under the TPP-11, the successor to Trans-Pacific Partnership agreement from which the Trump Administration withdrew the United States before its ratification. Under U.S.-China Phase One trade agreement, China agreed to abide by international standards and guidelines for trade, while expanding market access for more meat products that the USDA Food Safety and Inspection Service regulates should ease the process for U.S. meat and poultry exporters. <10.1. Export Bans on U.S. Meat and Poultry> USDA forecasts that exports of meat and poultry products will represent about 17% of U.S. domestic production in 2020. Periodically, foreign countries impose export bans on U.S. meat products in response to an outbreak of certain animal diseases. The bans are disruptive for livestock producers and meat exporters, are often inconsistent with internationally accepted protocols, and vary in terms of scope and duration. For example, bans were imposed on U.S. beef exports because of the discovery of bovine spongiform encephalopathy (BSE, or mad cow disease) in 2003. An outbreak of highly pathogenic avian influenza (HPAI) at the end of 2014 and early 2015 in U.S. turkey and egg-laying flocks triggered export bans on poultry products by more than 30 countries. The bans were imposed on all U.S. products even though the HPAI outbreaks were not in areas in close proximity to commercial broiler production. The World Organization for Animal Health (known as OIE) has established trade protocols when disease outbreaks occur in countries that export meat and poultry products. According to OIE, in most cases total export bans are not recommended or needed when there is a BSE or HPAI discovery or outbreak in exporting countries. In 2013, the OIE determined that the United States is at "negligible risk" for BSE, meaning that U.S. surveillance and safeguard systems are adequate. For HPAI, USDA, in collaboration with states, has implemented increased flock biosecurity and has placed a system to rapidly contain and eradicate an outbreak of HPAI. Over the years, while some foreign markets imposed total bans on U.S. beef exports following the 2003 BSE incident, other export markets for U.S. beef imposed specific conditions for imports of U.S. beef. For example, Japan and South Korea two major importers of U.S. beef required that imported U.S. beef be produced from cattle under 30 months of age. China did not lift its ban on U.S. beef exports until 2017 and included an under 30-month age restriction. Regarding poultry, some foreign markets imposed total bans on poultry exports during the HPAI outbreak, while other markets imposed export bans only from the regions affected by the outbreak, consistent with the recommended OIE regionalization protocol that allows for trade from regions that are disease free. As the United States demonstrated that the outbreak was contained and then eliminated, most of these bans were lifted. Status: China lifted the ban on U.S. beef in 2017 but continued to restrict imports of U.S. beef to cattle under 30 months of age, similar to other countries maintaining age restrictions. However, under the U.S.-China Phase One trade agreement, China agreed to amend import protocols that align with international standards. China agreed to (1) eliminate the cattle age restriction; (2) recognize that the U.S. traceability system meets or exceeds OIE guidelines for maintaining "negligible risk" for bovine disease, and if the U.S. status should change, China would set import regulations that follow OIE guidelines; and (3) adopt MRLs for certain hormones used in U.S. beef production, and follow Codex MRL guidelines. China continues to require that U.S. beef exporters participate in the USDA Agricultural Marketing Service export verification program, which verifies that U.S. suppliers are meeting importing country requirements. In 2019, the U.S. shipped about 10,507 MT of beef to China, representing about 1% of total U.S. beef exports. U.S. beef exports to China were valued at $85.3 million. China lifted its ban on the import of U.S. poultry meat in November 2019, allowing U.S. poultry exports from FSIS-approved poultry plants. Under the U.S.-China Phase One trade agreement, the United States and China agreed to finalize a protocol accepting regionalization when there are outbreaks of poultry diseases, and China agreed to follow OIE guidelines on international trade. Poultry industry analysts believe U.S. poultry exports to China could reach $1 billion in a short time, which would exceed record exports of $750 million in 2008. China's hog industry was hit hard with African Swine Fever in 2019, leaving a large gap in China's pork supplies and increasing demand for pork imports. In 2019, the value of U.S. pork and pork product exports (includes pork offal) to China more than doubled to $1.3 billion. Under the U.S.-China Phase One trade agreement, China is to increase the number of U.S. pork products inspected by FSIS that are eligible for import. <10.2. U.S. Meat and Poultry Imports> Currently, 33 countries are eligible to export meat and poultry to the United States. Before the United States authorizes imports of meat or poultry, APHIS conducts risk assessments of any foreign animal diseases that could pose a threat to U.S. animal health. APHIS maintains a list of countries and their animal health status for critical diseases. Also, FSIS must determine if foreign meat or poultry inspection systems provide an "equivalent" level of sanitation and protection of public health as the U.S. system. Foreign governments provide documentation on how their inspection systems are regulated, and FSIS conducts onsite audits of foreign facilities. FSIS also conducts equivalency verification and periodic audits of countries already approved to export meat and poultry to the United States. <10.2.1. Imports of Chicken from China> In August 2013, FSIS confirmed that China's poultry processing inspection system was equivalent to the U.S. inspection system. This allowed China to export processed (cooked) poultry meat that is sourced raw from the United States or from countries eligible to export poultry to the United States. In March 2016, FSIS recommended that the process of verifying equivalency for China's poultry slaughter inspection system move forward. In August 2017, FSIS released an audit report confirming that China's poultry processing system remained equivalent. In November 2019, FSIS issued a final rule that determined that China's poultry slaughter system is equivalent and that China could export domestically slaughtered poultry meat to the United States. China may only export fully cooked not shelf stable-products. China is not permitted to export raw poultry products due to animal disease risks. The United States did not import poultry meat from China in 2018 and 2019. These actions were the culmination of a process that began in 2005, when China requested that USDA evaluate its poultry inspection system. Congress halted the process in FY2006, when appropriations provisions prohibited FSIS from expending funds to evaluate China's poultry inspection system. The process resumed in FY2010 on the condition that FSIS provide Congress with regular reports on the equivalency process. The possibility that the United States could import poultry meat from China has alarmed some food safety advocates and some Members of Congress because of concerns about relatively lax food safety enforcement in China for both domestically consumed products and exports. Testimony presented during a Congressional-Executive Commission on China hearing highlighted concerns regarding China's food safety. Status: In response to concern about China's record on food safety, Section 738 of Division B of the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) prohibits USDA from using any funds to purchase Chinese raw or processed poultry products for feeding programs, including the school lunch and school breakfast programs. Section 741 of Division B of the FY2020 appropriations act prohibits USDA from finalizing the proposed rule to allow the importation of slaughtered Chinese poultry unless certain conditions are met to ensure the food safety of poultry meat imports from China. Under the U.S.-China Phase One trade agreement, China may submit a formal request to the United States to evaluate regional avian influenza (AI) status. Within 30 days of receipt of the request, APHIS would initiate an evaluation of conditions in the regions in order to determine if a region or regions could be recognized as AI-free. Such a determination would allow China to export raw poultry meat if FSIS determines that poultry plants in the region(s) met equivalency standards. <10.2.2. Fresh Beef Imports from Brazil and Argentina> The United States restricts or prohibits imports of animals or animal products (including meat) from countries where highly infectious animal diseases exist in order to protect U.S. herds. Fresh beef imports from Brazil and Argentina have been prohibited or restricted because of foot-and-mouth disease (FMD) in the two countries. U.S. beef imports from Brazil and Argentina have mostly been limited to fully cooked/processed product. Argentina was approved to export fresh beef to the United States from 1997-2001, until the United States halted exports after an Argentine FMD outbreak in 2001. In December 2013, APHIS proposed a rule that would allow fresh beef imports from 13 regions in Brazil. In August 2014, APHIS proposed a separate rule to allow fresh beef imports from Patagonia and northern Argentina. In July 2015, APHIS released final rules to allow the import of fresh beef from these regions of Brazil and Argentina. USDA risk assessments determined that, under certain circumstances, fresh beef could be safely imported from Brazil and Argentina without threatening the FMD-free status of the United States. Some livestock industry stakeholders, such as the National Cattlemen's Beef Association and the National Farmers Union, have expressed opposition to allowing fresh beef from Brazil and Argentina because neither country is considered to be free of FMD. FMD was eradicated in the United States in 1929, and any introduction of the disease back into the United States could be economically devastating for the livestock industry. In 2013, the Department of Homeland Security estimated that the cost of an FMD outbreak in the United States could exceed $50 billion. In May 2015, FSIS found that Brazil's beef inspection system would provide an equivalent level of food safety as the U.S. system. In August 2016, USDA announced that Brazil was approved to ship fresh beef to the United States, and the first shipments arrived the following month. In June 2017, USDA suspended imports of fresh beef from Brazil after FSIS found problems with re-inspected Brazilian beef at the U.S. port of entry. According to USDA, FSIS was re-inspecting 100% of Brazilian fresh beef imports and refused entry to 11% of shipments, well above the 1% refusal rate for other beef imports. In November 2018, FSIS announced that the Argentine beef inspection system was equivalent, and the country could export fresh beef to the United States. FSIS also announced that within six months of the November 2018 equivalency determination, the agency would undertake additional onsite audits of Argentina's raw beef inspection system. The United States imported about 1,623 MT of fresh beef from Argentina in 2019. Argentina holds a 20,000 MT ton duty-free TRQ allotment for beef shipments to the United States. Status : On February 21, 2020, the United States lifted the suspension on imports of raw, intact beef from Brazil. FSIS released a targeted on-site audit report on February 20, 2020 that addressed corrective actions taken by Brazil. Raw beef imports from Brazil will be subject to re-inspection at U.S. points of entry by FSIS. FSIS released an on-site audit report on Argentina's meat inspection system in September 2019 and noted that further on-site audits would be conducted to ensure that corrective actions undertaken as a result of the audit were implemented. <10.2.3. Meat Exports Under U.S.-Japan Trade Agreement (USJTA)> Japan is a leading export market for U.S. beef and pork products. In 2019, U.S. beef and beef product exports to Japan totaled about $2 billion, and pork and pork products amounted to $1.5 billion. Exports of both products were lower than the value of shipments in 2018, partly due to the preferential tariff treatment that competing exporters, such as Australia, New Zealand, Canada, and Mexico, have with Japan through the TPP-11 agreement. For example, Japan's beef imports from TPP-11 member nations entered at a 26.6% tariff rate in 2019 (year 2 of the TPP-11 agreement), but U.S. beef entered with a tariff rate of 38.5%. Under USJTA, the tariff on U.S. beef is now aligned with the TPP-11 tariff rates. Under these agreements, Japan's tariff on beef from the TPP-11 countries and the United States is scheduled to decline until it reaches 9% in year 15 of the USJTA (year 16 of TPP-11). Similarly, Japan's tariffs on imports of U.S. pork are reduced under the agreement, matching the TPP-11 tariff rates. Instead of an ad valorem rate of 4.3% on U.S. pork, the rate is 1.9% in the first year of the agreement, and is phased out in year 9. Japan maintains a variable duty mechanism (gate price), which is set to a fixed value and will gradually decline until year 9. U.S. beef and pork exports are not subject to Japan's WTO safeguards, but to U.S.-specific safeguards for beef and pork. The U.S. beef safeguard threshold is set at 242,000 MT and increases annually after year 2 of the agreement. Japan will terminate the beef safeguard measure if it does not trigger for four consecutive years after year 14 of the agreement. The U.S. pork safeguard will trigger if imports of U.S. pork exceed 112% of the largest import volume in the previous three years. The pork safeguard will terminate after year 10 of the agreement. Status: USJTA has been in effect since January 1, 2020, and U.S. meat exports to Japan are expected to increase as a result. <11. Issues in Dairy Product Trade321> The United States exported $6.0 billion in dairy products in 2019, and imported $3.1 billion worth of products. Reform of dairy pricing and establishing specific dairy product TRQs in Canada is expected to expand access in that market for U.S. dairy producers. The USJTA lowers tariffs for U.S. dairy products and expands some dairy product TRQs. Like U.S. livestock producers, dairy producers gain benefits that competing exporters have enjoyed under the TPP-11. Under the U.S.-China Phase One trade agreement, China is to streamline the regulatory process to facilitate trade in U.S. dairy and infant formula. <11.1. U.S. Dairy Exports to Canada> The Canadian dairy sector limits production, sets prices, and restricts imports. Canadian imports of dairy products are restricted through TRQs, with over-quota tariffs in excess of 200% for some products. Although Canada is the second-largest market for U.S. dairy exports, U.S. exports would likely be higher but for Canadian import restrictions. In recent years, U.S. milk producers began exporting increased quantities of ultra-filtered (UF) milk to Canada. UF milk is a high-protein liquid product made by separating and concentrating certain milk components (such as protein and fat) for use as ingredients in dairy products, such as cheese, yogurt, and ice cream. U.S. UF milk found a market among Canadian cheese makers in 2008 after Canada revised its compositional standards for cheese. This revision significantly reduced the use of several milk products that U.S. processors had been supplying to Canadian food manufacturers, including milk protein concentrates and dried protein products. In recent years, growing demand for butterfat in Canada resulted in increased Canadian milk production and, consequently, surplus supplies of skim milk. To address the surplus, Canada adopted the Class 7 milk price classification in 2017 (Class 6 in Ontario). Milk classified as Class 7 comprises skim milk components primarily milk protein concentrates and skim milk powder (SMP) used to process dairy products. Prices for Class 7 products were set at low levels. Once the Class 7 regime was implemented, Canadian skim milk products became cheaper. Canada expanded global exports of SMP with the consequence that U.S. producers lost exports of high-protein UF milk to Canadian cheese and yogurt processors. According to USDA, the value of U.S. UF milk exports to Canada peaked at nearly $107 million in 2015 but declined after the Class 7 regime was implemented in 2017 to $49 million in 2017 and $32 million in 2018. At the same time, Canada's exports of SMP more than tripled in 2017 to $133 million, compared with $42 million in 2016 before the Class 7 price regime was implemented. Eliminating Canada's Class 7 pricing regime became a priority for the U.S. dairy industry when NAFTA renegotiations commenced in 2017. Status : Under USMCA, Canada agreed to eliminate the Class 7 pricing regime six months after USMCA enters into force. Canada also agreed to reclassify Class 7 products according to their end use and base its selling price on a formula that takes into consideration the USDA reported nonfat dry milk price. Also under the agreement, Canada would be required to monitor its exports of milk protein concentrates, SMP, and infant formula and report at the harmonized tariff schedule level monthly. Although Canada would maintain its milk supply management system under USMCA, it would expand TRQs for U.S. milk, cheese, cream, skim milk powder, condensed milk, yogurt, and several other dairy products. U.S. dairy products within the USMCA TRQs would enter Canada duty free, while U.S. exports above the TRQ quantities would be subject to the existing over-quota tariffs. In return, the United States agreed to establish TRQs for imports of Canadian dairy products. In total, under USMCA Canada would grant the United States duty-free access to nearly 17,000 MT of dairy products in the first year of the agreement, 100,000 MT in the sixth year, and 109,000 MT in year 19. The USMCA quota is specific to the United States and would be in addition to the 93,648 MT of WTO global quota, which is open to U.S. dairy products as well as to those from other WTO member countries as was the case under NAFTA. <11.2. Dairy Exports under U.S.-Japan Trade Agreement (USJTA)> U.S. exports of dairy products to Japan totaled nearly $283 million in 2019, making Japan the fifth largest dairy export market for the United States. The Japanese dairy sector is protected by high import tariff rates and TRQ. In addition, competing exporters of dairy products to Japan (Australia, New Zealand, Canada, and the EU) have preferential tariffs through free trade agreements. The USJTA is expected to improve the competitive position of U.S. dairy producers through tariff reductions, and eventual tariff elimination in 15 years. Japan also established a country specific TRQ of 5,400 MT for U.S. whey products that is to increase to 9,000 MT in year 10. In-quota exports are to enter duty-free at the beginning of the agreement and tariffs on over-quota exports are to be eliminated in five years. Over-quota tariffs on other dairy products are to be phased out at various times through the agreement. Status: "Stage One" of USJTA became effective on January 1, 2020. Unlike the provisions the United States had negotiated with Japan under the Trans-Pacific Partnership (TPP), USJTA does not include TRQs for certain dairy products such as butter and skim milk powder. The U.S. dairy industry has identified that the lack of provisions on non-tariff measures, such as GIs, could prove to be a market access barrier for certain U.S. cheese exports to the Japanese market. Additional negotiations with Japan toward a more comprehensive agreement are expected in 2020 and may address these issues. <11.3. U.S.-China Phase One Trade Agreement: Dairy> China was the third-largest market for U.S. dairy exports in 2019 at nearly $374 million, but this total was 25% lower than in 2018 as retaliatory tariffs hindered trade. Under the U.S.-China Phase One trade agreement, China is to streamline the regulatory process to facilitate U.S. exports. China is to accept dairy products manufactured in facilities compiled by FDA and which have a USDA dairy sanitary certificate. China is to accept that the U.S. dairy regulatory system provides the same level of safety as China's system. FDA is to provide China updated lists of dairy facilities under FDA jurisdiction. In addition, China's General Administration of Customs China and the FDA is to hold technical discussions regarding FDA guidance (U.S. Import Alert 99-30) on dairy products and the presence of melamine in imports of Chinese milk products. For infant formula, China is to also streamline its import approval process (such as issuing product registrations, technical reviews, and considering FDA's review, inspections and regulatory determinations). Status: The U.S.-China Phase One trade agreement entered into force February 14, 2020. <12. U.S.-Mexico Sugar Suspension Agreements327> In December 2014, DOC signed suspension agreements with the government of Mexico and Mexican sugar producers and exporters that prevented the imposition of CVD and AD on U.S. imports of Mexican sugar. This was a consequence of U.S. government determinations that Mexican sugar was being subsidized by the government of Mexico and was being sold into the U.S. market at less than fair value. The suspension agreements limit Mexico's sugar exports to the United States to the residual of U.S. needs for domestic human use in a given marketing year after subtracting U.S. production and imports from other countries. The agreements establish minimum reference prices for Mexican sugar that are above U.S. sugar program loan levels for domestically produced sugar. Another provision limits the share of Mexican sugar that can enter the United States as refined sugar. After the suspension agreements took effect, a number of stakeholders in the U.S. sugar market asserted that the suspension agreements had not worked as intended and had not entirely eliminated the injury caused by the subsidization and dumping of Mexican sugar. One widely held criticism was that cane refiners who were dependent on imports of raw cane from Mexico had received an inadequate share of sugar from Mexico. Another criticism leveled at the agreements was that Mexican exporters were not always adhering to limits on the share of Mexican sugar imports that are refined sugar as compared with raw sugar, nor to the specified minimum reference prices. In November 2016, the American Sugar Coalition representing sugar cane and sugar beet producers and sugar processors, refiners, and workers called on DOC to withdraw from the agreements, an action that could have caused AD and CVD duties to be imposed on Mexican sugar. Imperial Sugar Company, a U.S. cane refiner, also advocated for withdrawal. The Sweetener Users Association, which represents sugar-using businesses, recommended renegotiating the agreements to address their shortcomings and warned that terminating them would virtually eliminate Mexican sugar from the U.S. market. In November 2016, DOC issued results of a preliminary administrative review, in which it concluded that the agreements may not have entirely redressed the injury, and that certain import transactions may not have adhered to the terms in the agreements. In June 2017, the United States and Mexico agreed to amendments to the suspension agreements. Under the amendments, effective October 1, 2017, the price of imported Mexican raw sugar was increased from $0.2225 per pound to $0.23 per pound. The price of imported refined sugar was increased from $0.26 per pound to $0.28 per pound. The maximum share of refined sugar imports was limited to 30%, with raw sugar imports constituting at least 70% of the total, compared with 53% and 47%, respectively, under the 2014 agreement. The agreement also requires that imported raw sugar be loaded in bulk and be free flowing that is, not packaged. Any raw sugar imports that are packaged would be counted toward the refined sugar allotment. In addition, if USDA determines that the United States requires additional sugar imports to meet its needs, Mexico would be awarded the first opportunity to fill the need. Status: In October 2019, the U.S. Court of International Trade (USCIT) voided the 2017 suspension agreements because DOC failed to follow recordkeeping requirements during the negotiations over the agreement. CSC Sugar LLC, a sugar trader and refiner of liquid sugar sued because the agreement changed the purity definition of refined sugar, harming its business, and it was unable to provide comment on the changes. As a result of the USCIT ruling, the 2014 suspension agreement provisions went back into force. On January 15, 2020, the DOC and Mexico agreed to new terms for the suspension agreement, specifically limiting imports from Mexico to 1,004,726 short tons from October 2019 through September 2020, with the share of refined sugar limited to 30% of import volume. CSC Sugar LLC again filed suit in the USCIT to block the new agreements between the United States and Mexico.

Sales of U.S. agricultural products to foreign markets absorb about one-fifth of U.S. agricultural production, thus contributing significantly to the health of the farm economy. Farm product exports, which totaled $136 billion in FY2019 (see chart), make up about 8% of total U.S. exports and contribute positively to the U.S. balance of trade. The economic benefits of agricultural exports also extend across rural communities, while overseas farm sales help to buoy a wide array of industries linked to agriculture, including transportation, processing, and farm input suppliers. A major area of interest for the 116 th Congress during its first session was the loss of export demand for agricultural products in the wake of tariff increases imposed by the Trump Administration on U.S. imports of steel and aluminum from certain countries and other imported products from China. Some of the affected countries levied retaliatory tariffs on U.S. agricultural products, contributing to a 53% decline in value of U.S. agricultural exports to China in 2018 and a broader decline in exports across countries imposing retaliatory tariffs in 2019. To help mitigate the economic impact from export losses, the U.S. Department of Agriculture (USDA) authorized two short-term assistance ("trade aid") programs to producers of affected agricultural commodities, valued at up to $12 billion in 2019 and $16 billion in 2019. Other major agricultural trade developments in 2019 included efforts to ratify the U.S.-Mexico-Canada Agreement (USMCA), trade negotiations with China, Japan, and the European Union, and continued review of U.S. participation in the World Trade Organization (WTO). The USMCA was ratified by Mexico and the U.S. Congress, and awaits ratification by Canada before it can enter into force. The United States and Japan signed an agreement increasing market access for many U.S. agricultural exports to Japan. This agreement, which does not require congressional approval, excludes provisions pertaining to non-tariff measures that could become future trade barriers for U.S. agricultural exporters. A second-stage negotiation toward a more comprehensive pact could commence in 2020. In January 2020, President Trump signed a "Phase One" executive agreement (that also does not require congressional approval) with the Chinese government on trade and investment issues, including agriculture. Under the agreement, China is not required to repeal any tariffs, but it has reduced certain retaliatory tariffs and is granting tariff exclusions for various agricultural products in order to reach a target level of U.S. imports—$32 billion (relative to a 2017 base of $24 billion) over a two-year period. The coronavirus outbreak since January 2020 may affect China's ability to meet these commitments. In addition to further negotiations with Japan and China, the Administration has stated its intent to pursue trade agreements with the European Union, India, Kenya, the United Kingdom, and possibly other countries. The Trump Administration has also indicated that reforming the WTO is a priority for 2020. The WTO Ministerial Conference in June 2020 presents an opportunity to address pressing concerns over agricultural reform efforts. Among other agricultural trade issues that may arise in the 116 th Congress are proposed changes to U.S. trade remedy laws to address imports of seasonal produce affecting growers in the Southeast, the establishment of a common international framework for approval, trade, and marketing of the products of agricultural biotechnology, and foreign restrictions on U.S. exports of meat that are inconsistent with international trade protocols. Additionally, U.S. beef and pork face trade barriers in several markets because of U.S. producers' use of growth promotants and the feed additive ractopamine.

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<1. Introduction and Issues for Congress> The United Kingdom's (UK's) exit from the European Union (EU), commonly termed Brexit , remains the overwhelmingly predominant issue in UK politics. In a national referendum held in June 2016, 52% of UK voters favored leaving the EU. In March 2017, the UK officially notified the EU of its intention to leave the bloc, and the UK and the EU began negotiations on the terms of the UK's withdrawal. Brexit was originally scheduled to occur on March 29, 2019, but the UK Parliament was unable to agree on a way forward due to divisions over what type of Brexit the UK should pursue and challenges related to the future of the border between Northern Ireland (part of the UK) and the Republic of Ireland (an EU member state). In early 2019, Parliament repeatedly rejected the withdrawal agreement negotiated between then-Prime Minister Theresa May's government and the EU, while also indicating opposition to a no-deal scenario, in which the UK would exit the EU without a negotiated withdrawal agreement. Amid this impasse, in April 2019, EU leaders agreed to grant the UK an extension until October 31, 2019. On October 17, 2019, negotiators from the EU and the government of UK Prime Minister Boris Johnson concluded a new withdrawal agreement, but Johnson encountered challenges in securing the UK Parliament's approval of the deal. The EU granted the UK another extension until January 31, 2020, while Parliament set an early general election for December 12, 2019. Johnson's Conservative Party scored a decisive victory in the election, winning 365 out of 650 seats in the UK House of Commons. The result provided Prime Minister Johnson with a mandate to proceed with his preferred plans for Brexit. The UK the EU ratified the withdrawal agreement in January 2020, and the UK withdrew from the EU on January 31, 2020. Brexit remains far from over, however, as the UK and the EU enter a process of determining the character of their future relationship. Many Members of Congress have a broad interest in Brexit. Brexit-related developments are likely to have implications for the global economy, U.S.-UK and U.S.-EU political and economic relations, and transatlantic cooperation on foreign policy and security issues. In 2018, the Administration formally notified Congress under Trade Promotion Authority (TPA) of its intent to launch U.S.-UK free trade agreement (FTA) negotiations after the UK leaves the EU, and Congress may consider how Brexit developments affect the prospects for an agreement. Whether a potential final agreement would meet congressional expectations or TPA requirements or be concluded as an executive agreement is unclear. Congress would likely need to pass legislation to implement the potential FTA before it could enter into force, particularly if it were a comprehensive FTA. U.S. Trade Representative Robert Lighthizer has said that trade negotiations with the UK are a "priority" and will start as soon as the UK is in a position to negotiate, but he cautioned that the negotiations may take time. Some Members of Congress also have demonstrated an interest in how Brexit might affect Northern Ireland. In April 2019, House Speaker Nancy Pelosi said there would be "no chance whatsoever" for a U.S.-UK trade agreement if Brexit were to weaken the Northern Ireland peace process. On October 22, 2019, the House Subcommittee on Europe, Eurasia, Energy, and the Environment held a hearing titled "Protecting the Good Friday Agreement from Brexit." On December 3, 2020, the House passed H.Res. 585 , reaffirming support for the Good Friday Agreement in light of Brexit and asserting that any future U.S.-UK trade agreement and other U.S.-UK bilateral agreements must include conditions to uphold the peace accord. Other Members of Congress, including Senate Finance Committee Chairman Chuck Grassley, have expressed support for the UK and a bilateral trade agreement post-Brexit and have not conditioned such support on protecting Northern Ireland. <2. Overview of Developments> The December 2019 election resolved a political deadlock that dominated UK politics for three and a half years. Unable to break the stalemate over Brexit in Parliament, Prime Minister Theresa May resigned as leader of the Conservative Party on June 7, 2019. Boris Johnson became prime minister on July 24, 2019, after winning the resulting Conservative Party leadership contest. Seen as a colorful and polarizing figure who was one of the leading voices in the campaign for the UK to leave the EU, Johnson previously served as UK foreign secretary in the May government from 2016 to 2018 and mayor of London from 2008 to 2016. He inherited a government in which, at the time, the Conservative Party held a one-seat parliamentary majority by virtue of support from the Democratic Unionist Party (DUP), the largest unionist party in Northern Ireland, which strongly supports Northern Ireland's continued integration as part of the UK. After taking office, Prime Minister Johnson announced that he intended to negotiate a new deal with the EU that discarded the contentious Northern Ireland backstop provision that would have kept the UK in the EU customs union until the two sides agreed on their future trade relationship. The backstop was intended to prevent a hard border with customs and security checks on the island of Ireland and to ensure that Brexit would not compromise the rules of the EU single market (see Appendix A , which reviews the backstop and the rejected withdrawal deal). Although Prime Minister Johnson asserted that he did not desire a hard land border, he strongly opposed the backstop arrangement. Like many Members of Parliament both within and outside the Conservative Party, Johnson viewed the backstop as potentially curbing the UK's sovereignty and limiting its ability to conclude free trade deals. Given initial skepticism about the chances for renegotiating the withdrawal agreement with the EU, the Johnson government began to ramp up preparations for a possible no-deal Brexit. In September 2019, Parliament passed legislation requiring the government to request a three-month deadline extension (through January 31, 2020) from the EU on October 19, 2019, unless the government had reached an agreement with the EU that Parliament had approved or received Parliament's approval to leave the EU without a withdrawal agreement. The government also lost its parliamentary majority in September 2019, with the defection of one Conservative Member of Parliament (MP) to the Liberal Democrats and the expulsion from the party of 21 Conservative MPs (10 of the 21 were later reinstated) who worked with the opposition parties to limit the government's ability to pursue a no-deal Brexit. Prime Minister Johnson subsequently sought to trigger an early general election, to take place before the October 31 Brexit deadline, but fell short of the needed two-thirds majority in Parliament to support the motion. <2.1. The New Withdrawal Agreement> On October 17, 2019, the European Council (the leaders of the EU27 countries) endorsed a new withdrawal agreement that negotiators from the European Commission and the UK government had reached earlier that day. The new agreement replicates most of the main elements from the original agreement reached in November 2018 between the EU and the government of then-Prime Minister Theresa May, including guarantees pertaining to citizens' rights, UK financial commitments to the EU, and a transition period lasting through 2020 (see Appendix A ). The main difference in the new withdrawal agreement compared to the November 2018 original is in the documents' respective Protocols on Ireland/Northern Ireland (i.e., the backstop). Under the new withdrawal agreement, Northern Ireland would remain legally in the UK customs territory but practically in the EU customs union, which essentially will create a customs border in the Irish Sea. Main elements of the new protocol include the following: Northern Ireland remains aligned with EU regulatory rules, thereby creating an all-island regulatory zone on the island of Ireland and eliminating the need for regulatory checks on trade in goods between Northern Ireland and Ireland; any physical checks necessary to ensure customs compliance are to be conducted at ports or points of entry away from the Northern Ireland-Ireland border, with no checks or infrastructure at this border; four years after the arrangement comes into force, the Northern Ireland Executive and Assembly must consent to renew it (this vote presumably would take place in late 2024 after the arrangement takes effect at the end of the transition period in December 2020); at the end of the transition period (the end of 2020), the entire UK, including Northern Ireland, will leave the EU customs union and conduct its own national trade policy. The changes were largely based on a proposal sent by Prime Minister Johnson to then-European Commission President Jean-Claude Juncker and facilitated by Johnson's subsequent discussions with Irish Prime Minister Leo Varadkar. Some analysts suggest the changes also resemble in part the "Northern Ireland-only backstop" initially proposed by the EU in early 2018. In the original agreement, the backstop provision was ultimately extended to the entire UK after Prime Minister May backed the DUP's adamant rejection of a Northern Ireland-only provision, which the DUP contended would create a regulatory barrier in the Irish Sea between Northern Ireland and the rest of the UK and thus would threaten the UK's constitutional integrity. The DUP also opposes the provisions for Northern Ireland in Johnson's renegotiated withdrawal agreement, especially the customs border in the Irish Sea, for similar reasons. <2.2. Extension Through January 2020> Prime Minister Johnson hoped to hold a yes or no vote on the renegotiated withdrawal agreement by the extension deadline of October 19, but Parliament decided to delay the vote until it had passed the legislation necessary for implementing Brexit and giving legal effect to the withdrawal agreement and transition period (the Withdrawal Agreement Bill). Prime Minister Johnson had repeatedly asserted strong opposition to requesting another extension from the EU. As noted above, however, UK law required the government to request another extension from the EU on October 19, 2019, unless the UK and EU had reached a new withdrawal agreement and Parliament had approved that agreement or the UK government received Parliament's approval to leave the EU without a withdrawal agreement. Johnson accordingly sent the EU an unsigned request for an extension through January 2020 with a cover letter from the UK ambassador to the EU stating that the request was made in order to comply with UK law. Johnson also included a personal letter to then-European Council President Donald Tusk reiterating Johnson's view that a further extension would damage UK and EU interests and the UK-EU relationship. The EU granted the request on October 28, 2019 and extended the Brexit deadline until January 31, 2020. <2.3. December 2019 Election> On October 29, 2019, Parliament agreed to set an early general election for December 12, 2019. Some commentators argued that since Prime Minister Johnson won the Conservative leadership contest in July 2019, his highest priority had been to spark a general election that returned him as prime minister. Many observers came to view a general election that produced a clear outcome as the best way to break the political deadlock over Brexit and provide a new mandate for the winner to pursue Brexit plans. With Brexit the defining issue of the campaign, the Conservative party won a decisive victory, winning 365 out of 650 seats in the House of Commons, an increase of 47 seats compared to the 2017 election (see Table 1 ). The opposition Labour Party, unable to present a clear alternative vision of Brexit to the electorate, and unable to gain sufficient traction with voters on issues beyond Brexit, suffered a substantial defeat with the loss of 59 seats. The Scottish National Party gained 13 seats to hold 48 of the 59 constituencies in Scotland, likely indicating a resurgence of the pro-independence movement in Scotland, where more than 60% of 2016 referendum voters had supported remaining in the EU. <2.4. Ratification and Withdrawal> The election outcome put the UK on course to withdraw as a member of the EU by the January 31, 2020, deadline. After the election, the UK government introduced a revised Withdrawal Agreement Bill, which became law on January 23, 2020. The UK government subsequently ratified the withdrawal agreement. The European Parliament voted its consent to the agreement on January 29, 2020, and the Council of the EU completed the EU's ratification the following day. On January 31, 2020, the UK concluded its 47-year membership in the EU. With the UK's formal exit, an 11-month transition period began, during which the UK is expected to continue following all EU rules and remain a member of the EU single market and customs union. The withdrawal agreement allows for a one- or two-year extension of the transition period, but Prime Minister Johnson has strongly opposed the idea of an extension and inserted language in the Withdrawal Agreement Bill that the transition period will conclude at the end of 2020 without an extension. The UK intends to begin negotiations on an FTA with the EU, with the aim of concluding an agreement by the end of the transition period. Should the transition period end without a UK-EU FTA or other agreement on the future economic relationship, UK-EU trade and economic relations would be governed by World Trade Organization (WTO) rules (see " Scenarios for UK-EU Trade Relationship Post-Brexit " below). Such an outcome could resemble many aspects of a no-deal Brexit (see "No-Deal Brexit" text box below). Beyond trade, negotiations on the future UK-EU relationship are expected to seek a comprehensive partnership covering issues including security, foreign policy, energy, and data sharing. Negotiations are also expected to address the numerous other areas related to the broader economic relationship, such as financial services regulation, environmental and social standards, transportation, and aviation. Officials and analysts have expressed doubts that such comprehensive negotiations can be concluded within 11 months. The two sides could temporarily address some areas, such as road transportation and aviation, through side deals granting interim provisions. The provisions of the revised protocol on Ireland/Northern Ireland are expected to take effect at the end of the transition period. Observers have questioned how exactly the revised protocol will be implemented, including where and how customs checks will take place. Such issues are to be decided by the Joint Committee (of UK and EU officials) during the transition period. Implementation is likely to remain a work in progress. Both parties seek to protect the Good Friday Agreement, while the EU seeks to safeguard its single market and the UK seeks to preserve its constitutional integrity. <3. Brexit and Trade> <3.1. Current UK-EU Trade Relationship> Brexit casts great uncertainty over the future UK-EU trade relationship. In 2018, the UK was the second largest economy of the EU28, comprising 15.2% of the bloc's gross domestic product (GDP); Germany comprised 21.0% of the EU's GDP. The EU as a bloc is the UK's largest trading partner; by country, the United States is its largest (see Figure 1 ). While UK trade with other countries, such as China, has risen in recent years, the EU remains the UK's most consequential trading partner. UK-EU trade is highly integrated through supply chains and trade in services, as well as through foreign affiliate activity of EU and UK multinational companies. Within the EU, the largest goods and services trading partners for the UK are Germany, the Netherlands, France, Ireland, and Spain. (See " Implications for U.S.-UK Relations " section for discussion of U.S.-UK trade.) As a member of the EU, the UK's trade policy was determined by the EU, which has exclusive competence for trade policy for EU member states. UK-EU trading arrangements largely continue to apply during the transition period. Thus, the UK remains in the EU customs union, which makes trade in goods between the UK and other EU members tariff-free and binds the UK to the EU's common external tariff, which the UK and other EU member states apply to goods imported from outside the customs union. During the transition period, the UK also remains a part of the more than 40 preferential trade agreements that the EU has with about 70 countries. In addition, during the transition period, the UK also remains a part of the EU single market, which provides for the free movement of goods, services, capital, and people. The single market is underpinned by common rules, regulations, and standards that aim to reduce and eliminate nontariff barriers. Such barriers may stem, for instance, from diverging or duplicative production standards, labeling rules, and licensing requirements. Goods move freely in the single market, tariff-free, and generally are not subject to customs procedures. A product imported into the single market currently faces the common external tariff; once inside the single market, the product does not face additional tariffs regardless of its origin if exported to another EU member state. The single market provides businesses inside the EU with the ability to sell goods and services across the EU more freely. The single market is more developed for goods than for services, but it still offers some significant market access for services. For instance, under the single market, banks and other financial services firms that are established and authorized in one EU member state can apply for the right to provide certain defined services throughout the EU or to open branches in other countries with relatively few additional requirements (known as passporting rights ). Among other things, professionals in an EU member state also can move freely to another EU member state, benefitting from mutual recognition of professional qualifications across EU member states. <3.2. Scenarios for UK-EU Trade Relationship Post-Brexit> Following the December 2019 election and the UK's withdrawal from the EU on J anuary 31, 2020, the UK and EU seek to negotiate an FTA to govern their future trade and economic relationship. Whether or not an FTA is concluded, the UK likely will no longer be part of the EU single market and customs union at the end of the ensuing transition period, currently expected to last to the end of 2020. <3.2.1. Free Trade Agreement> The political declaration attached to the withdrawal agreement envisions "an ambitious, broad, deep, and flexible partnership across trade and economic cooperation with a comprehensive and balanced Free Trade Agreement at its core." The Johnson government seeks to negotiate a "best in class" trade deal with the EU. EU FTAs have varied in their scope of trade liberalization and rules-setting. Draft EU negotiating directives for a trade agreement with the UK include tariff- and quota-free trade on goods and cover a range of sectors, including services trade, digital trade, intellectual property rights (IPR), government procurement, and regulatory cooperation. The EU offer is conditional on commitments to ensure a "level playing field" in relation to state aid, labor and environmental protections, and taxation agreements. The UK, however, may seek to diverge from EU rules and regulations, allowing for more flexibility in its trade negotiations with the United States and other countries. The Johnson government aims to conclude that deal by the end of the transition period. European Commission President Ursula von der Leyen has said that the timetable was "extremely challenging" and negotiators would do their best in the "very little time" available. EU officials have warned that such a timetable will constrain the scope of the talks. Many analysts are skeptical that an ambitious trade agreement can be negotiated and approved by the EU and UK governments by the end of the transition period. Some past EU trade agreement negotiations have been lengthy. For instance, EU negotiations with Canada and Japan took, respectively, seven and four years. <3.2.2. Leaving the Customs Union> Advocates of a soft Brexit argued that the UK should maintain close economic and trade ties with the EU by remaining a member of the EU customs union or developing another customs arrangement with the EU. A customs union would afford the UK closer economic ties with the EU but would limit the UK's control over its trade policy. The UK could negotiate with other countries on issues outside of the customs union (e.g., services, government procurement, or IPR), but it would have limited negotiating scope, since alignment with the EU would be a condition of being in the customs union. A customs union also could limit UK trade policy in terms of applying trade remedies or developing country preference programs. Under the withdrawal agreement, the UK is expected leave the EU customs union at the end of the transition period, and the result of the December 2019 UK general election and recent UK official statements makes a future customs union arrangement between the UK and the EU unlikely. The Johnson government opposes any form of soft Brexit, given that such models would force the UK to abide by EU rules and regulations and limit the UK's ability to conduct an independent trade policy. If the UK is no longer part of the EU customs union, it would regain control over its national trade policy and be free to negotiate its own free trade agreements with other countries, a key rationale for many Brexit supporters. <3.2.3. World Trade Organization Terms> If the post-Brexit transition period ends without the conclusion of a trade deal or customs union arrangement with the EU, the UK would no longer have preferential access to the EU market and WTO terms would govern the UK-EU trade relationship (see "United Kingdom, European Union, and the World Trade Organization" text box). Trade between the UK and the EU would no longer be tariff free, and nontariff barriers such as new customs procedures would arise, adding costs to doing business (see below). <3.3. Impact on UK Trade and Economy> The precise impact of Brexit on UK trade with the EU and the UK economy depends to a large degree on the shape of the future UK-EU relationship, and the UK's ability to conclude other new trade deals. In most scenarios, Brexit would raise the costs of UK trade with the EU through higher tariffs and nontariff barriers. Costs may be greater in the short term, until commercial disruptions are smoothed out. Costs may be mitigated to some degree if the two sides reach a free trade agreement, although this may take years. New trade deals signed by the UK with countries outside of the EU could boost economic growth, but they may not be by enough to offset the loss of the UK's membership in the EU single market. Some of the higher costs of commerce may be passed to consumers. As noted earlier, WTO terms would govern UK-EU trade if the transition period ends without a trade deal. EU average most-favored-nation (MFN) tariff rates are low (around 5%) but significantly higher for certain products. Because of the tight linkages in UK-EU trade, higher tariffs would raise the costs of trade not only for final goods but also for intermediate goods traded between UK and EU member states as part of production and supply chains. UK sectors that may be particularly affected by increased tariffs include agriculture and manufacturing sectors (processed food products, apparel, leather products, and motor vehicles). UK importers may face higher costs, as the UK may impose its own MFN-level tariffs on imports from the EU. Should the UK and EU negotiate a preferential trading arrangement, it likely would not lead to an elimination of all tariffs. In addition, exporters on both sides would have to certify the origin of their traded goods in order to satisfy "rules of origin" to receive the preferential market access. Brexit makes the UK a "third country" from the EU's perspective, and the UK's regulatory frameworks although currently aligned with those of the EU will no longer be recognized by the EU after the transition period. The EU will have to make determinations on whether measures of the UK comply with the corresponding EU regulatory framework. Some observers question the extent to which the Johnson government is willing to maintain regulatory alignment with the EU, and this issue is expected to pose a key challenge in negotiations with the EU on future trade relations. New administrative and customs procedures could apply to UK-EU trade. UK trade with the EU could face new licensing requirements, testing requirements, customs controls, and marketing authorizations. For instance, by some estimates, delays caused by customs checks of trucks from the EU could cause a 17-mile queue at the Port of Dover. Such potential backlogs have raised concerns about spoiling or shortage of foods and medicines and complications for industries that depend on "just-in-time" productions such as autos. Many businesses in the UK have been preparing for Brexit through such measures as stockpiling inventories, adjusting contract terms, restructuring operations, and shifting assets abroad. Some companies, particularly smaller companies, may not be as equipped as their larger competitors to deal with the transition. UK businesses also remain concerned about the potential effects of a no-deal scenario should the UK and EU fail to reach agreement on a future trade relationship by the end of 2020 without an extension of the transition period. Certain sectors of the UK economy may be particularly affected by Brexit. Examples include Autos. The EU is the UK's largest trading partner for motor vehicles, accounting for 43% of UK exports and 83% of UK imports in these products in 2018. The EU also comprises the majority of UK trade in auto component parts and accessories. The UK automobile sector thrives on the sort of "just-in-time production" that depends on a free flow of trade in component parts. If a no-deal scenario unfolded at the end of the transition period, UK auto exports to the EU would face a 10% tariff. Autos are a highly regulated industry, and UK and EU exporters would face new checks for safety and quality standards to obtain approval in the other's market. Chemicals. About 60% of UK chemicals exports are to the EU, and about 73% of UK chemicals imports are from the EU. Chemicals trade in the single market is governed by a European Economic Area (EEA) regulatory framework known as REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals Regulation). UK chemicals exports to the EU could face tariffs of up to 6.5% in the absence of a preferential trade arrangement with the EU. Without a deal, UK chemicals registrations under REACH would become void with Brexit and UK companies would have to transfer their registrations to an EEA-based subsidiary or representative to maintain market access. The UK also would need to set up its own regulatory regime for chemicals. Financial S ervices. London is the largest financial center in Europe presently. Financial services and insurance make up about one-third of UK services exports to the EU. The EU has made clear that the UK will no longer be able to benefit from financial passporting after the transition period. Absent alternative arrangements, such as an equivalence decision by the EU, continued trade in financial services may require UK and EU businesses to restructure their operations. Even with a positive determination, the EU could revoke equivalence at any time. U.S. and other banks are concerned about losing the ability to use their UK bases to access EU markets without establishing legally separate subsidiaries. Some financial institutions, such as Goldman Sachs, J.P. Morgan, Morgan Stanley, and Citigroup, have shifted (or plan to shift) some jobs and assets from London to other European cities, such as Amsterdam, Dublin, Frankfurt, and Paris. By one estimate, financial companies have already committed to moving over 1 trillion in assets from the UK to other parts of the EU as part of Brexit contingency planning. Business S ervices. The EU is the largest export market for a range of UK business services (legal, accounting, advertising, research and development, architectural, engineering, and other professional and technical services) accounting for 39% of these exports from the UK. Determinations of professional certification qualifications may need to be made. Data F lows. Cross-border data flows underpin much of UK-EU services trade. Although UK regulatory frameworks are currently aligned with those of the EU on data protection and data flows, after the transition period, the EU will have to make determinations on UK compliance with the EU regulatory frameworks, such regarding whether UK standards for protecting personal data meet EU standards under the EU General Data Protection Regulation. The potential blockage of data transfers could have serious implications for UK companies seeking to transfer personal data out of the EU including not only technology companies but also health care companies and other service providers. <3.4. Global Britain> Since the referendum, the UK government has championed a notion of "Global Britain," previously under the May government and now under the Johnson government. The idea of Global Britain promotes the UK's renewed engagement in a wide range of foreign policy and international issues, with trade a significant aspect of the broader concept; Global Britain envisages, among other things, an outward looking UK strengthening trade linkages around the world. For Brexit supporters, a major rationale was for the UK to regain a fully independent trade policy, which would allow the UK to tailor agreements to its specific interests. At the same time, the UK will have less leverage in trade negotiations compared to when negotiating as a part of the EU, given the UK's economic size relative to the EU bloc. Seeking continuity in its trade ties after Brexit, the UK is acting on a number of fronts. Among other things, the UK is N egotiating its own WTO schedule of commitments on goods, services, and agriculture. A s chedule of commitments refers to the commitments that WTO members make to all other WTO members on the nondiscriminatory market access (i.e., "most-favored-nation," or MFN, access) they will provide for trade in goods, services, agriculture, and government procurement. Although the UK is a WTO member in its own right, it does not have an independent schedule of commitments, as the EU schedule applies to all EU members, including the UK. Outside of the EU, the UK will need to have its own schedule on the market access commitments to other WTO members. In some cases, the UK may be able to replicate the EU schedule; other cases may be more complex. For example, developing the UK's agricultural schedule involves reallocation of EU and UK tariff-rate quotas such as beef, poultry, dairy, cereals, rice, sugar, fruits, and other vegetables. The EU and UK have engaged in bilateral discussions on apportioning the tariff-rate quotas; some WTO members, including the United States, have raised concerns that the UK-EU approach could reduce the level and quality of their access to UK and EU markets. During the transition period, the UK continues to apply to the EU schedule. In other developments, parties to the WTO Government Procurement Agreement (GPA) have agreed to the UK's continued participation in the GPA in principle; the UK has delayed submitting its instrument of accession for the GPA. Working to replicate existing EU deals with non-EU countries. The UK was a part of over 40 trade agreements with around 70 countries by virtue of its membership in the EU. Unless it makes other arrangements, the UK will lose its preferential access to these markets after the transition period. To avoid this outcome, the UK has been working to replicate the EU's trade agreements with other countries. According to the UK government, UK trade with countries with which the UK seeks to conclude continuity agreements accounted for 11.1% of total UK trade in goods and services in 2018. As of December 4, 2019, the UK has signed 20 "continuity" deals, accounting for about 8.3% of total UK trade; these deals cover around 50 countries or territories, including Switzerland, Liechtenstein, Iceland, Norway, and South Korea. Negotiating sector-specific regulatory agreements. The UK is negotiating mutual recognition agreements (MRAs) to assure continued acceptance by UK and partner country regulators of each other's product testing and inspections in certain sectors. The UK government has signed MRAs with Australia, New Zealand, and the United States. Discussions between the UK and Japan on an MRA are ongoing. Taking steps to pursue a range of new trade deals once outside of the EU. In addition to the United States, potential countries that the UK has identified as of interest for negotiating new trade deals include Australia, China, India, and New Zealand. A new priority for the UK is signing an FTA with Japan, with whom the EU already has an FTA. Rather than "rolling over" the EU-Japan FTA, Japan seeks to negotiate new terms with the UK. Japan is one of the UK's largest investors, with major carmakers such as Nissan, Toyota, and Honda operating auto-manufacturing factories in the UK. <4. Brexit and Northern Ireland59> In the 2016 Brexit referendum, Northern Ireland voted 56% to 44% against leaving the EU. Brexit poses considerable challenges for Northern Ireland, with potential implications for its peace process, economy, and, in the longer term, constitutional status in the UK. Following Brexit, Northern Ireland is the only part of the UK to share a land border with an EU member state (see Figure 2 ). Preventing a hard border on the island of Ireland (with customs checks and physical infrastructure) was a key goal, and a major stumbling block, in negotiating and finalizing the UK's withdrawal agreement with the EU. Northern Ireland's history of political violence complicated arrangements for the post-Brexit border between Northern Ireland and the Republic of Ireland. Roughly 3,500 people died during "the Troubles," Northern Ireland's 30-year sectarian conflict (1969 to 1999) between unionists (Protestants who largely define themselves as British and support remaining part of the UK) and nationalists (Catholics who consider themselves Irish and may desire a united Ireland). At the time of the 1998 peace accord in Northern Ireland (known as the Good Friday Agreement or the Belfast Agreement), the EU membership of both the UK and the Republic of Ireland was regarded as essential to underpinning the political settlement by providing a common European identity for both unionists and nationalists in Northern Ireland. EU law also provided a supporting framework for guaranteeing the human rights, equality, and nondiscrimination provisions of the peace accord. Since 1998, as security checkpoints were dismantled in accordance with the peace agreement, and because both the UK and Ireland belonged to the EU's single market and customs union, the circuitous 300-mile land border between Northern Ireland and Ireland effectively disappeared. The border's disappearance served as an important political and psychological symbol on both sides of the sectarian divide and helped produce a dynamic cross-border economy. Many experts deem an open, invisible border as crucial to a still-fragile peace process, in which deep divisions and a lack of trust persist. Some analysts suggest that differences over Brexit also heightened tensions between the unionist and nationalist communities' respective political parties and stymied the reestablishment of the regional (or devolved) government for close to three years following the last legislative assembly elections in March 2017. (For more background, see Appendix B .) <4.1. Possible Implications of Brexit> <4.1.1. The Irish Border and the Peace Process> Many on both sides of Northern Ireland's sectarian divide expressed deep concern that Brexit could lead to a return of a hard border with the Republic of Ireland and destabilize the peace process. Police officials warned that a hard border post-Brexit could pose considerable security risks. During the Troubles, the border regions were considered "bandit country," with smugglers and gunrunners. Checkpoints were frequently the site of conflict, especially between British soldiers and militant nationalist groups (or republicans ), such as the Irish Republican Army (IRA), that sought to achieve a united Ireland through force. Militant unionist groups (or loyalists ) were also active during the Troubles. Security assessments suggested that if border or customs posts were reinstated, violent dissident groups opposed to the peace process would view such infrastructure as targets, endangering the lives of police and customs officers and threatening the security and stability of the border regions. Some experts feared that any such violence could lead to a remilitarization of the border and that the violence could spread beyond the border regions. Many observers note a slight uptick in dissident republican activity over the last year, especially in border regions, as groups such as the New IRA and the Continuity IRA sought to exploit the stalemates over both Northern Ireland's devolved government and Brexit. Violence has been directed in particular at police officers (long regarded by dissident republicans as legitimate targets), and several failed bombings were attempted in border areas (especially Londonderry/Derry, a key flashpoint during the Troubles). Many in Northern Ireland and Ireland also were eager to maintain an open border to ensure "frictionless" trade, safeguard the north-south economy, and protect community relations. Furthering Northern Ireland's economic development and prosperity is regarded as crucial to helping ensure a lasting peace in Northern Ireland. Establishing customs checkpoints would pose logistical difficulties, and many people in the border communities worried that any hardening of the border could affect daily travel across the border to work, shop, or visit family and friends. Estimates suggest there are roughly 208 public road crossings along the border and nearly 300 crossing points when private roads and other unmarked access points are included. Some roads cross the border multiple times, and the border splits other roads down the center. Only a fraction of crossing points were open during the Troubles, and hour-long delays due to security measures and bureaucratic hurdles were common. Since the Brexit referendum in 2016, UK, Irish, and EU leaders asserted repeatedly that they did not want a hard border and worked to prevent such a possibility. In the initial December 2017 UK-EU agreement setting out the main principles for the withdrawal negotiations, the UK pledged to uphold the Good Friday Agreement, avoid a hard border (including customs controls and any physical infrastructure), and protect north-south cooperation on the island of Ireland. Analysts contend, however, that reaching agreement on a mechanism to ensure an open border was complicated by the UK government's pursuit of a largely hard Brexit, which would keep the UK outside of the EU's single market and customs union. As noted previously, the backstop emerged as the primary sticking point in gaining the UK Parliament's approval of former Prime Minister May's draft withdrawal agreement in the first half of 2019. Prime Minister Johnson opposed the backstop but also asserted a desire to avoid a hard border on the island of Ireland. Some advocates of a hard Brexit contended that security concerns about the border were exaggerated and that the border issue was being exploited by the EU and those in the UK who would have preferred a soft Brexit, in which the UK remained inside the EU single market and/or customs union. The Good Friday Agreement commits the UK to normalizing security arrangements, including the removal of security installations "consistent with the level of threat," but does not explicitly require an open border. The Irish government and many in Northern Ireland as well as most UK government officials argued that an open border had become intrinsic to peace and to ensuring the fulfillment of provisions in the Good Friday Agreement that call for north-south cooperation on cross-border issues (including transport, agriculture, and the environment). Some advocates of a hard Brexit, frustrated by the Irish border question, ruminated on whether the Good Friday Agreement had outlived its usefulness, especially in light of the stalemate in reestablishing Northern Ireland's devolved government. Both the May and Johnson governments continued to assert that the UK remains committed to upholding the 1998 accord. In light of Johnson's victory with a decisive Conservative majority in the December 2019 elections and Parliament's subsequent approval of the renegotiated withdrawal agreement, concerns have largely receded about a hard border developing on the island of Ireland. Uncertainty persists about what the overall UK-EU future relationship including with respect to trade will look like post-Brexit and whether the two sides can reach an agreement by the end of the transition period. However, unlike with the previous backstop arrangement, the provisions related to the Northern Ireland border are not expected to change pending the outcome of the UK-EU negotiations on its future relationship. A former UK official notes that the Johnson government "claims they have got rid of the backstop but in fact, have transformed it from a fallback into the definitive future arrangement for Northern Ireland" that would effectively leave Northern Ireland in the EU's single market and customs union. Prolongation of the post-Brexit arrangements for Northern Ireland will be subject to the consent of the Northern Ireland Assembly in 2024 but is not contingent upon the conclusion of a broader UK-EU agreement by the end of the transition period in December 2020. At the same time, many of the details related to how the post-Brexit regulatory and customs arrangements for Northern Ireland will work in practice must still be fleshed out by UK and EU negotiators during the transition period, and Brexit has further exacerbated political and societal divisions in Northern Ireland. As noted previously, the DUP opposed the Northern Ireland provisions in the renegotiated withdrawal agreement because it viewed them as treating Northern Ireland differently from the rest of the UK and undermining the union. In light of the Conservative Party's large majority following the December 2019 elections, however, the DUP lost political influence in the UK Parliament and was unable to block approval of the renegotiated withdrawal agreement. Many in the DUP and other unionists feel abandoned by Prime Minister Johnson's renegotiated withdrawal agreement. Amid ongoing demographic, societal, and economic changes in Northern Ireland that predate Brexit, experts note that some in the unionist community perceive a loss in unionist traditions and dominance in Northern Ireland. Some analysts suggest that the new post-Brexit border and customs arrangements for Northern Ireland could enhance this existing sense of unionist disenfranchisement, especially if Northern Ireland is drawn closer to the Republic of Ireland's economic orbit in practice post-Brexit. Such unionist unease in turn could intensify frictions and political instability in Northern Ireland; observers also worry that heightened unionist frustration could prompt a resurgence in loyalist violence post-Brexit. Some experts have expressed concerns about the potential for a hard border on the island of Ireland in the longer term should Northern Ireland's Assembly fail to renew the post-Brexit arrangements that would keep Northern Ireland aligned with EU regulatory and customs rules. Although many view this scenario as unlikely given that pro-EU parties hold a majority in the Assembly (and this appears unlikely to change in the near future), in such an event, the UK and the EU would need to agree on a new set of provisions to keep the border open. The DUP also argues that by allowing the Assembly to give consent to the border arrangements for an additional four years through a simple majority, the renegotiated withdrawal agreement undermines the Good Friday Agreement, which requires major Assembly decisions to receive cross-community support (i.e., a majority on each side of the unionist-nationalist divide). Some commentators believe the 2019 UK election results in which the DUP lost two seats in the UK Parliament, unionists no longer hold a majority of Northern Ireland's 18 seats in Parliament, and DUP votes were no longer crucial to Prime Minister Johnson's ability to secure approval of the withdrawal agreement helped improve the prospects for reestablishing Northern Ireland's devolved government. A functioning devolved government appeared to offer the DUP the best opportunity to ensure it has a voice in implementing the new border and customs arrangements for Northern Ireland and in the upcoming negotiations on the future political and trade relationship between the UK and the EU. On December 16, 2019, the UK and Irish governments launched a new round of talks with the main Northern Ireland political parties aimed at reestablishing the devolved government. On January 10, 2020, the DUP and Sinn Fein agreed to a deal to restore the devolved government put forward by the UK and Irish governments. The new Assembly convened the following day. The power-sharing deal addresses a number of key issues, including use of the Irish language, and promises additional UK financial support for Northern Ireland. The deal also calls for Northern Ireland's Executive, led by DUP First Minister Arlene Foster and Sinn Fein Deputy First Minister Michelle O'Neill, to establish a Brexit subcommittee to assess Brexit's implications for Northern Ireland. In addition, it reaffirms the UK government's commitment to including Northern Ireland Executive representatives in upcoming UK-EU Joint Committee meetings that will seek to implement the agreed arrangements for Northern Ireland post-Brexit. <4.1.2. The Economy> Many experts contend that Brexit could have serious negative economic consequences for Northern Ireland. According to a UK parliamentary report, Northern Ireland depends more on the EU market (and especially that of Ireland) for its exports than does the rest of the UK. In 2017, approximately 57% of Northern Ireland's exports went to the EU, including 38% to Ireland, which was Northern Ireland's top single export and import partner. Trade with Ireland is especially important for small- and medium-sized companies in Northern Ireland. Although sales in 2017 to other parts of the UK ( 11.3 billion) surpassed the value of all Northern Ireland exports ( 10.1 billion) and were nearly three times the value of exports to Ireland ( 3.9 billion), small- and medium-sized companies in Northern Ireland were responsible for the vast majority of Northern Ireland exports to Ireland. Large- and medium-sized Northern Ireland firms dominated in sales to the rest of the UK. UK and DUP leaders maintain that given the value of exports, however, the rest of the UK is overall more important economically to Northern Ireland than the EU. Significant concerns existed in particular that a no-deal Brexit without a UK-EU withdrawal agreement in place would have jeopardized integrated labor markets and industries that operate on an all-island basis. Northern Ireland's agri-food sector, for example, would have faced serious challenges from a no-deal scenario. Food and live animals make up roughly 32% of Northern Ireland's exports to Ireland; a no-deal Brexit could effectively have ended this trade due to the need for EU sanitary and phytosanitary checks at specified border inspection posts in Ireland, which would significantly extend travel times and increase costs. The Ulster Farmers' Union an industry association of farmers in Northern Ireland asserted that a no-deal Brexit would be "catastrophic" for Northern Ireland farmers. Many manufacturers in Northern Ireland and Ireland also depend on integrated supply chains north and south of the border; raw materials that go into making products such as milk, cheese, butter, and alcoholic drinks often cross the border between Northern Ireland and Ireland several times for processing and packaging. Although many in Northern Ireland are relieved that a no-deal Brexit was averted, the DUP and others in Northern Ireland contend that the renegotiated withdrawal agreement could be detrimental to Northern Ireland's economy. A UK government risk assessment released in October 2019 acknowledged that the lack of clarity about how the customs arrangements for Northern Ireland will operate in practice and possible regulatory divergence between Northern Ireland and the rest of the UK could lead to reduced business investment, consumer spending, and trade in Northern Ireland. The DUP highlights the potential negative profit implications for Northern Ireland businesses engaged in trade with the rest of the UK. Under the deal, Northern Ireland firms that export goods to elsewhere in the UK would be required under EU customs rules to make exit declarations, which would likely increase costs and administrative burdens. Concerns also exist that should the UK and the EU fail to reach agreement on a future new trade relationship by the end of the transition period, there could be significant customs and regulatory divergence between the UK and the EU, which in turn could mean more checks and controls on goods traded between Northern Ireland and the rest of the UK. Brexit could have other economic ramifications for Northern Ireland, as well. Some experts argue that access to the EU single market was one reason for Northern Ireland's success in attracting foreign direct investment since the end of the Troubles, and they express concern that Brexit could deter future investment. Post-Brexit, Northern Ireland also stands to lose EU regional funding (roughly $1.3 billion between 2014 and 2020) and agricultural aid (direct EU farm subsidies to Northern Ireland are nearly $375 million annually). UK officials maintain that the government is determined to safeguard Northern Ireland's interests and "make a success of Brexit" for Northern Ireland. They insist that Brexit offers new economic opportunities for Northern Ireland outside the EU. Supporters of Prime Minister Johnson's renegotiated withdrawal agreement argue that it will help improve Northern Ireland's economic prospects. Northern Ireland will remain part of the UK customs union and thus be able to participate in future UK trade deals but also will retain privileged access to the EU single market, which may make it an even more attractive destination for foreign direct investment. <4.1.3. Constitutional Status and Border Poll Prospects> Brexit has revived questions about Northern Ireland's constitutional status. Sinn Fein the leading nationalist party in Northern Ireland argues that "Brexit changes everything" and could generate greater support for a united Ireland. Since the 2016 Brexit referendum, Sinn Fein has repeatedly called for a border poll (a referendum on whether Northern Ireland should remain part of the UK or join the Republic of Ireland) in the hopes of realizing its long-term goal of Irish unification. The Good Friday Agreement provides for the possibility of a border poll in Northern Ireland, in line with the consent principle , which stipulates that any change in Northern Ireland's status can come about only with the consent of the majority of its people. The December 2019 election, in which unionist parties lost seats in the UK parliament while nationalist and cross-community parties gained seats, also has prompted increased discussion and scrutiny of Northern Ireland's constitutional status and whether a united Ireland may become a future reality. Any decision to hold a border poll in Northern Ireland on its constitutional status rests with the UK Secretary of State for Northern Ireland, who in accordance with the Good Friday Agreement must call a border poll if it "appears likely" that "a majority of those voting would express a wish that Northern Ireland should cease to be part of the United Kingdom and form part of a united Ireland." At present, and despite the 2019 election results in Northern Ireland, experts believe the conditions required to hold a border poll on Northern Ireland's constitutional status do not exist. Most opinion polls indicate that a majority of people in Northern Ireland continue to support the region's position as part of the UK. Some analysts attribute the UK parliamentary election results in Northern Ireland to frustration with the DUP and Sinn Fein (which also saw its share of the vote decline amid gains for a more moderate nationalist party and a cross-community party), rather than as an indication of support for a united Ireland. At the same time, some surveys suggest that views on Northern Ireland's status may be shifting and that a "damaging Brexit" in particular could increase support for a united Ireland. A September 2019 poll found that 46% of those polled in Northern Ireland favored unification with Ireland, versus 45% who preferred remaining part of the UK. Analysts note that Northern Ireland's changing demographics (in which the Catholic, largely Irish-identifying population is growing while the Protestant, British-identifying population is declining) combined with the post-Brexit arrangements for Northern Ireland that could lead to enhanced economic ties with the Republic of Ireland could boost support for a united Ireland in the longer term. Irish unification also would be subject to Ireland's consent and approval. Some question the current extent of public and political support in the Republic of Ireland for unification, given its potential economic costs and concerns that unification could spark renewed loyalist violence in Northern Ireland. According to Irish Prime Minister Varadkar, a border poll in Northern Ireland in the near future would be divisive and disruptive amid an already contentious Brexit process. In Ireland's February 8, 2020, parliamentary election, however, the nationalist Sinn Fein party (which has a political presence in both Northern Ireland and the Republic of Ireland) secured the largest percentage of the vote for the first time in Ireland's history, surpassing both Varadkar's Fine Gael party and the main opposition party, Fianna Fail. Sinn Fein's election platform included a pledge to begin examining and preparing for Irish unification, but housing, health care, and economic policy issues dominated the Irish election. Sinn Fein appeared to benefit mostly from the Irish electorate's desire for domestic political change rather than from the party's stance on a united Ireland. Nevertheless, some commentators suggest that Sinn Fein's electoral success in the Republic of Ireland could add momentum to calls for a united Ireland. <5. Implications for U.S.-UK Relations> Many U.S. officials and Members of Congress view the UK as the United States' closest and most reliable ally. This perception stems from a combination of factors, including a sense of shared history, values, and culture; a large and mutually beneficial economic relationship; and extensive cooperation on foreign policy and security issues. The UK and the United States have a particularly close defense relationship and a unique intelligence-sharing partnership. Since 2016, President Trump has been outspoken in repeatedly expressing his support for Brexit. President Trump counts leading Brexit supporters, including Boris Johnson and Brexit Party leader Nigel Farage, among his personal friends. He publicly criticized Theresa May's handling of Brexit and stated during the most recent Conservative leadership race that Boris Johnson would "make a great prime minister." President Trump repeated his support for Johnson prior to the December 2019 UK election and celebrated Johnson's win, writing on social media that the election outcome would allow the United States and UK to reach a new trade deal. Senior Administration officials have reinforced the President's pro-Brexit messages. During an August 2019 visit to London, then-U.S. National Security Adviser John Bolton stated that the Administration would "enthusiastically" support a no-deal Brexit; he asserted that a U.S.-UK trade deal could be negotiated quickly and possibly be concluded sector-by-sector to speed up the process. In a September 2019 visit to Ireland, Vice President Mike Pence reiterated the Administration's support for the UK leaving the EU and urged Ireland and the EU to "work to reach an agreement that respects the United Kingdom's sovereignty." Vice President Pence expressed his hope that an agreement would "also provide for an orderly Brexit." <5.1. Foreign Policy and Security Issues> President Trump has expressed a largely positive view of the UK and made his first official state visit there in June 2019 (he also visited in July 2018), but there have been some tensions over substantive policy differences between the UK government and the U.S. Administration and backlash from the UK side over various statements made by the President. Under President Trump and Prime Minister May, the United States and the UK proceeded from relatively compatible starting points and maintained close cooperation on issues such as counterterrorism, combating the Islamic State, and seeking to end the conflict in Syria. In contrast, the UK government has defended both the Joint Comprehensive Plan of Action agreement (known as the Iran nuclear deal) and the Paris Agreement (known as the Paris climate agreement) and disagreed with the Trump Administration's decisions to withdraw the United States from those agreements. Despite the close relationship between President Trump and Prime Minister Johnson, there are no clear indications that a post-Brexit UK might reverse course on contentious areas such as the Iran nuclear deal or climate change to align with the views of the Trump Administration. Additionally, in January 2020, the UK government announced it would allow Chinese telecom equipment company Huawei to build parts of the UK's 5G cellular network, despite U.S. calls to boycott Huawei due to security risks. At the same time, Prime Minister Johnson has expressed support for the Middle East Peace Plan announced by the Trump Administration in January 2020, reversing May's earlier criticism of the Administration's recognition of Jerusalem as Israel's capital. Brexit has forged opposing viewpoints about the potential trajectory of the UK's international influence in the coming years. The Conservative Party-led government has outlined a post-Brexit vision of a Global Britain that benefits from increased economic dynamism; remains heavily engaged internationally in terms of trade, political, and security issues; maintains close foreign and security policy cooperation with both the United States and the EU; and retains "all the capabilities of a global power." Other observers contend that Brexit would reduce the UK's ability to influence world events and that, without the ability to help shape EU foreign policy, the UK will have less influence in the rest of the world. Developments in relation to the UK's global role and influence are likely to have consequences for perceptions of the UK as either an effective or a diminished partner for the United States. Parallel debates apply to a consideration of security and defense matters. Analysts believe that close U.S.-UK cooperation will continue for the foreseeable future in areas such as counterterrorism, intelligence, and the future of the NATO, as well as numerous global and regional security challenges. NATO remains the preeminent transatlantic security institution, and in the context of Brexit, UK leaders have emphasized their continued commitment to be a leading country in NATO. Analysts also expect the UK to remain a key U.S. partner in operations to combat the remaining elements of the Islamic State in Iraq and Syria. In 2018, the UK had the world's sixth-largest military expenditure (behind the United States, China, Saudi Arabia, Russia, and India), spending approximately $56.1 billion. The UK is also one of seven NATO countries to meet the alliance's defense spending benchmark of 2% of GDP (according to NATO, the UK's defense spending was 2.14% of GDP in 2018 and was expected to be 2.13% of GDP in 2019). Nevertheless, Brexit has added to questions about the UK's ability to remain a leading military power and an effective U.S. security partner. U.S. officials and other leading experts have expressed concerns about reductions in the size and capabilities of the British military in recent years. Negative economic effects from Brexit could exacerbate concerns about the UK's ability to maintain defense spending, investment, and capabilities. Brexit also could have a substantial impact on U.S. strategic interests in relation to Europe more broadly and with respect to possible implications for future developments in the EU. For example, Brexit could allow the EU to move ahead more easily with developing shared capabilities and undertaking military integration projects under the EU Common Security and Defense Policy (CSDP), efforts that generate a mixture of praise and criticism from the United States. In the past, the UK has irritated some of its EU partners by essentially vetoing initiatives to develop a stronger CSDP, arguing that such efforts duplicate and compete with NATO. With the UK commonly regarded as the strongest U.S. partner in the EU, a partner that commonly shares U.S. views, and an influential voice in initiatives to develop EU foreign and defense policies, analysts have suggested that the UK's withdrawal could increase divergence between the EU and the United States on certain security and defense issues. More broadly, U.S. officials have long urged the EU to move beyond what is often perceived as a predominantly inward focus on treaties and institutions, in order to concentrate more effort and resources toward addressing a wide range of shared external challenges. Some observers note that Brexit has pushed Europe back toward another prolonged bout of internal preoccupation, consuming a considerable degree of UK and EU time and personnel resources in the process. <5.2. Trade and Economic Relations and Prospective U.S.-UK FTA> The UK is a major U.S. trade and economic partner (see Figure 3 ). The UK is also a leading source of and destination for foreign direct investment, and affiliate activity is significant. Presently, WTO terms govern U.S.-UK trade, and these terms continue to apply after Brexit unless the two sides secure more preferential access to each other's markets through the conclusion of a bilateral FTA. The UK can negotiate, but not implement, trade agreements with other countries during the transition period. In July 2017, the United States and the UK established a bilateral working group to lay the groundwork for a potential future bilateral FTA post-Brexit and to ensure commercial continuity in U.S.-UK ties. The bilateral working group has met regularly to discuss a range of issues, including industrial and agricultural goods, services, investment, digital trade, intellectual property rights, regulatory issues, and small- and medium-sized enterprises. On October 16, 2018, the Trump Administration formally notified Congress under Trade Promotion Authority (TPA) of its intent to enter into negotiations with the UK on a bilateral trade agreement. U.S. Trade Representative Robert Lighthizer has said that trade negotiations with the UK are a "priority" and will start as soon as the UK is in a position to negotiate, but he cautioned that the negotiations may take time. Whether the Administration ultimately takes a comprehensive approach to the negotiations, as with the U.S.-Mexico-Canada Trade Agreement, or a more limited approach, as with the U.S.-Japan trade deal, remains to be seen. In the meantime, the United States and the UK have signed MRAs covering telecommunications equipment, electromagnetic compatibility for information and communications technology products, pharmaceutical good manufacturing practice inspections, and marine equipment to ensure continuity of trade in these areas. In addition, the two sides have signed agreements on insurance and derivatives trading and clearing, as well, to ensure regulatory certainty. Some analysts question the priority that will be afforded to U.S.-UK trade agreement negotiations, in light of the UK-EU and U.S.-EU trade agreement negotiations. Some analysts also question the sequencing, to the extent that the United States may face difficulty negotiating meaningfully with the UK without knowing what the final UK-EU relationship looks like; others counter that the UK-EU relationship is becoming clearer. Some experts view a U.S.-UK FTA as more feasible than a U.S.-EU FTA, given the U.S.-UK "special relationship" and historical similarities in trade approaches. The UK has been a leading voice on trade liberalization in the EU. Others have expressed doubts about the likelihood of a "quick win" for either side, particularly as negotiations would need to overcome a number of obstacles and concerns. Many U.S. and UK businesses and other groups see an FTA as an opportunity to enhance market access and align UK regulations more closely with those of the United States than the EU regulatory framework, aspects of which raise concerns for U.S. business interests. Other stakeholder groups oppose what they view as efforts to weaken UK regulations. For instance, some in UK civil society have expressed concerns about the implications of U.S. demands for greater access to the UK market, and potential changes to UK food safety regulations and pharmaceutical drug pricing. Key issues in U.S.-UK FTA negotiations also could include financial services, investment, and e-commerce, which are a prominent part of U.S.-UK trade. To the extent that the UK decides to continue aligning its rules and regulations with the EU, sticking points in past U.S.-EU trade negotiations could resurface in the U.S.-UK context. Other complexities for the U.S.-UK trade talks include frictions over tariffs and other policy issues. For instance, the Trump Administration has threatened the UK with tariffs over its plan to apply a new digital services tax and strongly opposes the UK's decision to open its 5G network development to participation by Huawei, a Chinese telecommunications firm. Other issues, such as the U.S. Section 232 national security-based steel and aluminum tariffs and potential auto tariffs, could see pushback from the UK side. Many Members of Congress support a U.S.-UK FTA. However, some Members of Congress have cautioned that they would oppose a trade agreement if Brexit were detrimental to the Northern Ireland peace process, whereas others support a trade agreement without such conditions. Whether a potential final FTA would meet congressional expectations or TPA requirements or be concluded as an executive agreement remains to be seen. Congress may continue to hold consultations with the Administration over the scope of the negotiations and engage in oversight as the negotiations progress. <6. Conclusion> Three and a half years after the Brexit referendum, a decisive victory in the UK's December 2019 general election allowed UK Prime Minister Johnson to proceed with Brexit. The UK withdrew from the EU at the end of January 2020 and began a transition period, scheduled to last until the end of 2020, during which it is expected to focus on negotiations with the EU on an FTA and other elements of the future UK-EU relationship. A significant number of unknowns remain, including how elements of the withdrawal agreement will be implemented, whether the two sides will be able to conclude an agreement on the future relationship during the 11-month transition period, and the effects of ending the transition period without such an agreement. Regardless of the precise turn of events, the aftermath of Brexit is expected to remain a primary focus of UK politics and a leading concern for the EU for the foreseeable future. During the 116 th Congress, developments with regard to Brexit and their implications for U.S.-UK and U.S.-EU relations, foreign policy and security cooperation, and the global economy and trade issues may remain of interest to Members of Congress. The topic of a prospective U.S.-UK FTA may be a particular area of congressional interest. Congress also may consider how Brexit could affect Northern Ireland and the Northern Ireland peace process. Appendix A. Review of the Backstop and the Rejected Withdrawal Deal Under former United Kingdom (UK) Prime Minister Theresa May, the approach of the UK government to leaving the European Union (EU) was to pursue a relatively hard Brexit , meaning a full departure from the EU single market and customs union, and a full restoration of British sovereignty over lawmaking, including with regard to controlling immigration. The approach called for the UK to subsequently negotiate a free trade agreement with the EU to secure as much access to the EU market as possible. In November 2018, EU and UK negotiators finalized a 585-page draft withdrawal agreement and a 26-page political declaration on the future relationship. The withdrawal agreement contained four main elements to guide the UK's orderly departure from the EU: Guarantees pertaining to the rights of the approximately 3 million EU citizens residing in the UK and the approximately 1 million UK citizens residing in the EU. A commitment by the UK to pay the EU 39 billion (approximately $50 billion) to settle outstanding budgetary and financial pledges. A transition period, lasting through 2020, in which the UK would be bound to follow all rules governing the EU single market while the two sides negotiate their future relationship and implement steps needed to effect an orderly separation. A backstop provision, which would keep the UK in the EU customs union until the two sides agreed on their future trade relationship. The backstop was made necessary by the lack of an apparent solution to the Irish border question, with both sides intent on avoiding a hard border with customs checks and physical infrastructure between Northern Ireland and the Republic of Ireland. The provision was intended to protect cross-border trade and preserve the peace process between parties to Northern Ireland's long sectarian conflict. The EU also viewed the backstop as necessary to ensure that Brexit would not violate the rules and structure of the EU single market. The nonbinding political declaration on the future UK-EU relationship called for an economic partnership with the EU that features an ambitious free trade area and deep cooperation, but also "separate markets and distinct legal orders," and the development of an independent UK trade policy. The backstop provision became one of the main obstacles to securing Parliament's approval of the withdrawal agreement. Although the former May government contended that it would never be necessary to implement the backstop, critics noted that the UK would be unable to conduct an independent national trade policy, one of the main selling points for Brexit's supporters, as long as the UK remained a member of the EU customs union. (The backstop would have taken effect at the conclusion of the transition period that is, at the end of 2020 if the two sides had not reached a new trade agreement with more preferable arrangements for resolving the border issue.) Supporters of a hard Brexit, led by a faction of the Conservative Party, objected that the backstop would leave the UK a "vassal state" of the EU, bound indefinitely to many EU rules (both sides would have to jointly agree to end the backstop). Many unionists in Northern Ireland strongly opposed the deal because a provision in the backstop would preserve deeper regulatory alignment between Northern Ireland and the EU to avoid a hard border. They argue that it is unacceptable to treat Northern Ireland differently from the rest of the UK and that doing so weakens the UK's constitutional integrity. Advocates of a soft Brexit maintain that permanent membership in the EU single market would be the least damaging outcome in economic terms, and that an assurance of permanent customs union membership would mitigate Brexit-related uncertainties. Many who favor a soft Brexit argued that May's withdrawal agreement prolonged such uncertainties while failing to deliver sufficient benefits. Others in the opposition parties voted against the deal in the hopes that its defeat would lead to an early general election or a second referendum on EU membership. Between January 2019 and March 2019, the House of Commons rejected the withdrawal agreement three times. The House of Commons also held a series of nonbinding "indicative" votes to determine where Members stood on options and proposals, including staying in the EU single market and/or customs union, leaving without a deal, cancelling the withdrawal process to avoid "no deal," and holding a public vote to confirm any deal. No proposal received a majority. Appendix B. Northern Ireland: From the Troubles to a Fragile Peace Between 1969 and 1999, roughly 3,500 people died as a result of political violence in Northern Ireland. The conflict, often referred to as "the Troubles," has its origins in the 1921 division of Ireland and reflects a struggle between different national, cultural, and religious identities. Protestants in Northern Ireland (48%) largely define themselves as British and support remaining part of the United Kingdom ( unionists ). Catholics in Northern Ireland (45%) consider themselves Irish, and many Catholics desire a united Ireland ( nationalists ). In the past, more militant unionists ( loyalists ) and more militant nationalists ( republicans ) were willing to use violence to achieve their goals. The 1998 Peace Agreement For years, the British and Irish governments sought to facilitate a negotiated political settlement to the conflict. After many ups and downs, the two governments and the Northern Ireland political parties participating in peace talks announced an agreement on April 10, 1998. The resulting Good Friday Agreement or Belfast Agreement is a multi-layered and interlocking document, consisting of a political settlement reached by Northern Ireland's political parties and an international treaty between the UK and Irish governments. At the core of the Good Friday Agreement is the consent principle that is, a change in Northern Ireland's status as part of the United Kingdom (UK) can come about only with the consent of the majority of Northern Ireland's people (as well as with the consent of a majority in Ireland). Although the agreement acknowledged that a substantial section of the population in Northern Ireland and a majority on the island desired a united Ireland, it recognized that the majority of people in Northern Ireland wished to remain part of the UK. If the preferences of these majorities were to change, the agreement asserted that both the UK and Irish governments would have a binding obligation to bring about the wish of the people; thus, the agreement included provisions for future polls (a border poll ) to be held in Northern Ireland on its constitutional status should events warrant. The Good Friday Agreement set out a framework for devolved government the transfer of specified powers over local governance from London to Belfast with a Northern Ireland Assembly and Executive Committee in which unionist and nationalist parties would share power. The agreement also contained provisions on the decommissioning (disarmament) of paramilitary weapons, policing, human rights, UK security normalization (demilitarization) in Northern Ireland, and the status of prisoners. Finally, the Good Friday Agreement created several new institutions to promote "north-south" cooperation on cross-border issues among leaders on the island of Ireland and "east-west" institutions to address regional issues affecting the UK, Ireland, the Channel Islands, and the Isle of Man. Despite a much-improved security situation since 1998, full implementation of the Good Friday Agreement has been challenging. For years, instability in Northern Ireland's devolved government was the rule rather than the exception. Decommissioning and police reforms were key sticking points. In 2007, however, the hard-line Democratic Unionist Party (DUP) and Sinn Fein, the political party associated with the Irish Republican Army (IRA), reached a landmark power-sharing deal. Regularly scheduled Assembly elections since the 2007 deal (in 2011 and 2016) produced successive power-sharing governments led by the DUP and Sinn Fein. In 2010, the DUP and Sinn Fein also reached an agreement to resolve the controversial issue of devolving police and justice affairs from London to Belfast. Recent Crisis in the Devolved Government and Other Challenges Analysts largely view implementation of the most important aspects of the Good Friday Agreement as complete. At the same time, tensions and distrust persist among the unionist and nationalist communities and their respective political parties, and many experts suggest that the peace process remains fragile. The inability of Northern Ireland's political parties to reach an agreement on reestablishing a devolved government for nearly three years following snap 2017 Assembly elections exemplifies the ongoing divisions and frictions in Northern Ireland's politics and society. The previous devolved government led by the DUP and Sinn Fein collapsed in January 2017, after 10 months in office. The immediate impetus for the collapse was a renewable energy scandal involving DUP leader and Northern Ireland First Minister Arlene Foster. However, frictions on several other issues including giving the Irish language the same official status as English, legalizing same-sex marriage, and Brexit contributed to Sinn Fein's decision to force snap Assembly elections. The DUP and Sinn Fein remain at odds over Brexit; Sinn Fein strongly opposes Brexit, whereas the DUP is the only major Northern Ireland political party to support it. The DUP retained the largest number of Assembly seats in the March 2017 elections, but Sinn Fein reduced the gap with the DUP to one seat in the Assembly and was widely regarded as the biggest winner. Negotiations on forming a new devolved government proceeded in fits and starts but repeatedly stalled, primarily over a potential stand-alone Irish Language Act. Some analysts suggest that the DUP's support for the Conservative Party government in the UK Parliament following the June 2017 snap general election further heightened distrust between Sinn Fein and the DUP, hardened the positions of both parties, and made reaching an agreement on a new devolved government more difficult. Others note that Brexit has consumed UK and Northern Ireland politicians' time and attention and largely overshadowed negotiations on a new devolved government. In April 2019, journalist Lyra McKee was shot and killed while covering riots in Londonderry (also known as Derry). The New IRA, a dissident republican group opposed to the peace process, claimed responsibility (but also apologized, asserting that it had been aiming to shoot a police officer but hit McKee by accident). McKee's death sparked a significant public outcry and prompted the UK and Irish governments to launch a more intensive effort to revive talks with Northern Ireland's political parties on forming a new devolved government. Negotiations remained largely deadlocked, however, throughout the summer and fall of 2019 amid ongoing uncertainty over Brexit. On December 16, 2019, the UK and Irish governments launched a new round of talks with the DUP, Sinn Fein, and Northern Ireland's other main political parties aimed at reestablishing the devolved government. These negotiations followed the UK's December 12, 2019, general election in which Prime Minister Johnson's Conservative Party won a convincing parliamentary majority, negating the influence of the DUP in the UK Parliament and clearing the way for approval of the Brexit withdrawal agreement with the EU. Some analysts suggested the UK election results improved the prospects for restoring Northern Ireland's devolved government. Both the DUP and Sinn Fein saw a decrease in their shares of the vote, while more moderate "middle ground" parties saw an increase, in part due to voter dissatisfaction with the impasse in reestablishing the devolved government. On January 10, 2020, the DUP and Sinn Fein agreed to a deal to restore devolved government put forward by the UK and Irish governments. The new Assembly convened the following day and elected a new Executive, including the DUP's Arlene Foster as First Minister and Sinn Fein's Michelle O'Neill as Deputy First Minister. The power-sharing deal is wide-ranging and addresses a number of key issues, including use of the Irish language, health and education concerns, increasing the number of police officers, and measures to improve the sustainability and transparency of Northern Ireland's political institutions. Both the UK and Irish governments also promised additional financial support for Northern Ireland as part of the deal. Despite the decrease in the levels of violence since the Good Friday Agreement, Northern Ireland continues to grapple with a number of issues in its search for peace and reconciliation. Northern Ireland remains a largely divided society, with Protestant and Catholic communities existing in parallel. Around 100 peace walls or other physical barriers throughout Northern Ireland separate some Protestant and Catholic neighborhoods, and schools and housing estates remain mostly single-identity communities. Sectarian tensions continue to flare periodically on issues such as parading, protests, and the use of flags and emblems. Other prominent challenges include addressing Northern Ireland's legacy of violence (often termed dealing with the past ), curbing remaining paramilitary and dissident activity, and promoting economic development and equality. Experts also contend that Brexit may continue to pose significant concerns for Northern Ireland's still-tenuous peace process and its future political and economic development.

The United Kingdom (UK) formally withdrew from membership in the European Union (EU) on January 31, 2020. Under the withdrawal agreement negotiated by the two sides, the UK is to continue applying EU rules during a transition period scheduled to run through the end of 2020. During the transition period, the UK and the EU are expected to begin negotiating the terms of their future relationship, including trade and economic relations as well as cooperation on foreign policy, security, and a range of other issues. Overview of Developments After the 2016 referendum in which 52% of voters in the UK favored leaving the EU, Brexit was originally scheduled to occur in March 2019. In early 2019, Parliament repeatedly rejected the withdrawal agreement negotiated between then-Prime Minister Theresa May's government and the EU. Boris Johnson became prime minister in July 2019, following May's resignation. Given continued deadlock over Brexit in the UK, the EU granted the UK a series of extensions. In October 2019, EU and UK negotiators reached a new withdrawal agreement altering the Northern Ireland backstop provision, which was a main sticking point to Parliament passing the original deal. Under the new deal, Northern Ireland (part of the UK) is to maintain regulatory alignment with the EU (essentially creating a customs border in the Irish Sea) to preserve an open border with the Republic of Ireland (an EU member state) while safeguarding the rules of the EU single market. At the end of the transition period, the UK (including Northern Ireland) is expected to leave the EU customs union and pursue an independent national trade policy. Prime Minister Johnson encountered difficulties in securing Parliament's approval of the new deal. Seeking to break the deadlock, the UK Parliament agreed to set an early general election for December 12, 2019. Johnson's Conservative Party won a decisive victory in the election, winning 365 out of 650 seats in the UK House of Commons. The result allowed the UK to ratify the new withdrawal agreement and end its EU membership. Brexit, Trade, and Economic Impact Brexit has considerable implications for the UK's trade arrangements. Outside the EU customs union, the UK would regain an independent national trade policy, a major selling point for many Brexit supporters who advocate negotiating new bilateral trade deals around the world, including with the United States and the EU. The unlikely prospect in which the UK remains a member of the EU single market or customs union would provide more barrier-free access to the EU, but the UK would have to follow most EU rules without having a say in how those rules are made. Analysts predict the disruption resulting from Brexit likely will have at least a short-term negative economic impact on the UK, and many businesses in the UK have been taking steps to mitigate potential economic losses. Northern Ireland Many observers have expressed concerns that Brexit could destabilize the Northern Ireland peace process, especially if it resulted in a hard border with physical infrastructure and customs checks between Northern Ireland and the Republic of Ireland. Conditions have improved considerably since the 1998 peace accord (known as the Good Friday Agreement or the Belfast Agreement), but many analysts assess that peace and security in Northern Ireland remains fragile. Concerns about a hard border developing have receded in light of Johnson's election victory and Parliament's approval of the renegotiated withdrawal agreement. Still, Brexit has added to divisions within Northern Ireland and continues to pose challenges for Northern Ireland's peace process, economy, and, possibly in the longer term, its constitutional status as part of the UK. U.S.-UK Relations and Congressional Interest President Trump and Administration officials have expressed support for Brexit. Members of Congress hold mixed views. The UK likely will remain a leading U.S. partner in addressing many foreign policy and security challenges, but Brexit has fueled a debate about whether the UK's global role and influence are likely to be enhanced or diminished. In 2018, the Administration notified Congress of its intention to negotiate a bilateral free trade agreement (FTA) with the UK after Brexit. Congress likely would need to pass implementing legislation before the potential FTA could enter into force. Many in Congress also are concerned about Brexit's possible implications for Northern Ireland's peace process, stability, and economic development.

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<1. Introduction> The Coronavirus Disease 2019 (COVID-19) pandemic is affecting communities around the world and throughout the United States, with case counts growing daily. As private health insurance is the predominant source of health coverage in the United States, there is considerable congressional interest in understanding private health insurance coverage of health benefits related to COVID-19 diagnosis, treatment, and prevention. This report addresses frequently asked questions about covered benefits and consumer cost sharing related to COVID-19 testing, treatment, and a potential vaccine. It discusses recent legislation, references relevant existing federal requirements and recent administrative interpretations of them in relation to COVID-19, and notes state and private-sector actions. It begins with background information on types and regulation of private health insurance plans. The Families First Coronavirus Response Act (FFCRA; P.L. 116-127 ) requires specified types of private health insurance plans to cover COVID-19 testing, administration of the test, and related items and services, without consumer cost sharing. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ) further addresses private health insurance coverage of COVID-19 testing, and requires coverage of a potential vaccine and other preventive services without cost sharing, if they are recommended by specified federal entities. There are no federal requirements that specifically require coverage of COVID-19 treatment services. However, one or more existing federal requirements are potentially relevant, as discussed in this report. Some states have also announced requirements related to covered benefits and consumer costs, and some insurers have reported that they will voluntarily cover certain relevant benefits. This report discusses most U.S. private health insurance plans' coverage of health care items and services related to COVID-19, but it generally does not discuss the delivery of those services, insurers' payments to health care providers, or private health insurance coverage of other benefits. The Appendix lists Congressional Research Service (CRS) analysts who can discuss with congressional clients other topics of interest related to private health insurance and COVID-19, including types of plans and coverage of benefits not addressed in this report. Also beyond the scope of this report are public health coverage programs (e.g., Medicare); the domestic and international public health responses to COVID-19; and economic, human services, and other nonhealth issues. For further information on these topics, congressional clients can access the CRS Coronavirus Disease 2019 resources page at https://www.crs.gov/resources/coronavirus-disease-2019 . The information in this report is current as of its publication date and may be superseded by subsequent congressional or administrative action. Congressional clients may contact the report author and/or the experts listed in the Appendix for questions about further developments. In addition, Centers for Medicare & Medicaid Services (CMS) guidance related to private health insurance and COVID-19 is compiled on its website. <2. Background on Private Health Insurance> The private health insurance market includes both the group market (largely made up of employer-sponsored insurance) and the individual market (which includes plans directly purchased from an insurer). The group market is divided into small- and large-group market segments; a small group is typically defined as a group of up to 50 individuals (e.g., employees), and a large group is typically defined as one with 51 or more individuals. Employers and other group health plan sponsors may purchase coverage from an insurer in the small- and large-group markets (i.e., they may fully insure ). Sponsors may instead finance coverage themselves (i.e., they may self-insure ). The individual and small-group markets include plans sold on and off the individual and small-group health insurance exchanges, respectively. Covered benefits, consumer costs, and other plan features may vary by plan, subject to applicable federal and state requirements. The federal government may regulate all the coverage types noted above (i.e., individual coverage, fully insured small- and large-group coverage, and self-insured group plans), and states may regulate all but self-insured group plans. Federal and state requirements may vary by coverage type. This report focuses on private-sector plans explained above. There are some variations of these coverage types, and there are other types of private health coverage arrangements, which may or may not be subject to the requirements discussed in this report, or for which there may be other policy questions related to COVID-19. These other coverage types are out of the scope of this report, but a number of them are identified in the Appendix , along with resources for further information. One coverage variation, grandfathered plans , is included in this report because it is explicitly referenced in legislation relevant to COVID-19 and private health insurance coverage. Grandfathered plans are individual or group plans in which at least one individual was enrolled as of enactment of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended), and which continue to meet certain criteria. Plans that maintain their grandfathered status are exempt from some, but not all, federal requirements. Another type of coverage, short-term, limited duration insurance (STLDI or STLD plans), is also included in this report, because it is explicitly excluded from a coverage definition cited by relevant legislation. STLDI is coverage, generally sold in the individual market, which meets certain definitional criteria. The statutory definition of "individual health insurance coverage" excludes STLDI; thus, STLDI is exempt from complying with all federal health insurance requirements applicable to individual health insurance plans. <3. FAQ: COVID-19 Covered Benefits and Cost Sharing> The remainder of this report addresses private health insurance coverage of COVID-19 testing, treatment, and vaccination, when a vaccine becomes available. Where there are federal requirements related to such coverage, it is useful to understand the following: Is the service or item required to be covered? If so, is cost sharing allowed? In general, private health insurance cost sharing includes deductibles, coinsurance, and copayments. Are plans allowed to impose prior authorization or other medical management requirements? For example, some insurers require that they (the insurer) provide prior authorization for routine hospital inpatient care, and/or require that primary care physicians provide approval or referrals for specialty care, as a condition for covering the care. Does the coverage requirement depend on how or where the service or item is furnished (e.g., by an in-network versus out-of-network provider)? Under private insurance, benefit coverage and consumer cost sharing is often contingent upon whether the service or item is furnished by a provider that the insurer has contracted with (i.e., whether that provider is in network for a given plan). In instances where a contract between an insurer and provider does not exist, the provider is considered out of network . When does the coverage requirement go into effect? What types of plans are subject to the coverage requirement? To the extent that information is available, these issues are addressed with regard to private health insurance coverage of COVID-19 testing, treatment, and vaccination. Table 1 summarizes key information. <3.1. Are Plans Required to Cover COVID-19 Testing?> <3.1.1. FFCRA and CARES Act> Prior to the enactment of the FFCRA ( P.L. 116-127 ), there were no federal requirements specifically mandating private health insurance coverage of items or services related to COVID-19 testing. Section 6001 of the FFCRA requires most private health insurance plans to cover COVID-19 testing, administration of the test, and related items and services, as defined in the act. Per FFCRA, the coverage must be provided without consumer cost sharing, including deductibles, copayments, or coinsurance. Prior authorization or other medical management requirements are prohibited. The definition of testing that must be covered was expanded by Section 3201 of the CARES Act ( P.L. 116-136 ). In addition, the Department of Labor (DOL), Department of Health and Human Services (HHS), and the Treasury issued an FAQ document on April 11, 2020 (hereinafter, "Tri-Agency April 11 FAQ"), on the private health insurance coverage requirements in FFCRA and the CARES Act. Together, the acts and guidance require coverage of certain tests and services, as summarized below. Specified COVID-19 diagnostic tests, including both molecular (e.g., polymerase chain reaction, or PCR, tests) and serological tests (i.e., antibody tests), and the administration of such tests are covered. "Items and services furnished to an individual during [visits, as specified below] that result in an order for or administration of [an applicable COVID-19 test], but only to the extent such items and services relate to the furnishing or administration of such product or to the evaluation of such individual for purposes of determining the need of such individual for such product." This definition could encompass additional diagnostic testing associated with the visit. However, it would not encompass treatment for COVID-19-associated illnesses. The coverage requirements apply to the specified items and services when furnished at visits including to health care provider offices, urgent care centers, emergency rooms, and "nontraditional" settings, including drive-through testing sites. The requirements apply to both in-person and telehealth visits. FFCRA does not specify whether its coverage requirements apply when the test is furnished by an out-of-network provider. However Section 3202 of the CARES Act addresses insurer payments to in-network and out-of-network providers. In addition, the Tri-Agency April 11 FAQ clarifies that the FFCRA coverage requirements apply both in network and out of network. The coverage requirements in FFCRA apply only to the specified items and services that are furnished during the COVID-19 public health emergency period described in that act, as of the date the FFCRA was enacted (March 18, 2020). These requirements apply to individual health insurance coverage and to small- and large-group plans, whether fully insured or self-insured. This includes grandfathered individual or group plans, which are exempt from certain other federal private health insurance requirements. Per the definition of individual health insurance coverage cited in the act, the requirements do not apply to STLDI. <3.1.2. State and Private-Sector Actions> In recent weeks, some states have announced coverage requirements, and some insurers have clarified or expanded their policies, regarding coverage of COVID-19 testing, among other services. However, states cannot regulate self-insured plans, and insurer announcements do not necessarily apply to those plans either. FFCRA does apply to self-insured group plans in addition to the other plan types discussed above. To the extent that state requirements about or plans' voluntary coverage of COVID-19 testing did not extend as far as FFCRA and CARES Act requirements, the federal laws supersede them. However, state requirements and plans' voluntary coverage may exceed applicable federal requirements, as long as they do not prevent the implementation of any federal requirements. Even though federal law now requires most plans to cover specified COVID-19 testing services without cost sharing, it may be useful for consumers to contact their insurers or plan sponsors to understand their coverage. Subject to applicable federal and state requirements, coverage of the COVID-19 test and related services and items may vary by plan. <3.2. Are Plans Required to Cover COVID-19 Treatment?> <3.2.1. Essential Health Benefits Guidance on COVID-19 Coverage> Although FFCRA requires certain plans to cover specified COVID-19 testing services without cost sharing, neither FFCRA nor the CARES Act mandates coverage of COVID-19 treatment services. There is no federal requirement specifically mandating private health insurance coverage of items or services related to COVID-19 treatment. However, one or more existing federal requirements are potentially relevant, subject to state implementation and plan variation. There is a federal statutory requirement that certain plans cover a core set of 10 categories of essential health benefits (EHB). However, states, rather than the federal government, generally specify the benefit coverage requirements within those categories. Current regulation allows each state to select an EHB-benchmark plan. The benchmark plan serves as a reference plan on which plans subject to EHB requirements must substantially base their benefits packages. Because states select their own EHB-benchmark plans, there is considerable variation in EHB coverage from state to state. On March 5, 2020, and March 12, 2020, CMS issued guidance addressing the potential relevance of EHB requirements to coverage of COVID-19 treatment, among other benefits, subject to variation in states' EHB-benchmark plan designations. According to the March 12 document, "all 51 EHB-benchmark plans currently provide coverage for the diagnosis and treatment of COVID-19" (emphasis added), but coverage of specific benefits within the 10 categories of EHB (e.g., hospitalization, laboratory services) may vary by state and by plan. The March 12 document suggests that coverage of medically necessary hospitalizations would include coverage of medically necessary isolation and quarantine during the hospital admission, subject to state and plan variation. Quarantine in other settings, such as at home, is not a medical benefit. The document notes, "however, other medical benefits that occur in the home that are required by and under the supervision of a medical provider, such as home health care or telemedicine, may be covered as EHB," subject to state and plan variation. The March 12 document confirms that "exact coverage details and cost-sharing amounts for individual services may vary by plan, and some plans may require prior authorization before these services are covered." In other words, even where certain treatment items and services are required to be covered as EHB in a state, cost-sharing and medical management requirements could apply, subject to applicable federal and state requirements. In addition, cost sharing and other coverage details may vary for services furnished by out-of-network providers. Individual and fully insured small-group plans are subject to EHB requirements. Large-group plans, self-insured plans, grandfathered plans, and STLDI are not. Whether or not certain treatment services are defined as EHB in a state, other state benefit coverage requirements may be relevant to COVID-19 treatment. Plans may also voluntarily cover benefits. See " State and Private-Sector Actions " below. <3.2.2. Certain Federal Requirements Related to Cost Sharing> Other existing federal requirements are also relevant to consumer cost sharing on COVID-19 treatment services, to the extent that such treatments are covered by the consumer's plan, and largely to the extent that they are defined by a state as EHB. For example, plans must comply with annual l imits on consumers' out-of-pocket spending (i.e., cost sharing, including deductibles, coinsurance, and copayments) on in-network coverage of the EHB. If certain treatment services are defined as EHB in a state, and are furnished by an in-network provider, consumers' out-of-pocket costs for the plan year would be limited as discussed below. If certain treatment services are not defined as EHB in a state, and/or are furnished by out-of-network providers, this out-of-pocket maximum would not necessarily apply. In 2020, the out-of-pocket limits cannot exceed $8,150 for self-only coverage and $16,300 for coverage other than self-only. This means that once a consumer has spent up to that amount in cost sharing on applicable in-network benefits, the plan would cover 100% of remaining applicable costs for the plan year. The out-of-pocket maximum applies to individual health insurance coverage and to small- and large-group plans, whether fully insured or self-insured. The requirement does not apply to grandfathered plans or STLDI. <3.2.3. State and Private-Sector Actions> As stated above, in recent weeks, some states have announced coverage requirements related to COVID-19 testing services and items, and some insurers have clarified or expanded their policies to include relevant coverage. Some of these state and insurer statements also address coverage of treatment services. However, as discussed above, states cannot regulate self-insured plans, and insurer announcements do not necessarily apply to those plans either. Coverage, cost sharing, and the application of medical management techniques (e.g., prior authorization) can vary by plan, subject to applicable federal and state requirements. It may be useful for consumers to contact their insurers or plan sponsors to understand their coverage of services and items related to COVID-19 treatment. <3.3. Will Plans Be Required to Cover a COVID-19 Vaccine?> <3.3.1. CARES Act and Existing Preventive Services Coverage Requirements> As of the date of this report, there is no vaccine against COVID-19 approved by the Food and Drug Administration (FDA) for use in the United States, although several candidates are in development. Prior to the enactment of the CARES Act, there were no federal requirements specifically mandating private health insurance coverage of items or services related to a COVID-19 vaccine. However, per an existing federal requirement ( 2713 of the Public Health Service Act [PHSA]) and its accompanying regulations, most plans must cover specified preventive health services without cost sharing. This includes any preventive service recommended with an A or B rating by the United States Preventive Services Task Force (USPSTF); or any immunization with a recommendation by the Advisory Committee on Immunization Practices (ACIP), adopted by the Centers for Disease Control and Prevention (CDC), for routine use for a given individual. These coverage requirements apply no sooner than one year after a new or revised recommendation is published. Requirements of PHSA Section 2713 apply to individual health insurance coverage and to small- and large-group plans, whether fully insured or self-insured. The requirements do not apply to grandfathered plans or to STLDI. By regulation, plans are generally not required to cover preventive services furnished out of network. They are allowed to use "reasonable medical management" techniques, within provided guidelines. Cost sharing for office visits associated with a furnished preventive service may or may not be allowed, as specified in regulation. Section 3203 of the CARES Act requires specified plans the same types as those subject to PHSA Section 2713 to cover a COVID-19 vaccine, when available, and potentially other COVID-19 preventive services, if they are recommended by ACIP or USPSTF, respectively. This coverage must be provided without cost sharing. Section 3203 also applies an expedited effective date for the required coverage: 15 business days after an applicable ACIP or USPSTF recommendation is published. Otherwise, requirements of Section 3203 mirror the existing requirements under PHSA Section 2713. The requirement to cover COVID-19 vaccination and other preventive services is not time limited, whereas the FFCRA requirement to cover COVID-19 testing is limited to the duration of a declared COVID-19 public health emergency. See " Are Plans Required to Cover COVID-19 Testing? " <3.3.2. State and Private-Sector Actions> Some of the state and insurer announcements about coverage of COVID-19 benefits, discussed earlier in this report, reference coverage of a potential vaccine. However, pending development and approval of the vaccine, and pending the implementation of the CARES Act requirements related to COVID-19 vaccine coverage, it is premature to discuss potential variations in coverage of the vaccine at the state or plan level. It may still be useful for consumers to contact their insurers or plan sponsors to understand their coverage of services and items related to a potential COVID-19 vaccine. <3.3.2.1. Appendix. Resources for Questions about Private Health Insurance and COVID-19> This report has focused on coverage of COVID-19 testing, treatment, and vaccination by most types of private health insurance plans. CRS analysts are also available to congressional clients to discuss other topics of interest related to private health insurance and COVID-19, including coverage of COVID-19 benefits by types of private plans not specifically addressed in this report; other issues related to private coverage of COVID-19 benefits; private coverage of certain other benefits of concern during this pandemic, or of services furnished via telehealth; and issues related to private health insurance enrollment and premium payments. The following table lists examples of such topics of interest, any relevant legislative or administrative resources, any relevant CRS resources, and names of appropriate CRS experts for the benefit of congressional clients. Besides the CRS reports listed below that provide background on relevant topics, also see CRS reports on health provisions in recent COVID-19 legislation: CRS Report R46316, Health Care Provisions in the Families First Coronavirus Response Act, P.L. 116-127 , and CRS Report R46334, Selected Health Provisions in Title III of the CARES Act (P.L. 116-136) . The information in this report is current as of its publication date and may be superseded by subsequent congressional or administrative action. Congressional clients may contact the report author and/or experts listed below for questions about further developments. In addition, CMS guidance related to private health insurance and COVID-19 is compiled on its website.

The Coronavirus Disease 2019 (COVID-19) pandemic is affecting communities around the world and throughout the United States, with case counts growing daily. As private health insurance is the predominant source of health coverage in the United States, there is considerable congressional interest in understanding private health insurance coverage of health benefits related to COVID-19. This report addresses frequently asked questions about private health insurance covered benefits and consumer cost sharing related to COVID-19 testing, treatment, and a potential vaccine. It discusses recent legislation, references existing federal requirements and recent administrative interpretations of them in relation to COVID-19, and notes state and private-sector actions. Federal and state health insurance requirements may relate to covered benefits and consumer cost sharing, among many other topics. These requirements can vary by coverage type (i.e., individual coverage, fully insured small- and large-group coverage, and self-insured plans). Covered benefits, consumer costs, and other plan features may vary by plan within each type of coverage, subject to applicable federal and state requirements. The following bullets summarize federal requirements related to coverage and cost sharing (which includes deductibles, coinsurance, and copayments) of COVID-19 testing, treatment, and vaccination. Additional details are addressed in the report, including the applicability of the requirements to different types of plans; whether the coverage requirements apply even when furnished by out-of-network providers; whether plans are allowed to impose prior authorization or other medical management techniques; and the applicable dates of any coverage requirements. COVID-19 Testing . The Families First Coronavirus Response Act (FFCRA; P.L. 116-127 ), as amended by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ), requires most private health insurance plans to cover COVID-19 testing, administration of the test, and related items and services, as defined by the acts. This coverage must be provided without consumer cost sharing. COVID-19 Treatment . There are no federal requirements that specifically require coverage of COVID-19 treatment. However, the existing federal requirement that certain plans cover a set of 10 categories of essential health benefits (EHB) is potentially relevant to coverage of COVID-19 treatment items and services, depending on state and plan variation with regard to implementation of this requirement. Even where treatment items and services are required to be covered as EHB, cost sharing could apply. COVID-19 Vaccine . As of the date of this report, there is no vaccine against COVID-19 approved by the Food and Drug Administration (FDA) for use in the United States, although several candidates are in development. The CARES Act requires most plans to cover a COVID-19 vaccine, when available, without cost sharing, if it is recommended by the Advisory Committee on Immunization Practices (ACIP). Similarly, most plans must cover, without cost sharing, any other COVID-19 preventive services that are recommended for use by the United States Preventive Services Task Force (USPSTF). Some states have also announced relevant requirements on the plans they regulate, and some insurers have reported that they will cover certain relevant benefits. Several organizations are tracking these announcements, as noted in this report. Congressional Research Service (CRS) experts on other topics related to private health insurance and COVID-19, including types of plans and coverage of benefits not addressed in this report, are listed in the Appendix for the benefit of congressional clients. For information on other COVID-19 issues, congressional clients can access the CRS Coronavirus Disease resources page at https://www.crs.gov/resources/coronavirus-disease-2019 .

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<1. Introduction> Each year, the House and Senate armed services committees take up national defense authorization bills. The House of Representatives passed its version of the National Defense Authorization Act for Fiscal Year 2020 (NDAA; H.R. 2500 ) on July 12, 2019. The Senate passed its version of the NDAA ( S. 1790 ) on June 27, 2019. These bills contain numerous provisions that affect military personnel, retirees, and their family members. Provisions in one version may not be included in the other, may be treated differently, or may be identical to those in the other versions. Following passage of each chamber's bill, a conference committee typically convenes to resolve the differences between the respective chambers' versions of the bill. The House passed the FY2020 NDAA conference report on December 11, 2019, and the Senate passed the report on December 17, 2019. On December 20, 2019, President Donald J. Trump signed the bill into law ( P.L. 116-92 ). This report highlights selected personnel-related issues that may generate high levels of congressional and constituent interest. Related CRS products are identified in each section to provide more detailed background information and analysis of the issues. For each issue, a CRS analyst is identified. Some issues discussed in this report were previously addressed in the FY2019 NDAA ( P.L. 115-232 ) and discussed in CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , by Bryce H. P. Mendez et al., or other reports. Issues that were considered previously are designated with an asterisk in the relevant section titles of this report. <2. *Active Component End-Strength> Background: The authorized active duty end-strengths for FY2001, enacted in the year prior to the September 11 terrorist attacks, were as follows: Army (480,000), Navy (372,642), Marine Corps (172,600), and Air Force (357,000). Over the next decade, in response to the demands of wars in Afghanistan and Iraq, Congress substantially increased the authorized personnel strength of the Army and Marine Corps. Congress began reversing those increases in light of the withdrawal of most U.S. forces from Iraq in 2011, the drawdown of U.S. forces in Afghanistan beginning in 2012, and budgetary constraints. Congress halted further reductions in Army and Marine Corps end-strength in FY2017, providing slight end-strength increases for both Services that year. In FY2018 and FY2019, Congress again provided slight end-strength increases for the Marine Corps, while providing a more substantial increase for the Army. However, the Army did not reach its authorized end-strength of 483,500 in FY2018 or its authorized end-strength of 487,500 in FY2019, primarily due to missing enlisted recruiting goals. End-strength for the Air Force generally declined from 2004 to 2015, but increased from 2016 to 2019. End-strength for the Navy declined from 2002 to 2012, increased in 2013 and remained essentially stable through 2017; it increased again in 2018 and 2019. Authorized end-strengths for FY2019 and FY2020 are shown in Figure 1 . Discussion: In comparison to FY2019 authorized end-strengths, the Administration's FY2020 budget proposed a decrease for the Army (-7,500) and increases for the Navy (+5,100), Marine Corps (+100) and Air Force (+3,700). The administration's proposed decrease for the Army reflects the challenges the Army is facing in recruiting a sufficient number of new enlisted personnel to expand its force. As stated in the Army's military personnel budget justification document, "Given the FY 2018 end strength outcome and a challenging labor market for military recruiting, the Army Active Component has decided to pursue a new end strength growth ramp. The Army has shifted to a more modest end strength growth ramp of 2,000 Soldiers per year, with end strength targets of 478,000 in FY 2019 and 480,000 in FY 2020. Beyond FY 2019, the steady 2,000 Solider per year growth increases Active Army end strength while maintaining existing high quality standards." Section 401 of the enacted bill approved end-strengths identical to the Administration request. References: Previously discussed in CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , by Bryce H. P. Mendez et al. and similar reports from earlier years. Enacted figures found in P.L. 115-232 . CRS Point of Contact: Lawrence Kapp. <3. *Selected Reserve End-Strength> Background: The authorized Selected Reserve end-strengths for FY2001, enacted the year prior to the September 11 terrorist attacks, were: Army National Guard (350,526), Army Reserve (205,300), Navy Reserve (88,900), Marine Corps Reserve (39,558), Air National Guard (108,022), Air Force Reserve (74,358), and Coast Guard Reserve (8,000). The overall authorized end-strength of the Selected Reserves has declined by about 6% over the past 18 years (874,664 in FY2001 versus 824,700 in FY2019). During this period, the overall decline is mostly attributed to reductions in Navy Reserve strength (-29,800). There were also smaller reductions in the authorized strength for the Army National Guard (-7,026), Army Reserve (-5,800), Marine Corps Reserve (-1,058), Air National Guard (-922), Air Force Reserve (-4,358), and Coast Guard Reserve (-1,000). Authorized end-strengths for FY2019 and FY2020 are shown in Figure 2 . Discussion: Relative to FY2019 authorized end-strengths, the Administration's FY2020 budget proposed decreases in the Army National Guard (-7,500), Army Reserve (-10,000), and Navy Reserve (-100), increases for the Air National Guard (+600) and Air Force Reserve (+100), and no change for the Marine Corps Reserve and Coast Guard Reserve. The Administration's proposed decrease for the Army National Guard and the Army Reserve reflected the challenges those reserve components have had in meeting their authorized strength. According to the Army National Guard (ARNG) FY2020 military personnel budget justification document: The ARNG fell short of the FY 2018 National Defense Authorization Act (NDAA) Congressionally authorized End Strength 343,500 by 8,296 Soldiers due to recruiting challenges, too few accessions, and to cover increased attrition losses in FY2018 The ARNG began addressing these issues and challenges in FY 2018 by ramping up the recruiting force, incentives programs, bonuses, and marketing efforts. While these efforts are expected to result in additional accessions in FY 2019, they will not be enough to meet the FY 2019 NDAA authorized End Strength of 343,500. The newly hired force will reach full production levels by end of the FY 2019 in order to meet the required accessions mission and a projected end strength of 336,000 in FY 2020 and continue the projected ramp to an end strength of 338,000 by the end of FY 2024. Similarly, the Army Reserve FY2020 Military Personnel budget justification document stated: In FY 2018, the Army Reserve fell short of its end strength objective by 10,689 Soldiers due to a challenging recruiting and retention environment Prior to the FY 2020 President's Budget request, the Army Reserve recognized it would not meet its FY 2019 end strength goal of 199,500 and subsequently reduced its goal to a more achievable end strength of 189,250. The Army Reserve continues to set conditions for a successful and productive recruiting and retention environment in support of achieving an end strength of 189,250 by the end of FY 2019 and sustaining that level through FY 2020. Section 411 of the enacted bill approved end-strengths identical to the Administration request. References: Previously discussed in CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , by Bryce H. P. Mendez et al. and similar reports from earlier years. For more on the Reserve Component see CRS Report RL30802, Reserve Component Personnel Issues: Questions and Answers , by Lawrence Kapp and Barbara Salazar Torreon, and CRS In Focus IF10540, Defense Primer: Reserve Forces , by Lawrence Kapp. CRS Point of Contact: Lawrence Kapp. <4. Access to Reproductive Health Services> Background: In general, the Department of Defense (DOD) offers certain reproductive health services in DOD-operated hospitals and clinics known as military treatment facilities (MTFs) or through civilian health care providers participating in TRICARE. Reproductive health services typically include counseling, therapy, or treatment for male or female conditions affecting "fertility, overall health, and a person's ability to enjoy a sexual relationship." With regard to contraceptive services, DOD policy requires that all eligible beneficiaries have access to "comprehensive contraceptive counseling and the full range of contraceptive methods." The policy also requires that DOD provide contraceptive services when "feasible and medically appropriate," such as during: a health care visit before or during deployment; enlisted or officer training; annual well woman exams and reproductive health screenings; physical exams; or when referred after a periodic health assessment. With regard to fertility services, DOD offers: diagnostic services (e.g., hormone evaluation and semen analysis); diagnosis and treatment of illness or injury to the male or female reproductive system; care for physically caused erectile dysfunction; genetic testing; certain prescription fertility drugs; and certain assisted reproductive services for "seriously or severely ill/injured" active duty servicemembers. Active duty military personnel generally incur no out-of-pocket costs for DOD health care services. If a servicemember receives reproductive health services that are not directly provided, referred by a DOD or TRICARE provider, or otherwise covered by DOD, then they may be required to pay for those services. Other DOD beneficiaries may be subject to cost-sharing based on their TRICARE health plan, beneficiary category, and type of medical service received. Discussion: Currently, DOD offers comprehensive contraceptive counseling and a range of contraceptive methods. However, non-active duty beneficiaries may be subject to certain cost-sharing requirements depending on the type of contraceptive service rendered, the accompanying procedures or follow-up evaluations that may be clinically necessary, or health care provider nonparticipation in the TRICARE network. Other reproductive health services, such as cryopreservation of human gametes (i.e., sperm or eggs), are generally not offered or covered by TRICARE unless narrow criteria are met. While there are no provisions in the enacted bill relating to access to reproductive health services, the committee report ( S.Rept. 116-48 ) accompanying the Senate bill ( S. 1790 ) includes a similar reporting requirement as House Section 728. The committee report directs DOD to "conduct a study on the incidence of infertility among members of the Armed Forces" and provide a report to the House and Senate armed services committees by June 1, 2020. The study is to include the following elements: number of servicemembers diagnosed with a common cause of infertility; number of servicemembers whose infertility has no known cause; incidence of miscarriage among female servicemembers; infertility rates of female servicemembers, as compared to their civilian counterparts; demographic information on infertile servicemembers and potential hazardous environmental exposures during service; availability of infertility services for servicemembers who desire such treatment, including waitlist times at MTFs offering reproductive health services; criteria used by the military services to determine service-connection for infertility; and DOD policies for ensuring geographic stability for servicemembers receiving treatment for infertility. Not adopted were provisions to expand TRICARE coverage of specific reproductive health services to certain eligible beneficiaries. References: CRS In Focus IF11109, Defense Health Primer: Contraceptive Services , by Bryce H. P. Mendez. CRS Point of Contact: Bryce H.P. Mendez. <5. *Administration of the Military Health System> Background: DOD operates a health care delivery system that serves approximately 9.5 million beneficiaries. The Military Health System (MHS) administers the TRICARE program, which offers health care services at military treatment facilities (MTFs) or through participating civilian health care providers. Historically, the military services have administered the MTFs, while the Defense Health Agency (DHA) administered the private sector care program of TRICARE. DHA is a combat support agency that enables the Army, Navy, and Air Force medical services to provide a medically ready force and ready medical force to combatant commands in both peacetime and wartime. In 2016, Congress found that the organizational structure of the MHS could be streamlined to sustain the "medical readiness of the Armed Forces, improve beneficiaries' access to care and the experience of care, improve health outcomes, and lower the total management cost." Section 702 of the FY2017 NDAA ( P.L. 114-328 ) directed significant reform to the MHS and administration of MTFs by October 1, 2018. Reforms include: transfer of administration and management of MTFs from each respective service surgeon general to the DHA Director; reorganization of DHA's internal structure; and redesignation of the service surgeons general as principal advisors for their respective military service, and as service chief medical advisor to the DHA. In June 2018, DOD submitted its implementation plan to Congress. The implementation plan details how DOD is to reform the MHS to a "streamlined organizational model that standardizes the delivery of care across the MHS with less overhead, more timely policymaking, and a transparent process for oversight and measurement of performance." Congress later revised the MHS reform mandate by further clarifying certain tasks relating to the transfer of MTFs, the roles and responsibilities of the DHA and the service surgeons general, and by extending the deadline for implementing reform efforts to September 30, 2021. DOD later revised its plan to accelerate certain tasks. On October 1, 2019, the military services transferred the administration and management of their U.S.-based MTFs to the DHA. The military services are to continue to administer their overseas MTFs until transfer to the DHA in 2020 2021. Discussion: The enacted bill includes a number of provisions clarifying certain responsibilities for DHA and other medical entities with service-specific responsibilities, such as administering and managing MTFs, providing health service support to combatant commanders, performing medical research, recruiting and retaining medical personnel, and establishing military-civilian partnerships. Organizational Management . Section 711 of the enacted bill amends 10 U.S.C. 1073c to clarify the qualifications of the DHA assistant director and the deputy assistant directors, and allow DOD to reassign certain civil service employees from a military department to a DOD component, or vice-versa. The provision also adds the following to DHA's existing roles and responsibilities: provision of health care; clinical privileging and quality of care programs; MTF capacities to support clinical currency and readiness standards; and coordination with the military services for joint staffing. Section 712 of the enacted bill clarifies the roles and responsibilities of the service surgeons general, to include: support to combatant commanders for operational and deployment requirements; support to DHA by assigning military medical personnel to MTFs; development of combat medical capabilities; and medical readiness of the Armed Forces. In 2018, Congress directed DOD to consolidate most of its medical research programs under the DHA. While the military services are to retain certain medical research responsibilities, the DHA is to be responsible for coordinating all research, development, test, and evaluation (RDT&E) funds appropriated to the defense health program (DHP), including the congressionally-directed medical research programs (CDMRP). The U.S. Army Medical Research and Materiel Command (USAMRMC) administers the CDMRP and executes a variety of RDT&E funds appropriated to the Department of the Army, DHP, and other DOD-wide operation and maintenance accounts. USAMRMC executes most of the annual DHP RDT&E. In FY2017, USAMRMC executed approximately 76% ($377.5 million) of the total DHP RDT&E funds. As of June 1, 2019, USAMRMC restructured and realigned its responsibilities under two separate DOD entities: the DHA and Army Futures Command. Depending on the research mission (DHP requirements vs. service-specific requirements), USAMRMC resources were also reallocated accordingly. Section 737 of the enacted bill directs the Secretary of Defense to retain certain manpower and funding resources with USAMRMC. The provision requires USAMRMC manpower and funding to be at a baseline of no less than "the level of such resources as of the date of the enactment of this Act until September 30, 2022." On October 1, 2022, DOD is to: (1) transfer USAMRMC resources programmed to the Army's research, development, test, and evaluation account to the DHP; and (2) maintain USAMRMC as a "Center of Excellence for Biomedical Research, Development and Acquisition Management." Military Medical Personnel . DOD's budget request for FY2020 includes a proposal to reduce its active duty medical force by 13% (14,707 personnel) in order to maintain a workforce that is "appropriately sized and shaped to meet the National Defense Strategy requirements and allow the MHS to optimize operational training and beneficiary care delivery." Compared to FY2019 levels, the Army would have the largest reduction in medical forces (-16%), followed by the Air Force (-15%), and the Navy (-7%). DOD's initial plan to implement these reductions include: (1) transferring positions (also known as billets) from the MHS to new health service support positions in deployable or warfighting units, military service headquarters, or combatant commands; (2) transferring billets from the MHS to the military departments for repurposing as nonmedical assets; and (3) converting certain military billets to civilian billets. Section 719 of the enacted bill limits DOD actions to reduce or realign its active duty medical force until certain internal reviews, analyses, measurements, and outreach actions are conducted within 180 days of enactment and at least 90 days after a report to the House and Senate armed services committee on such actions have been provided. The report is to include also the department's plan to reduce or realign its military medical force. In addition, the provision contains certain exceptions that allow DOD to proceed with reducing or realigning certain positions. The exceptions are: administrative billets assigned to a service medical department that has been vacant since at least October 1, 2018; nonclinical billets that were identified in the President's FY2020 budget submission and not to exceed a total of 1,700; and service medical department billets solely assigned to a headquarters office and not dually assigned to support a deployable medical unit. Civilian Partnerships . The MHS states that its "success depends on building strong partnerships with the civilian health care sector." As a high-priority initiative, the MHS maintains numerous partnerships with civilian health care organizations, academic institutions, and research entities to enhance or supplement military medical readiness and deliver the health entitlements authorized in chapter 55 of Title 10, U.S. Code. Section 740 of the enacted bill authorizes DOD to conduct a pilot program to improve medical surge capabilities of the National Disaster Medical System and interoperability with certain civilian health care organizations and other federal agencies. If exercised by the Secretary of Defense, pilot program sites are to be located "in the vicinity of major aeromedical and other transport hubs and logistics centers of the Department of Defense." Section 751 of the enacted bill directs DOD to study existing military-civilian integrated health delivery systems and the activities conducted that promote value-based care, measurable health outcomes, patient safety, access to care, critical wartime readiness skills, and cost. The provision requires DOD to submit a report to the House and Senate armed services committees, within 180 days of enactment, on the study's findings and a plan for further development of military-civilian health partnerships. References: Previously discussed in CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , by Bryce H. P. Mendez et al.; CRS In Focus IF11273, Military Health System Reform , by Bryce H. P. Mendez; CRS Report WPD00010, Military Health System Reform , by Bryce H. P. Mendez; CRS Insight IN11115, DOD's Proposal to Reduce Military Medical End Strength , by Bryce H. P. Mendez; and CRS Report R45399, Military Medical Care: Frequently Asked Questions , by Bryce H. P. Mendez. CRS Point of Contact: Bryce H.P. Mendez. <6. Boards of Correction of Military Records & Discharge Review Board Matters> Background: The characterization of service when a servicemember is discharged, as well as awards received and length of service, may affect eligibility for certain veterans' benefits, employment opportunities, and some government programs. If a servicemember believes a service record's information is incorrect or the servicemember alleges an injustice, two statutorily established entities exist for addressing these matters: a board of correction of military records (BCMR) and a discharge review board (DRB). Each armed service has a BCMR and DRB. A BCMR provides an administrative process for military personnel to request record corrections and payment of monetary claims associated with a record correction. An applicant to a BCMR must request a record correction within three years of discovering an alleged error or injustice. A DRB provides an administrative process for former servicemembers to request changes to the reason for discharge or the characterization of service when discharged, but any monetary claim associated with a change must be presented to a BCMR. An application for review must be made to A DRB within 15 years of the discharge. A subsequent change in service policy has no effect on a preceding discharge unless the new policy is retroactive or materially different in a way that would substantially enhance a servicemember's rights and likely invalidate the reason for discharge or characterization of service. Statute requires a DRB to give liberal consideration to an application in which post-traumatic stress syndrome (PTSD), traumatic brain injury (TBI), or mental health conditions typically associated with combat operations may have been a factor in the discharge decision. The liberal consideration requirement equally applies to discharge reviews in which sexual assault or harassment caused PTSD, TBI, or mental health conditions that may have been a factor in the basis for the discharge decision. Discussion: The enacted bill includes 6 out of 13 proposed provisions discussed above: three addressing the oversight and operations of a DRB and BCMR; two addressing PTSD, TBI, or other trauma mental health conditions; and one addressing separations for homosexual conduct. Oversight and Operations. Section 522 of the enacted bill reduces the number of required DRB members from five to three. If overall service review agency personnel requirements remain unchanged, reducing the number of DRB members and reallocating the previously required fourth and fifth members to new DRBs could presumably increase the number of DRBs available. Section 523 of the enacted bill creates a new entity, and capacity, for discharge review appeals and new reporting requirements for discharge review appeals data. The provision includes a Senate amendment that requires the Secretary of Defense to establish the appeals process based on certain parameters. Section 524 of the enacted bill amends 10 U.S.C. 1559 to extend previously authorized restrictions on reducing personnel levels at service review agencies until December 31, 2025. The provision also requires each Service Secretary to report to Congress his or her plan to reduce application backlogs and maintain personnel resources at a review agency. Post-Traumatic Stress Disorder (PTSD), Traumatic Brain Injury (TBI), or Other Trauma Mental Health Conditions. Section 521 of the enacted bill requires a DRB or BCMR to obtain a medical opinion from specified health care professionals on two types of cases. For cases based in whole or in part on PTSD or TBI related to combat, a BCMR or DRB is required to seek advice and counsel from a psychiatrist, psychologist, or social worker with training in PTSD, TBI, or other trauma treatment. For cases based in whole or in part on PTSD or TBI related to sexual trauma, intimate partner violence, or spousal abuse, a DRB or BCMR is required to seek advice and counsel from a psychiatrist, psychologist, or social worker with training PTSD, TBI, or other trauma treatment for these types of cases. Section 525 of the enacted bill amends statutorily mandated training for BCMR and DRB members to include curricula on sexual trauma, intimate partner violence, spousal abuse, and the various responses to these events. Separations for Homosexual Conduct. Section 527 of the enacted bill removes the presumption of administrative regularity that a previous discharge for homosexual conduct was correct and proper. Eliminating this presumption relieves the applicant of the burden to show by substantial evidence that a discharge was not correct or not proper. This provision allows a DRB to review and change, upon request and if found appropriate, the characterization of service for a servicemember originally discharged based on sexual orientation. If an application for review of a discharge based on sexual orientation is denied, the provision establishes a discretionary appeal process consistent with existing DRB procedures. References: CRS Report R43928, Veterans' Benefits: The Impact of Military Discharges on Basic Eligibility , by Sidath Viranga Panangala . CRS Point of Contact: Alan Ott. <7. *Defense Commissary System> Background: Over the past several decades, Congress has been concerned with improving the Defense Commissary Agency (DeCA) system, mandating 12 reports or studies between 1989 and 2015 that considered the idea of consolidating the three military exchanges and the commissary agency. Recent reform proposals have sought to reduce DeCA's reliance on appropriated funds without compromising patrons' commissary benefits or reducing the revenue generated by DOD's military exchanges, which are nonappropriated fund (NAF) entities that fund morale, welfare, and recreation (MWR) facilities on military installations. However, 10 U.S.C. 2482 prohibits the Defense Department from undertaking consolidation without new legislation. Section 627 of the FY2019 NDAA ( P.L. 115-232 ) required the Secretary of Defense to conduct a study to determine the feasibility of consolidating commissaries and military exchange entities into a single defense resale system. The study, The Department of Defense Report on the Development of a Single Defense Resale System , April 29, 2019, concluded that the benefits of consolidating DeCA and the military exchanges into one defense resale entity far outweighed the costs. This DOD study "projected net savings of approximately $700M $1.3B of combined appropriated and nonappropriated funding over a five-year span, and recurring annual savings between $400M-$700M thereafter." Opponents of consolidation maintain that DOD is moving forward without considering the risk that consolidation could cost more than anticipated and fail to result in projected savings in operational costs. This could result in higher prices for patrons and curtail support for MWR programs. In the FY2019 NDAA, Congress authorized $1.3 billion for DeCA to operate 236 commissary stores on military installations worldwide, employing a workforce of over 12,500 civilian full-time equivalents (FTE). Discussion: Section 633 of the enacted bill adopts House Section 631. The enacted provision requires the Government Accountability Office (GAO) to review DOD's business case analysis (pricing, sales, measuring customer savings, timetable for consolidation, etc.) before merging the various resale entities into a single entity. Elements of the GAO report is to include data on the financial viability of a single defense resale entity and the ability of commissaries and exchanges to support MWR programs after consolidation. The enacted provision directs that GAO provide an interim report no later than March 1, 2020, and a final report no later than June 1, 2020. The Senate-passed bill had no similar provision. Section 632 of the House-passed bill would have required a report to Congress by the Defense Secretary regarding the management practices of military commissaries and exchanges no later than 180 days after enactment. This report would have included "a cost-benefit analysis with the goals of reducing the costs of operating military commissaries and exchanges by $2,000,000,000 during fiscal years 2020 through 2024" while not raising costs for patrons. The Senate-passed bill had no similar provision. Section 632 was not adopted in the enacted bill. Section 641 of the enacted bill adopts House Section 634. The enacted provision amends section 1065 of Title 10, U.S. Code, to extend MWR privileges to Foreign Service Officers on mandatory home leave by permitting the use of military lodging effective January 1, 2020. The Senate-passed bill had no similar provision. Section 631 of the enacted bill adopts Senate Section 641. The enacted provision requires the Under Secretary of Defense for Personnel and Readiness (USD[P&R]) to coordinate with the DOD Chief Management Officer to maintain oversight of the business transformation efforts. This provision also requires a DOD executive resale board to advise the USD(P&R) on the implementation of sustainable, complementary operations of the defense commissary system and the exchange stores system. The enacted provision also requires DOD to "field new technologies and best business practices for information technology for the defense resale system" and "implement cutting-edge marketing and advertising opportunities." This provision also amends Section 2483(b) of Title 10, U.S. Code, to allow DOD to include advertising commissary sales on materials available within commissary stores and at other on-base locations in the operating expenses of defense commissaries. Section 642 of the Senate-passed bill would have amended section 2483(c) of Title 10, U.S. Code, to authorize fees collected by DeCA on services provided to secondary patron groups (like DOD contactors) to offset commissary operating costs. The enacted bill did not adopt this provision. Section 632 of the enacted bill adopts Senate Section 643. The enacted provision requires commissary stores to procure locally sourced products such as dairy products, fruits, and vegetables as available while maintaining mandated patron savings. The House-passed bill had no similar provision. References: CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , section on "Defense Commissary System" and similar reports from earlier years; and CRS In Focus IF11089, Defense Primer: Military Commissaries and Exchanges , by Kristy N. Kamarck and Barbara Salazar Torreon. CRS Point of Contact: Barbara Salazar Torreon. <8. Diversity and Inclusion> Background: Throughout the history of the Armed Forces, Congress has used its constitutional authority to establish criteria and standards for individuals to be recruited, advance through promotion, and be separated or retired from military service. DOD and Congress have established some of these criteria through policy and law based on demographic characteristics such as race, sex, and sexual orientation. In the past few decades there have been rapid changes to certain laws and policies regarding diversity, inclusion, and equal opportunity in particular authorizing women to serve in combat arms occupational specialties and the inclusion of lesbian, gay, bisexual, and transgender (LGBT) individuals. Some of these changes remain contentious and face continuing legal challenges. Discussion: In the FY2009 NDAA ( P.L. 110-417 ), Congress authorized the creation of the Military Leadership Diversity Commission (MLDC). Following that effort, in 2012, DOD developed and issued a five-year Diversity and Inclusion Strategic Plan . In 2013, as part of the FY2013 NDAA ( P.L. 112-239 ), Congress required DOD to develop and implement a plan regarding diversity in military leadership. The House bill includes several provisions that would address diversity and inclusion, while the Senate bill has none. Section 526 of the House bill would require DOD to design and implement a five-year strategic plan that is consistent with the 2018 National Military Strategy beginning on January 1, 2020. Section 529 of the enacted bill adopts the House provision and requires DOD to implement the new strategic plan within one year of enactment. Existing law requires DOD to conduct surveys on racial and gender issues. Section 594 of the House bill would require that workplace and equal opportunity, command climate, and workplace and gender relations (WGR) surveys ask respondents whether they have ever experienced supremacist activity, extremist activity, racism, or anti-Semitism. A modified provision was adopted in the enacted bill, which requires questions be included in appropriate surveys on whether respondents experienced, witnessed, or reported extremist activity. The enacted provision does not define extremist activity or specify the frequency for such survey questions. DOD has recently initiated a number of shifts in policy with regard to individuals who identify as transgender. Current policy, which went into effect on April 12, 2019, disqualifies any individual from appointment, enlistment, or induction into the service if they have a history of cross-sex hormone therapy or sex reassignment or genital reconstruction surgery. The policy also disqualifies individuals with a history of gender dysphoria unless they were stable in their biological sex for 36 consecutive months prior to applying for admission into the Armed Forces. However, the policy allows for transgender persons to "seek waivers or exceptions to these or any other standards, requirements, or policies on the same terms as any other person." Those individuals in the service who initially seek military medical care after the effective date of the policy may receive counseling for gender dysphoria and may be retained without a waiver if (1) a military medical provider has determined that gender transition is not medically necessary to protect the health of the individual; and (2) the member is willing and able to adhere to all applicable standards associated with his or her biological sex. Section 597 of the House bill would have required DOD to submit an annual report on the number of servicemembers who sought a waiver prior to accession or while in service on the basis of a transgender-related condition. Section 596 of the enacted bill adopts the House provision and includes clarifying language as to how data elements should be reported. It also requires DOD to protect personally identifiable and health information of members. This reporting requirement expires in 2023. In addition, the conference report accompanying the enacted bill states, In determining whether an applicant with a disqualifying diagnosis of gender dysphoria or history of gender transition treatment or surgery merits a waiver to permit his or her service in the military, the conferees encourage Service-designated waiver authorities to consider such a waiver under the same circumstances as they would for an applicant who is not transgender, but has been diagnosed with analogous conditions or received analogous treatments, presuming the individual meets all other standards for accession. Entry into the Armed Forces by enlistment or appointment (officers) requires applicants to meet certain physical, medical, mental, and moral standards. While some of these standards are specified in law (e.g., 10 U.S.C. 504), DOD and the Services generally establish these standards through policy and regulation. The Services may require additional qualification standards for entry into certain military occupational specialties (e.g., pilots, special operations forces). By law, qualification standards for military career designators are required to be gender-neutral. Section 530B would require that service entry standards account only for the ability of an individual to meet gender-neutral occupational standards and could not include any criteria relating to the "race, color, national origin, religion, or sex (including gender identity or sexual orientation) of an individual." This provision was not adopted. Women were historically prohibited from serving in certain combat roles by law and policy until December 3, 2015, when the Secretary of Defense opened all combat roles to women who can meet gender-neutral standards. Entry level and occupational-specific training has been gender integrated across the military services, with the exception of Marine Corps basic training (boot camp). In 2019, the Marines graduated the first gender-integrated boot camp class at Marine Recruit Depot Parris Island in South Carolina. In a statement to Congress, Lieutenant General David Berger noted that there were no significant variations in the performance of gender-integrated units relative to gender-segregated units. Section 561 of the House bill would prohibit gender segregated Marine Corps recruit training at Marine Corps Recruit Depot Parris Island no later than five years after the date of enactment, and at Marine Corps Recruit Depot San Diego no later than eight years after the date of enactment. Section 565 of the enacted bill adopts this provision. In addition, section 1099I would require the Armed Forces components to share lessons learned and best practices on the progress of their gender integration implementation plans as recommended by the Defense Advisory Committee on Women in the Services (DACOWITS). Finally, section 1099J would require the military departments to examine successful strategies for recruitment and retention of women in foreign militaries, as recommended by DACOWITS. The final bill did not adopt either of these provisions (sections 1099I and 1099J). References: CRS Report R44321, Diversity, Inclusion, and Equal Opportunity in the Armed Services: Background and Issues for Congress , by Kristy N. Kamarck , and CRS Insight IN11086, Military Personnel and Extremism: Law, Policy, and Considerations for Congress , by Kristy N. Kamarck. CRS In Focus IF11147, Defense Primer: Active Duty Enlisted Recruiting , by Lawrence Kapp. CRS Point s of Contact : Kristy N. Kamarck. <9. *Domestic Violence and Child Abuse> Background : The Family Advocacy Program (FAP) is the congressionally-mandated program within DOD devoted to "clinical assessment, supportive services, and treatment in response to domestic abuse and child abuse and neglect in military families." As required by law, the FAP provides an annual report to Congress on child abuse and neglect and domestic abuse in military families. Approximately half of military servicemembers are married and there are approximately 1.6 million dependent children across the active and reserve components. According to DOD statistics, in FY2018, the rate of reported child abuse or neglect in military homes was 13.9 per 1,000 children, an increase from the previous year's rate of 13.7 per 1,000 children. There were 26 child abuse-related fatalities, relative to 17 fatalities in FY2017. The rate of reported spousal abuse in FY2018 was 24.3 per 1,000 military couples, a decrease from the FY2017 rate of 24.5 per 1,000 couples with 13 spouse abuse fatalities recorded. Since FY2006, DOD has been collecting data on unmarried intimate partner abuse. In FY2018, there were 1,024 incidents of intimate partner abuse that met criteria involving 822 victims and 2 fatalities. Discussion: A special victim counsel (SVC) is a judge advocate or civilian attorney who satisfies special training requirements and provides legal assistance to victims of sexual assault throughout the military justice process. Section 542 of the House bill and Section 541 of the Senate bill would expand SVC staffing and authorize SVC services for military-connected victims of domestic violence. The Administration has opposed this measure, stating that it would "decrease access for sexual assault victims to Special Victims' Counsels (SVCs)/Victims' Legal Counsels (VLCs), exacerbate already high caseloads for SVC/VLCs, and impose an unfunded mandate." The enacted bill adopts the Senate provision with an amendment that would require counsel to receive specialized domestic violence legal training, serve for a minimum of two years, and be supported by sufficiently trained paralegals. DOD is required to provide a report on planned implementation no later than 120 days after enactment. Transitional compensation is a monetary benefit authorized under 10 U.S.C. 1059 for dependent family members of servicemembers or of former servicemembers who are separated from the military due to dependent-abuse offenses. One of the motivating arguments for establishing the transitional compensation benefit is that it provides a measure of financial security to spouses or former spouses. Eligible recipients receive monthly payments for no less than 12 months and no more than 36 months at the same rate as dependency and indemnity compensation (DIC). While in receipt of transitional compensation, dependents are also entitled to military commissary and exchange benefits, and may receive dental and medical care, including mental health services, through military facilities as TRICARE beneficiaries. Section 621 of the House bill and Section 601 of the Senate bill are similar provisions that would expand the authority of the Secretary concerned to grant exceptional transitional compensation in an expedited fashion. This would allow dependents who are victims of abuse to start receiving compensation while the offending servicemember is still on active duty and as early as the date that an administrative separation is initiated by a commander. In addition, the House Report directs DOD to provide a comprehensive review and assessment of the transitional compensation program. Section 621 of the enacted bill adopts this provision. When a servicemember has allegedly committed an act of domestic violence, a commander can issue a military protective order (MPO) to a servicemember that prohibits contact between the alleged offender and the domestic violence victim. A servicemember must obey an MPO at all times, whether inside or outside a military installation, or may be subject to court martial or other punitive measures. By law, a military installation commander is required to notify civilian authorities when an MPO is issued, changed, and terminated with respect to individuals who live outside of the installation. House Section 543 would amend 10 U.S.C. 1567a to require notification of civilian authorities no later than seven days after issuing an order, regardless of whether the member resides on the installation. The provision would also require commanders to notify the receiving command in the case of a transfer of an individual who has been issued an MPO. DOD would also be required to track and report the number of orders reported to civilian authorities annually. Section 543 of the enacted bill adopts the House provision and requires annual reports through 2025. While MPOs are typically not enforceable by civilian authorities, a civil protection order (CPO), by law, has full force and effect on military installations. House Section 544 and Senate Section 556 would require DOD to establish policies and procedures for registering CPOs with military installation authorities. Section 550A of the enacted bill adopts this provision. House Section 550F would codify an existing DOD policy to report to the National Instant Criminal Background Check System (NICS) servicemembers who are prohibited from purchasing firearms due to a domestic violence conviction in a military court. This section would also require DOD to study the feasibility of creating a database of military protective orders issued in response to domestic violence and the feasibility for reporting such MPOs to NICS. Section 550E of the enacted bill adopts the House provision, but removes the section that would amend the National Instant Criminal Background Check System Improvement Amendments Act of 2007 (34 U.S.C. 40911(b)) with respect to DOD reporting. It also expands the matters to be explored in the feasibility report. References: For information on Special Victims' Counsel and Military Protective Orders, see CRS Report R44944, Military Sexual Assault: A Framework for Congressional Oversight , by Kristy N. Kamarck and Barbara Salazar Torreon. CRS Point of Contact : Kristy N. Kamarck and Alan Ott. <10. *Medal of Honor> Background: The Medal of Honor (MoH) is the highest award for valor "above and beyond the call of duty" that may be bestowed on a U.S. servicemember. In recent years, the MoH review process has been criticized by some as being lengthy and bureaucratic, which may have led to some records being lost and conclusions drawn based on competing eyewitness and forensic evidence. Reluctance on the part of reviewing officials to award the MoH retroactively or to upgrade other awards is generally based on concern for maintaining the integrity of the award and the awards process. This reluctance has led many observers to believe that the system of awarding the MoH is overly restrictive and that certain individuals are denied earned medals. As a result, DOD periodically reviews inquiries by Members of Congress and reevaluates its historical records. Systematic reviews began in the 1990s for World War II records when African-American units remained segregated and whose valorous unit and individuals' actions, along with others, may have been overlooked. That effort resulted in more than 100 soldiers receiving the MoH, the majority of which were posthumously awarded. On January 6, 2016, DOD announced the results of its year-long review of military awards and decorations. This included review of the timeliness of the MoH process and review by all the military departments of the Distinguished Service Cross, Navy Cross, Air Force Cross, and Silver Star Medal recommendations since September 11, 2001, for actions in Iraq and Afghanistan. Subsequently, the MoH was awarded to the first living recipient from the Iraq War, Army Staff Sgt. David Bellavia, on June 25, 2019. Discussion: Section 583 of the House-passed bill would require DOD to review the service records of certain servicemembers who fought in World War I (WWI) to determine whether they should be posthumously awarded the MoH. Specifically, the provision would require record reviews of certain African-American, Asian-American, Hispanic-American, Jewish-American, and Native-American veterans who were recommended for the MoH or who were the recipients of the Distinguished Service Cross, Navy Cross, or French Croix de Guerre with Palm. Four soldiers, one Hispanic-American (Private David Barkley Cantu) and three Jewish-American veterans (First Sergeant Sydney Gumpertz, First Sergeant Benjamin Kaufman, and Sergeant William Sawelson), were awarded Medals of Honor at the conclusion of WWI. In 1991, President George H.W. Bush awarded the MoH posthumously to Corporal Freddie Stowers, who became the first African-American recipient from WWI after the Army's review of his military records. Later, the FY2015 NDAA ( P.L. 113-291 ) authorized posthumous award of the MoH to Private Henry Johnson, an African-American veteran, and Sgt. William Shemin, a Jewish-American veteran, for valor during WWI. Proponents of the Pentagon review in Section 583 point to similar reviews for minority groups who served in other conflicts from World War II to the present. Some were later awarded the MoH, the majority of which were posthumously awarded. According to the Congressional Budget Office (CBO), "a remote possibility exists" that one of the veterans honored under Section 583 could have a surviving widow who could potentially receive expanded health benefits or increased survivor benefits. Section 584 of the enacted bill adopts this section. If a Secretary concerned determines, based upon the review under that the award of the MoH to a certain World War I veteran is warranted, such Secretary shall submit to the President a recommendation that the President award the MoH to that veteran. This review shall terminate not later than five years after the date of the enactment of this Act. Section 584 of the House-passed bill would have waived the time limitation and authorize the posthumous award of the MoH to Army Sergeant First Class (SFC) Alwyn Cashe for acts of valor in Samarra, Iraq, during Operation Iraqi Freedom. SFC Cashe led recovery efforts and refused medical treatment until his men were evacuated to safety after an improvised explosive device struck their vehicle and caught fire. Cashe's actions saved the lives of six of his soldiers. He later succumbed to his wounds. This provision was not adopted in the enacted bill. Section 1099L of the House-passed bill would have allowed the nation to honor the last surviving MoH recipient of WWII by permitting the individual to lie in honor in the Capitol rotunda upon death. This provision was not adopted in the enacted bill. Section 585 of the Senate-passed bill would have waived the time limitation in section 7274 of title 10, United States Code, and authorize the award of the MoH to Army Major John J. Duffy for acts of valor in Vietnam on April 14 and 15, 1972, for which he was previously awarded the Distinguished Service Cross. Section 583 in the enacted bill adopts this section waiving the time limitation so that the President may award the Medal of Honor under section 7271 of title 10 U.S. Code to John J. Duffy for the acts of valor in Vietnam. References: Previously discussed in the "Medal of Honor" section of CRS Report R44577, FY2017 National Defense Authorization Act: Selected Military Personnel Issues , by Kristy N. Kamarck et al. and similar reports from earlier years; CRS Report 95-519, Medal of Honor: History and Issues , by Barbara Salazar Torreon; and the Congressional Budget Office, Cost Estimates for H.R. 2500 , National Defense Authorization Act for Fiscal Year 2020, June 19, 2019. CRS Point of Contact: Barbara Salazar Torreon. <11. Military Family Issues> Background: Approximately 2.1 million members of the Armed Forces across the active and reserve components have an additional 2.7 million "dependent" family members (spouses and/or children). Slightly over 40% of servicemembers have children and approximately 50% are married. The military provides a number of quality of life programs and services for military families as part of a servicemember's total compensation and benefit package. These include family life, career, and financial counseling, childcare services and support, and other MWR activities. The general motivation for providing these benefits is to improve the recruitment, retention, and readiness of military servicemembers. Discussion: Spouse Employment and Education. Section 1784 of Title 10, U.S. Code , requires the President to order such measures as necessary to increase employment opportunities for military spouses. Active duty servicemembers conduct frequent moves to military installations across the globe. For working spouses, this sometimes requires them to establish employment in a new state that has different occupational licensing requirements than their previous state. The FY2018 NDAA ( P.L. 115-91 556) authorized the reimbursement of certain relicensing costs up to $500 for military spouses following a permanent change of station from one state to another with an end date of December 31, 2022. Section 628 of the House bill would have raised the maximum reimbursement to $1,000 and would require the Secretary of Defense to perform an analysis of whether that amount is sufficient to cover average costs. Section 576 of the Senate bill would not have raised the maximum reimbursement amount; however, it would extend the authority to December 31, 2024. Section 577 of the enacted bill adopts the House provision and extends the authorization for this benefit to December 31, 2024. Both bills also had similar provisions (House Section 524 and Senate Section 577) that sought to improve interstate license portability through DOD funding support for the development of interstate compacts. Both bills would have capped funding support for each compact at $1 million, while the Senate bill would have capped the total program funding at $4 million. Section 575 of the enacted bill adopts the House provision with an amendment that would require the Secretary of Defense to enter into a cooperative agreement with the Council of State Governments to assist with the funding and development. DOD's My Career Advancement Account Scholarship Program (MyCAA), launched in 2007, currently provides eligible military spouses up to $4,000 in financial assistance to pursue a license, certification, or associate's degree in a portable career field. Eligible spouses are those married to military servicemembers on active duty in pay grades E-1 to E-5, W-1 to W-2 and O-1 to O-2. During the pilot phase of the program, the benefit was offered to all spouses and funds were also available for a broader range of degrees and certifications, including bachelor's and advanced degrees. However, due to concerns about rising costs and enrollment requests, DOD has since reduced the maximum benefit amount (from $6,000 to $4000), limited eligibility to spouses of junior servicemembers, and restricted the types of degrees and career fields that were eligible for funding. Section 623 of the House bill would have allowed continued eligibility for spouses when the member is promoted above those pay grades after the spouse has begun a course of instruction. Section 580B of the House bill would have expanded the qualifying degrees and certifications to include non-portable career fields and occupations. Finally, Section 580C would have expanded the eligible population to all enlisted spouses and would also have provided eligibility for Coast Guard spouses to participate in the DOD program. The enacted bill adopts all three of these House provisions, expanding eligibility for more military spouses and a broader range of certifications. Parents and Children. DOD operates the largest employer-sponsored childcare program in the United States, serving approximately 200,000 children of uniformed servicemembers and DOD civilians, and employing over 23,000 childcare workers. DOD offers subsidized programs on and off military installations for children from birth through 12 years, including care on a full-day, part-day, short-term, or intermittent basis. Title 10 U.S.C. 1798 authorizes fee assistance for civilian childcare services. Section 625 of the House bill would have specifically authorized fee assistance for survivors of members of the Armed Forces who die "in line of duty while on active duty, active duty for training, or inactive duty for training.'' DOD policy currently authorizes childcare for "surviving spouses of military members who died from a combat related incident." Section 624 of the enacted bill amends the House provision to only authorize fee assistance for survivors of those who die "in combat-related incidents in the line of duty." Section 629 of the House bill and Section 578 of the Senate bill would have expanded and attempted to clarify hiring authorities for military childcare workers. The House provision would also have required an assessment and report from DOD on the adequacy of the maximum fee assistance subsidy, the accessibility of childcare and spouse employment websites, and the capacity needs of installation-based childcare facilities. Finally, the same section sought to improve portability of background checks for childcare workers. It is common for military spouses to be employed as childcare workers, and frequent moves may require them to reapply and resubmit background check material at a new facility. Section 580 of the enacted bill adopts the House provision and includes language clarifying the direct hire authority for DOD childcare development centers to include family childcare coordinator services and school age childcare coordinator services. References: CRS Report R45288, Military Child Development Program: Background and Issues , by Kristy N. Kamarck. CRS Points of Contact: Kristy N. Kamarck. <12. Military Medical Malpractice> Background: DOD employs physicians and other medical personnel to deliver health care services to servicemembers in military treatment facilities (MTFs). Occasionally, however, patient safety events do occur and providers commit medical malpractice by rendering health care in a negligent fashion, resulting in the servicemember's injury or death. In the civilian health care market, a victim of medical malpractice may potentially obtain recourse by pursuing litigation against the negligent provider and/or his employer. A servicemember injured as a result of malpractice committed by an MTF health care provider, however, may encounter significant obstacles if attempting to sue the United States. In general, the Federal Tort Claims Act (FTCA) permits private parties to pursue certain tort claims (e.g., medical malpractice) against the United States. However, in 1950, the U.S. Supreme Court in the case of Feres v. United States recognized an implicit exception to the FTCA that the federal government is immunized from liability "for injuries to servicemen where the injuries arise out of or are in the course of activity incident to service." This exception to tort liability is known as the Feres doctrine. Many lower federal courts have concluded that Feres generally prohibits military servicemembers from asserting malpractice claims against the United States based on the negligent actions of health care providers employed by the military. Over the past decade, Congress has held multiple hearings to assess whether to modify the Feres doctrine to allow servicemembers to pursue medical malpractice litigation against the United States. Congress has also considered several proposals to amend the FTCA to allow these tort claims. Discussion: The enacted bill does not abrogate the Feres doctrine, nor does it amend the FTCA to provide servicemembers the ability to litigate certain medical malpractice claims against the United States. Instead, enacted provisions focus on establishing an administrative claims process to compensate injured servicemembers and on conducting oversight of the Defense Department's clinical quality assurance program. Section 731 of the enacted bill authorizes the Secretary of Defense to "allow, settle, and pay a claim against the United States for personal injury or death incident to the service of a member of the uniformed services that was caused by the medical malpractice of the Department of Defense health care provider." Under the provision, the Defense Secretary may establish an administrative claims process for servicemembers who have been injured or died as a result of medical malpractice committed by an MTF provider. Only an injured servicemember, or an authorized representative of a deceased or incapacitated servicemember, may file a claim within two years after a malpractice incident (three years if filed in calendar year 2020). For a substantiated claim, DOD may issue financial compensation, up to $100,000. If referred by the Defense Secretary, the Secretary of the Treasury may issue additional compensation in excess of $100,000. Within 180 days after enactment, the Defense Secretary is required to brief the House and Senate armed services committees on the status of developing and implementing the regulations for this authority. Typically, DOD conducts prospective, ongoing, and retrospective monitoring and assessment of its health care services through its Medical Quality Assurance (MQA) programs and clinical quality management activities. The Defense Health Agency and the Service medical departments administer these programs and activities, which are intended to "ensure quality in healthcare throughout the MHS." Section 747 of the enacted bill directs GAO to assess the effectiveness of DOD's quality assurance program, including the use and monitoring of the National Practitioner Data Bank when hiring, retaining, and documenting adverse actions taken against DOD health care providers. GAO is to report their findings to the House and Senate armed services committees no later than January 1, 2021. References: CRS In Focus IF11102, Military Medical Malpractice and the Feres Doctrine , by Bryce H. P. Mendez and Kevin M. Lewis; and CRS Legal Sidebar LSB10305, The Feres Doctrine: Congress, the Courts, and Military Servicemember Lawsuits Against the United States , by Kevin M. Lewis. CRS Point of Contact: Bryce H.P. Mendez. <13. *Military Pay Raise> Background: Congress has a long-standing congressional interest in military pay raises, as they relate to the overall cost of military personnel and to recruitment and retention of high-quality personnel to serve in the all-volunteer military. Section 1009 of Title 37, U.S. Code, codifies the formula for an automatic annual increase in basic pay that is indexed to the annual increase in the Employment Cost Index (ECI). The statutory formula stipulates that the increase in basic pay for 2020 will be 3.1% unless either (1) Congress passes a law to provide otherwise; or (2) the President specifies an alternative pay adjustment under subsection (e) of 37 U.S.C. 1009. Increases in basic pay are typically effective at the start of the calendar year, rather than the fiscal year. The FY2020 President's Budget requested a 3.1% military pay raise, equal to the statutory formula. Discussion: The House bill would have included two provisions that would address the military pay raise. Section 606 would have directed a 3.1% increase in basic pay. Section 607 would have directed that the statutory formula of 37 U.S.C. 1009 go into effect, also resulting in a 3.1% increase in basic pay, even if the President were to specify an alternate adjustment. The Senate bill did not contain a provision specifying an increase in basic pay; it would have left the 3.1% automatic adjustment provided by 37 U.S.C. 1009 in place. Section 609 of P.L. 116-92 specified a 3.1% increase in basic pay. References: For an explanation of the pay raise process and historical increases, see CRS In Focus IF10260, Defense Primer: Military Pay Raise , by Lawrence Kapp. Previously discussed in CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , by Bryce H. P. Mendez et al. and similar reports from earlier years. CRS Point of Contact: Lawrence Kapp. <14. Military Retirement and Survivor Benefits> Background: The military retirement system is a funded, noncontributory system that provides a monthly annuity after 20 qualifying years of service, or upon qualifying for a disability retirement. As of January 1, 2018, those joining the military and those who opted into the Blended Retirement System also receive a defined contribution from the federal government into the Thrift Savings Plan (TSP). Military retirees and their dependents are also eligible for other DOD benefits, including commissary and exchange shopping privileges, medical benefits, and space-available travel on military aircraft. Surviving spouses and other eligible beneficiaries may be eligible to receive a portion of the servicemember's retired pay after the member's death in retirement (if enrolled) or while on active duty (automatic eligibility). This benefit is called the Survivor Benefit Plan (SBP). In addition, military retirees and their dependents may be eligible for benefits from the VA, including Dependency and Indemnity Compensation (DIC), a monthly payment to beneficiaries whose spouse's death was related to a service-connected injury or condition. Discussion: Military retirees are paid from the Military Retirement Fund (MRF). Under the accrual accounting system, the DOD budget for each fiscal year includes a contribution to the MRF as a percentage of basic pay in the amount needed to cover future retirement costs. This percentage called the normal cost percentage (NCP) is determined by an independent, presidentially appointed, DOD Retirement Board of Actuaries. Estimated future retirement costs are modeled based on the past rates at which active duty military personnel stayed in the service until retirement and on assumptions regarding the overall U.S. economy, including interest rates, inflation rates, and military pay levels. Currently, the DOD Actuary calculates separate NCPs for the active and reserve components; however, by law the Actuary applies a single NCP across all of the military services. The conference report ( H.Rept. 115-404 ) accompanying FY2018 NDAA ( P.L. 115-91 ) contained a provision asking the GAO to evaluate whether the current method used to calculate DOD retirement contributions reflects estimated service retirement costs, and what effects, if any may result from calculating a separate NCP for each of the Services. The GAO's December 2018 report found that, due to differing continuation rates among the Services, "the mandated single, aggregate contribution rate does not reflect service specific retirement costs." In particular, the analysis found that the probability of reaching 20 years of service was more than 3 times higher for the Air Force than the Marine Corps. Section 631 of the Senate bill would have changed how military retirement contributions are calculated, by requiring separate NCPs for each of the Services and components. Some analysts who have studied the issue have argued that this change would improve resource allocation efficiency, manpower decision-making, and accuracy in budget estimates at the service level. On the other hand, the GAO report notes that military service officials stated that their "workforce decision making processes would not change." Section 655 of the enacted bill does not change the funding process, but requires the Secretary of Defense to deliver an implementation plan to the House and Senate armed services committees by April 1, 2020. DOD's plan would assume that the change in funding process would commence in FY2025. Following the death of a servicemember, certain beneficiaries may be eligible for survivor benefits from both DOD (SBP) and the VA (DIC). However, by law, surviving spouses who receive both annuities must have their SBP payments reduced by the amount of DIC they receive. This offset has sometimes been referred to as a widows' tax . The FY2018 NDAA ( P.L. 115-91 ) permanently authorized a payment called the called the Special Survivor Indemnity Allowance (SSIA) to such surviving spouses, to offset that reduction. The SSIA payment is adjusted annually to account for cost-of-living increases. In the past, to avoid the offset, some survivors have used the authority under 10 U.S.C. 1448(d)(2) to transfer the SBP benefit to dependent children. Section 630A of the House bill would have repealed the offset as well as the authority to provide the annuity to dependent children. Surviving spouses who had transferred the benefit would not have been able to have their eligibility for the benefit restored. Retroactive payments would not be authorized under this provision. SBP is also paid from the MRF. CBO estimates that the repeal would increase federal spending by $5.7 billion over a period of 10 years. Approximately 65,000 surviving beneficiaries are eligible to receive both SBP and DIC. Section 622 of the enacted bill phases out the requirement for an SBP-DIC offset over a period of three years, and repeals the optional SBP annuity for dependent children. References: CRS Report RL34751, Military Retirement: Background and Recent Developments , by Kristy N. Kamarck . CRS Report R45325, Military Survivor Benefit Plan: Background and Issues for Congress , by Kristy N. Kamarck and Barbara Salazar Torreon , CRS Insight IN11112, The Kiddie Tax and Military Survivors' Benefits , by Sean Lowry and Kristy N. Kamarck , CRS Report R40757, Veterans' Benefits: Dependency and Indemnity Compensation (DIC) for Survivors , by Scott D. Szymendera. CRS Legal Sidebar LSB10316, FY2020 NDAA Analysis: Elimination of Benefits Offset for Surviving Spouses and Related Legal Issues , by Mainon A. Schwartz. CRS Point of Contact : Kristy N. Kamarck. <15. *Military Sexual Assault and Sexual Harassment> Background: Over the past decade, the issues of sexual assault and sexual harassment in the military have generated sustained congressional and media attention. Congress has required additional study, data collection, and reporting to determine the scope of the issue, expand protections and support services for victims, make substantial changes to the military justice system, and take other actions to enhance sexual assault prevention and response. Sexual assault and related sex offenses are crimes under the Uniform Code of Military Justice (UCMJ) and are prosecutable by court-martial. DOD's Sexual Assault Prevention and Response Office (SAPRO) oversees sexual assault policy and produces an annual report on sexual assault estimated prevalence rates and actual reporting. In FY2018, estimated sexual assault prevalence rates across DOD's active duty population were 6.2% for women and 0.7% for men. These estimated prevalence rates were higher for active duty women than the FY2016 of 4.3% while the rate for men remained close to the FY2016 rate of 0.6%. Discussion: The following discussion is split into four topic areas: Reporting and Accountability; Prevention and Response; Victim Services and Support; and Military Justice and Investigations. In March 2019, following a Senate Armed Services Committee hearing, the Acting Secretary of Defense established the Sexual Assault Accountability and Investigation Task Force (SAAITF). This task force made several recommendations for legislative action, some of which are reflected in sections of the House and Senate bills. Reporting and Accountability . Several provisions in the House and Senate bills would have offered support to congressional oversight. In the FY2015 NDAA, Congress called for the establishment of a 20-member Defense Advisory Committee on Investigation, Prosecution, and Defense of Sexual Assault in the Armed Forces (DAC-IPAD). The committee was established in 2016 and has since produced several studies. Section 548 of the House bill and Section 533 of the Senate bill would have extended the term of the DAC-IPAD for an additional five years. The House provision would have also expanded the scope of the committee's research to include exploring the feasibility of incorporating restorative justice models into the UCMJ. Section 535 of the enacted bill adopts the Senate provision and expands the scope of research as proposed in the House bill. Section 535 of the Senate bill would have required the committee to review and assess the relationship between race and ethnicity and the investigation, prosecution, and defense of sexual assault. In May 2019, the GAO reported that "Blacks, Hispanics, and male servicemembers were more likely than Whites and female servicemembers to be the subjects of recorded investigations in all of the military services, and were more likely to be tried in general and special courts-martial." GAO also reported that differences in how the Services record information on race and ethnicity make it difficult to identify disparities. Section 540A of the House bill would have required DOD to conduct a review of racial, ethnic, and gender disparities across the entire military justice system (see also the " Diversity and Inclusion " section of this report). Section 540I of the enacted bill adopts the House provision and requires the DAC-IPAD to conduct the review for each fiscal year in which the committee assesses completed court-martial cases. Both bills (House Section 549 and Senate Section 534) would have required the Secretary of Defense to establish a 20-member "Defense Advisory Committee for the Prevention of Sexual Misconduct" with expertise in areas such as organizational culture, suicide prevention, implementation science, and the continuum of harm. This provision was adopted in the enacted bill. Section 540M of the enacted bill adopts a Senate provision requiring a GAO report on Armed Forces implementation of statutory requirements for sexual assault for FY2004 FY2019. Prevention and Response. Section 521 of the Senate bill would have required the Secretary of Defense and Secretaries of the military departments to promulgate policies "to reinvigorate the prevention of sexual assault involving members of the Armed Forces." Elements of the required policy would include, (1) education and training on the prevention of sexual assault; (2) promoting healthy relationships; (3) empowering and enhancing the role of noncommissioned officers in the prevention of sexual assault (4) fostering social courage to promote interventions to prevent sexual assault; (5) addressing behaviors across the continuum of harm; (6) countering alcohol abuse, including binge drinking; and (7) other matters as the Secretary of Defense deems appropriate. The enacted bill adopts this provision. Senate Section 530 and House Section 550O would have ensured that Catch a Serial Offender (CATCH) Program information is not subject to Freedom of Information Act (FOIA) requests. According to SAPRO, "CATCH allows sexual assault victims (Service members and adult dependents) to discover if the suspect in their restricted report may have also assaulted another person (a "match" in the CATCH website), and, having that knowledge, decide whether to convert their restricted report to unrestricted to initiate an investigation of the serial offender suspect." A sexual assault victim may submit a confidential restricted report and receive counseling and other services without notifying his or her commander or military investigative authorities. The report may later be converted to an unrestricted report , which does initiate an investigation. Section 530 would ensure that restricted reports to, or by the CATCH program, would not affect the report's status as restricted and thus would maintain victim confidentiality. Section 530 of the enacted bill adopts the Senate provision. Victim Services and Support . Both bills included provisions that would have expanded or enhanced the Special Victim Counsel (SVC) program. An SVC is a judge advocate or civilian attorney who meets special training requirements and provides legal assistance to victims of sexual assault throughout the military justice process. Based on victim surveys, there is substantial confidence and satisfaction with SVC services and support. Sections 541 and 542 of the Senate bill would expand SVC services to include cases of retaliation and would authorize services for military-affiliated victims of domestic violence when resources are available. House Section 542 would also expand SVC services to victims of domestic violence, establish minimum staffing levels, and require the creation of SVC paralegal positions. Sections 541 and 548 of the enacted bill adopt the Senate provisions and includes an amendment requiring specialized training in domestic violence for specified legal counsel and a report to Congress on resources needed to carry out the program. Both House and Senate bills would have also ensured that an SVC would be made available to a requesting victim within a certain amount of time 48 hours in the House bill (Section 550A), and 72 hours in the Senate version (Section 543). Section 542 of the enacted bill adopts the Senate provision for a 72-hour window. Finally, similar provisions in both bills (House Section 550C and Senate Section 544) would have required SVC training on state-specific criminal justice matters. Section 550C of the enacted bill adopts the House provision and adds "protective orders" to the list of topics for training. Another aspect of victim protection and support that appeared in both bills is the requirement for development of a safe to report policy (House Section 550 and Senate Sections 527 and 528). This policy, which has been implemented in some form at the military service academies, is intended to remove disincentives for alleged victims to report sexual assault incidents by protecting cadets and midshipmen from punishment for minor collateral misconduct violations that might be uncovered during an investigation. In response to the House provision, the Administration stated that such a policy "would provide blanket immunity [to the alleged victim] and might have the effect of undermining the validity of a victim's allegations. Specifically, under this provision, victims might be subjected to allegations that the report was made merely to escape disciplinary or punitive action." It is not clear from existing data how prevalent it is for misconduct investigations to lead to sexual assault allegations or vice versa. However, survey data suggests that collateral misconduct may reduce reporting of sexual assault. According to active duty survey data for 2018, 34% of women and 26% of men who experienced a sexual assault did not report the assault because they "thought they might get in trouble for something they had done or would get labeled a troublemaker." The final bill did not adopt the safe to report provision. Section 558 of the House bill would have required the Secretary of Defense to draft regulations on the consideration of a transfer of a military service academy student who is the victim of a sexual assault or related offense to another service academy. Section 555 of the enacted bill adopts the House provision and includes an amendment expanding options available to include enrollment in a Senior Reserve Officer Training Corps (SROTC) program. Regular active duty members who are victims of sexual assault have the ability to request a permanent change of station, or a change of unit or duty assignment at the same installation; however, there are generally no regulations that provide for transfer to another service (e.g., from the Navy to the Army). Service academy cadets and midshipmen may be offered the opportunity to change units (i.e., companies or squadrons) within the same academy; however, cross-service transfers are rare. The military service academies all have similar entry requirements based on physical, mental and moral standards; however, there are certain curriculum and military education requirements that are specific to the individual academies for each academic year and summer training period. As such, considerations for transfer may include the ability of the individual to qualify under another academy's standards and complete all requirements for commissioning within the four-year program, or the necessity of waivers for certain requirements . Finally, Section 550P in the House bill and Section 531 in the Senate bill would have addressed continued confidentiality of restricted reports if a sexual assault allegation is inadvertently disclosed to a third party who would normally be a mandatory reporter (e.g., commanding officers, supervisors, and law enforcement). Mandatory reporters are individuals who, when they receive information that a sexual assault has occurred, must report that information to military criminal investigative services. The enacted bill adopts the Senate provision. Military Justice and Investigations . Several provisions in the House and Senate bills sought to make changes to how disposition decisions are made in sex-related cases for military service academies and the total force. Section 538 of the House bill would have established a four-year pilot program at the military service academies, This pilot would have required the Secretary of Defense to establish an Office of the Chief Prosecutor, at the grade of O-7 or above, for the independent review and disposition of certain sex-related ( special victim ) offenses. Those who argue for taking decision-making outside of the chain of command contend that independent prosecutors are better equipped to make disposition decisions and that such an endeavor could improve victim confidence in the investigative and judicial process. For the 2017 2018 academic program year at the service academies, there were 67 unrestricted reports alleging sexual assault by or against cadets, midshipmen, or prep school students, and 55 investigations initiated during the APY. The Administration opposed this pilot program contending that it would, "outsource authority for discipline," and "undermines commander accountability and the chain of command relationship." The provision was not adopted. Since 2012, DOD policy has required that all unrestricted reports of adult sexual assault offenses be reviewed by a special court-martial convening authority (SPCMCA) for the initial disposition decision. Section 522 of the Senate bill would codify the requirement that only a SPCMCA in the grade of O-6 or above may have disposition authority for certain sex-related offenses. In addition, it would require that only a SPCMCA or higher in the victim's chain of command may make disposition decisions with regard to any collateral misconduct by the victim. This provision was not adopted. House Section 540 and Senate Section 523 were similar provisions that would require training for those responsible for the disposition of sexual assault cases on the exercise of such authority. Section 540C of the House bill and Section 525 of the Senate bill would have required uniform training for commanders on their role in each stage of the military justice system with regard to sexual assault cases. The enacted bill adopted these provisions. Section 539 of the House bill would have required that commanders take timely disposition action on nonprosecutable sex-related offenses, following a determination that there is insufficient evidence to support prosecution for a sex-related offense in a general or special court-martial. Under this provision, a commanding officer would receive the investigative materials within seven days of the nonprosecutable determination and would be required to take other judicial, nonjudicial, or administrative action on the case within 90 days. The Administration objects to this provision on the basis that it could be inconsistent with statutory requirements for higher-level review of certain non-referral dispositions and that the 90-day deadline could potentially immunize misconduct if command action is not taken within that timeframe. Section 540C of the enacted bill adopts the House provision with an amendment requiring a policy to ensure the timely disposition of alleged sex-related offenses that a court-martial convening authority has declined to refer for trial by a general or special court-martial, due to a determination that there is insufficient evidence to support prosecution. Several provisions in the bills also addressed victim consultation and notifications during investigative and judicial processes. Section 550B of the House bill and Section 526 of the Senate bill were identical provisions that would have require commanders to notify victims on a monthly basis on any final determinations (i.e., administrative, nonjudicial punishment, or no further action) made with respect to a case that is not referred to court-martial. The enacted bill adopted this provision. The FY2015 NDAA ( P.L. 113-291 524) required that DOD officials ask victims about their preference regarding the prosecution venue whether they prefer prosecution by court-martial or in a civilian court of jurisdiction. A March 2019 report by the DOD Inspector General found that in approximately 27% of the cases reviewed, victims were denied the opportunity to state their preference. In the remaining cases there was insufficient documentation to ascertain whether the victims were consulted as required by law. Sections 534 and 547 of the House bill and Section 524 of the Senate bill included provisions that would have required documentation of the consultation with the victim on the prosecution venue. Section 538 of the enacted bill adopts House provision 534 and requires implementation no later than 180 days after enactment. An April 2019 report by DOD's SAAITF recommended making sexual harassment a criminal offense for uniformed personnel by adding a specific punitive article to the UCMJ, to "make a strong military-wide statement about the seriousness of these behaviors and the military's zero tolerance policy for them." Section 529 of the Senate bill would have require DOD to submit a report within 180 days of enactment on recommended legislative and administrative actions required to establish a separate punitive article for sexual harassment in the UCMJ. Section 540E of the enacted bill adopts the Senate provision. References: See also CRS Report R44944, Military Sexual Assault: A Framework for Congressional Oversight , by Kristy N. Kamarck and Barbara Salazar Torreon, Previously discussed in CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , by Bryce H. P. Mendez et al. and similar reports from earlier years. CRS Point of Contact : Kristy N. Kamarck and Alan Ott. <16. Screening and Testing for Environmental and Occupational Exposures> Background: In general, DOD policies require the protection of military and civilian personnel from accidental death, injury, or occupational illness. DOD's occupational and environmental health programs typically require military and civilian personnel to receive occupation- or mission-specific exposure or injury prevention education, operational risk management training, personal protective equipment, exposure assessments, and medical prophylactics or treatment, if necessary. DOD policies also require exposure assessments and screenings for certain hazardous substances or potentially harmful environments, such as lead, hexavalent chromium, cadmium, open air burn pits, radiation, blast pressure injuries, and noise. DOD primarily documents exposures in the Defense Occupational and Environmental Health Readiness System (DOEHRS), an electronic "information management system for longitudinal exposure recordkeeping and reporting." DOD epidemiologists, public health practitioners, and occupational safety experts use DOEHRS data to conduct medical surveillance, inform future prevention measures, and develop improved personnel protective equipment. DOD medical personnel can use DOEHRS data when evaluating, diagnosing, or treating patients exposed to a hazardous substance or environment. In addition to DOEHRS, DOD can also document certain exposures in legacy electronic health record systems, paper medical records, or the individual longitudinal exposure record (ILER). The VA also utilizes DOD's exposure data when considering presumptive service connection for a veteran's claim for disability compensation, or providing ongoing medical care. While DOD's occupational and environmental health programs screen, document, and track servicemember or civilian employee exposure to certain substances, all potentially hazardous substances are not covered under these programs. Discussion: The enacted bill include provisions that address DOD's requirements and processes for documenting and conducting medical surveillance on certain at-risk individuals or those exposed to certain hazards. General Exposure Documentation and Tracking. Section 705 of the enacted bill amends 10 U.S.C. 1074f to include additional requirements for DOD to "record any exposure to occupational and environmental health risks" during the course of a servicemembers' deployment and make such information available to other DOD health care providers conducting post-deployment medical examinations or reassessments. The bill also requires DOD health care providers to: (1) use standardized questions when assessing for deployment-related exposures, (2) include detailed diagnosis codes in a servicemember's medical record, and (3) have access to information contained in the Airborne and Open Burn Pit Registry (i.e., Burn Pit Registry). Lead Exposure. Section 703 of the enacted bill adopts Senate Section 703, which requires DOD to offer lead level screening and testing to potentially exposed children. DOD is to implement this requirement by establishing clinical practice guidelines that take into account recommendations published by the U.S. Centers for Disease Control and Prevention (CDC) on lead level screening and testing in children. The provision directs the sharing of test results with the child's parent or guardian. Test results with "abnormal" or "elevated" blood lead levels are to be disclosed to the local health department, or the CDC and an "appropriate authority" of the host nation, if residing overseas. DOD is required to report to Congress, by January 1, 2021, the number of children screened, found to have elevated blood lead levels, and provided treatment for lead poisoning. The provision also tasks GAO to report to Congress on the effectiveness of DOD's lead screening, testing, and treatment program for children. Not adopted was House Section 710, which would have authorized $5 million in the Defense Health Program account to fund lead level screening and testing for children through an offset reduction to the Army procurement account for Wheeled and Tracked Combat Vehicles. Burn Pit & Airborne Hazards Exposure. Section 704 of the enacted bill directs DOD to assess servicemembers for exposure to open burn pits or other toxic airborne hazards. The provision requires exposure assessments during the annual periodic health assessment, separation history and physical examination, and deployment health assessments. DOD is also required to enroll exposed servicemembers in the Burn Pit Registry and share its assessment findings with the VA. PFAS Exposure. Section 707 of the enacted bill directs DOD to assess its firefighters, during their annual physical examination, for exposure to PFAS. The assessment requirement is to take effect on October 1, 2020. Blast Pressure Exposure. Section 717 of the enacted bill adopts House Section 716. The provision directs DOD to document in a servicemember's medical record, information on blast pressure exposure that results in a "concussive event or injury that requires a military acute concussive evaluation." Section 742 of the enacted bill modifies the requirement for a longitudinal medical study on blast pressure exposure in servicemembers, as directed by Section 734 of the FY2018 NDAA ( P.L. 115-91 ). The modification requires DOD to assess the feasibility of uploading its blast pressure exposure data into DOEHRS or other tracking systems, as well as data interoperability with MHS Genesis. References: CRS Report R45986, Federal Role in Responding to Potential Risks of Per- and Polyfluoroalkyl Substances (PFAS) , coordinated by David M. Bearden, and CRS Report RS21688, Lead-Based Paint Poisoning Prevention: Summary of Federal Mandates and Financial Assistance for Reducing Hazards in Housing , by Jerry H. Yen. CRS Point of Contact: Bryce H.P. Mendez.

Each year, the National Defense Authorization Act (NDAA) provides authorization of appropriations for a range of Department of Defense (DOD) and national security programs and related activities. New or clarified defense policies, organizational reform, and directed reports to Congress are often included. For FY2020, the NDAA ( P.L. 116-92 ) addresses or attempts to resolve high-profile military personnel issues. Some are required annual authorizations (e.g., end-strengths); some are updates or modifications to existing programs; and some are issues identified in certain military personnel programs. In the FY2020 NDAA, Congress authorized end-strengths identical to the Administration's FY2020 budget proposal. The authorized active duty end-strength increased by about 1% to 1,339,500. The authorized Selected Reserves end-strength decreased by about 2% to 807,800. A 3.1% increase in basic military pay took effect on January 1, 2020. This increase is identical to the Administration's FY2020 budget proposal and equal to the automatic annual adjustment amount directed by statutory formula (37 U.S.C. §1009). Congress also directed modifications to several existing personnel programs, including extension of DOD Morale, Welfare, and Recreation (MWR) privileges to Foreign Service Officers on mandatory home leave; repeal of the Survivor Benefit Plan (SBP) and Veterans Affairs' Dependency and Indemnity Compensation (DIC) offset requirement (i.e., the wi dows' tax ); modification of DOD workplace and command climate surveys to include questions relating to experiences with supremacist activity, extremist activity, or racism; expansion of Special Victim Counsel services for victims of domestic violence; prohibition of gender-segregated Marine Corps recruit training; expansion of spouse employment and education programs, including reimbursement for relicensing costs associated with military relocations; clarified roles and responsibilities for senior military medical leaders assigned to the Defense Health Agency or a service medical department; and medical documentation and tracking requirements for servicemembers or family members exposed to certain environmental or occupational hazards (e.g., lead, open air burn pits, blast pressure). As part of the oversight process, several provisions address selected congressional items of interest, including DOD review of service records of certain World War I veterans for potential eligibility for a posthumously awarded Medal of Honor; a process for former servicemembers to appeal decisions issued by a Board of Correction of Military Records or a Discharge Review Board; a feasibility study on the creation of a database to track domestic violence military protective orders and reporting to the National Instant Criminal Background Check System; transparency on military medical malpractice, including the ability for servicemembers to file administrative claims against the United States; and limitations on the reduction of military medical personnel.

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<1. Introduction> Congress is considering federal funding for infrastructure to revive an economy damaged by Coronavirus Disease 2019 (COVID-19). This is not the first occasion on which Congress has considered funding infrastructure for purposes of economic stimulus. This report discusses the economic impact of the trans portation infrastructure funding that was provided in the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ). Enacted on February 17, 2009, ARRA was a response to the recession that officially ran from December 2007 through June 2009. This "Great Recession" proved to be the most severe economic downturn since the Great Depression of the 1930s. The recession was relatively deep and the recovery relatively slow. The unemployment rate, for example, rose from 4.4% in May 2007 to 10% in October 2009, and did not fall below 6% again until September 2014. ARRA was the largest fiscal stimulus measure passed by Congress in reaction to the Great Recession. When enacted, the Congressional Budget Office (CBO) estimated the law would cost the federal government $787 billion from FY2009 through FY2019. Of this amount, infrastructure accounted for approximately $100 billion to $150 billion (13% to 19%), depending on how the term is defined (see text box, 'What is Infrastructure?'). Of the original $787 billion cost estimate, programs administered by the U.S. Department of Transportation (DOT) received a total of $48.1 billion, about 6% of the total. Other public works infrastructure funding in ARRA included $4.6 billion for Army Corps of Engineers projects, some of which were related to waterborne transportation; $4 billion for state clean water revolving funds; $2 billion for state drinking water revolving funds; and $2.5 billion for four major federal land management agencies. Authority for state and local governments to issue tax credit bonds for capital spending represented an additional federal subsidy of about $36 billion. These figures do not include ARRA funding for federal government buildings and facilities, communications technologies, and energy systems. As is the case with most federal infrastructure investment, the infrastructure support authorized in ARRA was provided in four different ways: direct spending on infrastructure the federal government owns and operates, including roads and bridges on federal lands and the air traffic control system; grants to nonfederal entities, especially state and local agencies such as state departments of transportation and local public transportation authorities; tax preferences to provide incentives for nonfederal investment in infrastructure, such as the authority granted state and local governments to issue bonds to finance capital spending on infrastructure; and credit assistance to nonfederal entities, such as loans and loan guarantees to public and private project sponsors. <2. Transportation Infrastructure Funding in ARRA> ARRA funding represented a 72% supplement to DOT's regular FY2009 funding of $67.2 billion. More than half of the DOT spending authorized in ARRA was for highways. The highway funding was predominantly distributed by formula, and, like most of the other funding, had to be obligated by the end of FY2010 19 months after the date of enactment and expended by the end of FY2015. Most of the funding for public transportation was also distributed by formula; the major exception was $750 million for the Federal Transit Administration's existing Capital Investment Grant program. The $8 billion for high-speed and intercity rail projects was an entirely new discretionary program. ARRA also created an entirely new discretionary program whose explicit purpose was economic stimulus, Transportation Investment Generating Economic Recovery (TIGER) grants, which could be used for a wide range of transportation projects ( Table 1 ). For most of these programs, the ARRA grants did not require any local match. States were required to certify that they would use these grants to supplement their planned transportation spending, rather than substituting the additional funding for their planned spending. This was known as maintenance-of-effort certification. <3. Observations on the ARRA Experience> <3.1. Infrastructure Spending Is Slower Than Other Types of Stimulus> The timing of expenditures of ARRA transportation funding demonstrated that infrastructure funding is generally expended more slowly than other types of assistance, such as unemployment compensation, Medicaid payments, and Social Security payments. Of the funding allocated to DOT, about 9% was spent within the first six months or so of availability, compared with 44% of unemployment compensation ( Table 2 ). The majority of DOT's ARRA funding was spent in FY2010 (37%) and FY2011 (24%). Another 11% was spent in FY2012. As with regular federal funding provided though DOT programs, ARRA funding was provided on a reimbursable basis. State and local governments had to complete an eligible project, or a defined part of a project, before receiving federal payment, so at least some of the intended economic effects, such as wage payments and orders for construction materials, had occurred prior to each transfer of federal grant funds to a recipient. There was a good deal of criticism of infrastructure spending as an economic stimulus, asserting that the expenditures were too slow. The Obama Administration emphasized that the money could be used for "shovel-ready" projects, but critics complained that there is "no such thing as shovel ready." CBO data show that almost half of DOT's ARRA funding was spent within about 18 months of enactment. The Obama Administration argued that the relatively slow expenditure of infrastructure funding could offer advantages in a deep and long economic downturn, such as the Great Recession, by noting that different types of stimulus affect the economy with different speeds. For instance, aid to individuals directly affected by the recession tends to be spent relatively quickly, while new investment projects require more time. Because of the need to provide broad support to the economy over an extended period, the Administration supported a stimulus plan that included a broad range of fiscal actions. <3.2. Characteristics of Infrastructure Funding Can Affect Expenditure Timing> Although the ARRA infrastructure funding was expended more slowly than most other types of support provided in the law, there were major differences in the rate of expenditures among infrastructure programs. Much of the highway and transit funding was distributed by DOT agencies to their usual grantees via existing formula programs, and was therefore available for use relatively quickly. Similarly, the Federal Aviation Administration distributed airport funds through the existing Airport Improvement Program, and the Maritime Administration awarded grants through its existing Assistance to Small Shipyards Program. More than 50% of funding for these programs was expended by grantees by January 2011, less than two years after the enactment of ARRA ( Table 3 ). Discretionary funds for programs established in the law, such as for the high-speed rail program and TIGER grants, took much longer to distribute and to use because DOT had to design the programs, issue rules, advertise the availability of funds, and wait for applications. Congress recognized that setting up new programs would take some time by including longer obligation deadlines in the law. High-speed rail funding was expended particularly slowly. DOT data showed that three years after ARRA enactment, 8% of high-speed rail funding had been expended. High-speed rail had been studied for decades, but there were almost no plans or projects that were ready for implementation. In addition, unlike other parts of DOT, the Federal Railroad Administration was inexperienced at administering large amounts of grant funds. A major exception to the general distinction between the timing of formula and discretionary program expenditures was the ARRA funding for the Federal Transit Administration's Capital Investment Grant (CIG) Program. The CIG Program, also known as New Starts, funds the construction of new fixed-guideway public transportation systems and the expansion of existing systems. Eligible projects include transit rail, such as subway/elevated rail (heavy rail), light rail, and commuter rail, as well as bus rapid transit and ferries. The agency has discretion in selecting projects to receive funds and in determining the federal contribution to each approved project. ARRA provided $750 million for the CIG Program. The Federal Transit Administration distributed these funds to 11 projects already under construction that "demonstrated some contract capacity to absorb additional revenues." The money was given to local transit authorities as various construction activities were completed. According to DOT, 63% of these funds were spent within one year of the ARRA's enactment and 100% were spent within two years. In general, it was easier for state and local agencies to quickly spend funds on the types of small-scale projects that are typically made possible by formula funds. The Government Accountability Office (GAO) found that more than two-thirds of highway funds were committed for pavement improvement projects, such as resurfacing, reconstruction, and rehabilitation of existing roadways, and three-quarters of transit funds were committed to upgrading existing facilities and purchasing or rehabilitating buses. Funding for airports was used to rehabilitate and reconstruct runways and taxiways, as well as to upgrade or purchase air navigation infrastructure such as air traffic control towers and engine generators. <3.3. The Level of Infrastructure Investment Can Depend on Nonfederal Entities> Public spending on transportation, measured in inflation-adjusted 2017 dollars, has been on a downward trend since peaking in 2003 ( Figure 1 ). Infrastructure funding provided by ARRA interrupted that trend, buoying total spending in 2010 and 2011. Except for 2009, however, state and local expenditures, which make up around 75% of total infrastructure expenditures, continued to fall. State and local spending on transportation infrastructure, adjusted for inflation, was 8% lower in 2013 than in 2007, reflecting the long-term damage the Great Recession did to state and local budgets. As the stimulus from ARRA faded, 2013 saw the lowest spending on these major infrastructure systems since the late 1990s. In some infrastructure sectors, such as highways, the growth in federal spending due to ARRA did not outweigh the decline in state and local government spending. Consequently, highway infrastructure spending fell over the period 2009 through 2013 ( Figure 2 ). Of course, there is no way to know exactly how highway spending would have changed in the absence of ARRA. Federal spending would have been lower, but it is possible that state and local government spending would have been higher if federal funding had not been available. <3.4. Maintenance-of-Effort Requirements Were Difficult to Enforce> Because of the Great Recession, state and local governments experienced a dramatic reduction in tax revenue even as demand for government services increased. For this reason, many jurisdictions found it difficult to maintain pre-recession levels of spending for at least some types of transportation infrastructure, leaving the possibility that additional federal dollars would simply replace state and local dollars. The federal share of transportation projects using ARRA funds was generally 100%, but states were required to certify that they would spend amounts already planned. This maintenance-of-effort requirement was in force from ARRA's enactment in February 2009, by which time the recession had been under way for over a year, through September 30, 2010. In its analysis of ARRA, GAO found that the maintenance-of-effort requirements in transportation were challenging to comply with and to administer. For example, governors had to certify maintenance of effort in several transportation programs, some administered by the state and some administered by local governments and independent authorities. Within each state, these various programs typically had different and complex revenue sources. In many cases, states did not have a way to identify planned expenditures. Because of ambiguities in the law and practicalities that come to light with experience, DOT issued maintenance-of-effort guidance to the states seven times in the first year after ARRA enactment. Some research on the effects of highway funding in ARRA on state highway spending found that, despite the maintenance-of-effort requirement, there was substantial substitution of federal dollars for state dollars. One analysis found that for every dollar of federal aid in ARRA for highways, on average, overall spending increased by 19 cents, meaning states decreased their own spending by 81 cents. <3.5. Employment Effects Were Modest> In many infrastructure sectors, the employment effects of ARRA funding were relatively modest. In highway construction, for example, employment dropped sharply from the end of 2007 through 2009. There was a slight increase through 2010, presumably related to the ARRA funding, but a sustained increase in employment did not begin again until 2015. The number of highway construction workers reached pre-recession levels in 2018 ( Figure 3 ). Although employment in highway construction was much higher before the recession began in late 2007, employment might have fallen further in the absence of ARRA funding. The transportation funding in ARRA, therefore, may have allowed state and local governments to maintain a certain level of employment in the transportation construction sector. Additionally, it likely permitted state and local governments to maintain employment in other, nontransportation, sectors by shifting state expenditures from transportation to other purposes. The slow recovery of highway construction jobs suggests the sector could have productively absorbed more funding after the ARRA funding had largely been expended, particularly during the 2013, 2014, and 2015 construction seasons. <3.6. Financing Infrastructure May Leverage State Resources> The financial crisis and the accompanying recession affected state and local credit markets. Among other things, declines in employment and business activity made it difficult for state and local governments to raise funds through the sale of tax-exempt municipal bonds whose repayment depended on tax revenue. Limited access to financing or to financing at much higher costs may have contributed to a decline in state and local government infrastructure investment. In more normal economic times, municipal bonds account for about 10% of the capital invested in highways and public transportation. In response to the problems in the municipal credit markets, ARRA included the Build America Bond (BAB) program, which permitted state and local governments to issue tax credit bonds from April 2009 through the end of 2010 to raise funds that could be used for any type of capital investment. Unlike traditional municipal bonds, which provide a subsidy to bondholders by exempting interest payments from federal income taxation and thereby allow issuers to sell bonds at low interest rates, BABs offered a higher taxable yield to investors; the federal government subsidized 35% of the issuer's interest costs. This subsidy rate was generally seen as generous, thereby reducing borrowing costs for state and local governments. Because the interest on BABs was taxable, the bonds were attractive to investors without federal tax liability, such as pension funds, enlarging the pool of possible investors. The taxable bond market is about 10 times the size of the traditional tax-exempt bond market. This larger market may have contributed to the reduction in borrowing costs. BABs were also considered more efficient than traditional municipal bonds because all of the federal subsidy went to the state or local government issuer. With traditional tax-exempt municipal bonds, some of the subsidy goes to investors. There were 2,275 BAB issuances over the 21 months of eligibility, for a total of $181 billion. About 30% of BAB funding went to educational facilities, followed by water and sewer projects (13.8%), highways (13.7%), and transit (8.7%). Without the BAB program, some of this capital would have been raised using traditional tax-exempt bonds, although likely at a higher cost to state and local government issuers. The Department of the Treasury stated that BAB issuance surged in the last quarter of 2010, suggesting that issuers were accelerating the timing of capital financings and, thus, capital investment. Although BABs had a generous subsidy rate relative to other municipal bonds, their structure ensured that issuers paid 65% of the interest costs, effectively requiring state and local governments to pay a larger share of infrastructure costs than under ARRA grant programs. Because the federal subsidy is paid to the issuer as the interest is due to the investor, the cost to the federal government of BABs was spread over the subsequent years ( Table 2 ). <3.7. Stimulus-Funded Projects Can Provide Transportation Benefits> Because the purpose of ARRA was to stimulate the economy, the law included time limits on the obligation and expenditure of transportation funds. As noted earlier, about half of the transportation funds appropriated by ARRA were expended by the end of FY2010, within 20 months of the law's enactment. Much of this funding went to routine projects such as highway paving and bus purchases that were quick to implement. Larger projects that required more detailed environmental reviews and complex design work were not "shovel-ready," leading to assertions that ARRA did not "fund investments that would provide long-term economic returns." In its examination of ARRA transportation expenditures, GAO found that the focus on quick implementation did change the mix of highway projects chosen. Some state officials stated that the deadlines "prohibited other, potentially higher-priority projects from being selected for funding." However, others noted that ARRA funding allowed them to complete so-called "state-of-good-repair" projects, presumably leaving greater financial capacity to undertake larger projects in the future. Furthermore, economic research shows that smaller state-of-good-repair projects often have higher benefit-cost ratios than new, large "game changing" projects whose benefits are often more speculative. In its biennial examination of the highway and public transportation systems, DOT typically finds that, for the United States as a whole, too little is spent on state-of good-repair projects versus building new capacity. In its latest report, DOT examined actual spending in 2014 and various investment scenarios for the period 2015 through 2034. DOT found that state-of-good-repair spending was 76% of total highway spending in 2014, whereas to maximize economic benefits about 79% should go to such projects. For public transportation, DOT found that 64% to 74% of total infrastructure spending should be devoted to state-of-good repair projects, whereas 60% was used for that purpose in 2014.

Congress is considering federal funding for infrastructure to revive an economy damaged by Coronavirus Disease 2019 (COVID-19). Congress previously provided infrastructure funding for economic stimulus in the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ). Enacted on February 17, 2009, ARRA was a response to the "Great Recession" that officially ran from December 2007 through June 2009. This report discusses the economic impact of the transportation infrastructure funding in ARRA. ARRA provided $48.1 billion for programs administered by the U.S. Department of Transportation (DOT), with more than half, $27.5 billion, authorized for highways. Other funding included $8.4 billion for public transportation, $8.0 billion for high-speed rail, $1.3 billion for Amtrak, $1.3 billion for aviation programs, and $1.5 billion for Transportation Investment Generating Economic Recovery (TIGER) grants, which could be used for a wide range of transportation projects. Most of the ARRA funding was distributed by DOT agencies to their usual grantees via existing formula programs. The high-speed rail funding and TIGER grants required the establishment of two new discretionary programs. Based on approximately a decade or more of program and other data, the following are among the observations that can be made with regard to the economic effects of ARRA funding for transportation infrastructure: Infra structure s pending wa s s lower than o ther t ypes of s timulus . ARRA transportation funding was expended more slowly than other types of assistance, such as unemployment compensation. About 9% of DOT funding was spent within the first six months of availability compared with 44% of unemployment compensation. The majority of DOT's ARRA funding was spent in FY2010 (37%) and FY2011 (24%). Characteristics of i nfrastructure f unding a ffect ed e xpenditure t iming. Funding that was distributed by DOT agencies to their usual grantees via existing formula programs was expended relatively quickly. This included most of the funding for highways, public transportation, aviation, and maritime transportation. Discretionary funds for programs established in the law, such as for the high-speed rail program and TIGER grants, took much longer to expend on construction because DOT had to design the programs, issue rules, advertise the availability of funds, and wait for applications from state and local agencies, which then had to complete their own contracting procedures to get work under way. The l evel of i nfrastructure i nvestment d epend ed on n onfederal e ntities. State and local expenditures make up around 75% of transportation infrastructure expenditures. In some sectors, such as highways, the growth in federal spending due to ARRA was accompanied by a decline in state and local government spending. Maintenance-of- e ffort r equirements we re d ifficult to e nforce. The federal share of transportation projects using ARRA funds was generally 100%, but states were required to certify that they would spend amounts already planned. These maintenance-of-effort requirements in transportation were challenging to comply with and to administer. Employment e ffects w ere m odest . Employment in highway construction, for example, rose slightly in the year following the passage of ARRA. A sustained increase in employment did not begin until 2015. Financing i nfrastructure did l everage s tate r esources . ARRA included the Build America Bond (BAB) program, which permitted state and local governments to issue tax credit bonds for any type of capital investment. The attractiveness of BABs may have accelerated the timing of capital financings and, thus, capital investment. BABs had a relatively generous subsidy rate, but compared with ARRA grants, the issuance of BABs for infrastructure ensured a state funding match of 65%. Stimulus- f unded p rojects c an p rovide t ransportation b enefits . Most ARRA transportation funding went to routine projects such as highway paving and bus purchases that were quick to implement. According to DOT estimates, such projects often have higher benefit-cost ratios than large "game changing" projects that build new capacity.

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<1. Introduction> Numerous natural disasters including the 2017 hurricane season and devastating wildfires in California served as catalysts for significant recent changes in federal emergency management policy. Most of these policy changes were included in the Disaster Recovery Reform Act of 2018 (DRRA), which was included as Division D of the FAA Reauthorization Act of 2018 ( P.L. 115-254 ). DRRA is the most comprehensive reform of the Federal Emergency Management Agency's (FEMA's) disaster assistance programs since the passage of the Sandy Recovery Improvement Act of 2013 (SRIA, Division B of P.L. 113-2 ) and the Post-Katrina Emergency Management Reform Act of 2006 (PKEMRA, P.L. 109-295 ). As with past disaster legislation, lessons learned following recent disasters revealed areas that could be improved through legislative and programmatic changes, including the need for increased preparedness and pre-disaster mitigation. The legislative intent of DRRA includes improving disaster preparedness, response, recovery, and mitigation, including pre-disaster mitigation; clarifying assistance program eligibility, processes, and limitations, including on the recoupment of funding; and increasing FEMA's transparency and accountability. Thus, DRRA amends many sections of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act, P.L. 93-288 , as amended; 42 U.S.C. 5121 et seq.), which provides the authority for the President to issue declarations of emergency and major disasters, and provides a range of federal assistance to local, state, territorial, and Indian tribal governments, as well as certain private nonprofit organizations, and individuals and families. In addition to numerous amendments to the Stafford Act, DRRA includes new standalone authorities, and requires reports to Congress, rulemaking, and other actions. This report is structured to first provide a tabular overview of the major changes that DDRA made to the Stafford Act (see Table 1 ). The report then provides detailed explanations of the programmatic and procedural modifications to various disaster assistance programs under DRRA. These DRRA modifications are grouped in the following sections: preparedness; mitigation; public assistance; individual assistance; flood plain management and flood insurance; and other provisions. In addition to a description of DRRA's changes to programs, each section includes potential policy considerations for Congress. Appendix A includes the following tables of deadlines associated with DRRA's reporting, rulemaking/regulatory, and other implementation actions and requirements: Table A-1 , DRRA Reporting Requirements (i.e., reports to Congress); Table A-2 , DRRA Rulemaking and Regulations Requirements; and Table A-3 , DRRA Guidance and Other Required Actions. A table of common acronyms used throughout this report is also included in Table B-1 of Appendix B . Finally, a brief legislative history of DRRA is included in Appendix C . <2. Preparedness5> <2.1. Section 1208: Prioritization of Facilities> DRRA Section 1208 requires the FEMA Administrator to provide guidance and annual training to state, local, and Indian tribal governments; first responders; and utility companies on the need to prioritize assistance to hospitals, nursing homes, and other long-term health facilities to ensure they remain functioning, or return to functioning as soon as possible, during power outages related to natural hazards and severe weather; how these medical facilities should prepare for power outages related to natural hazards and severe weather; and how local, state, territorial, and Indian tribal governments; first responders; utility companies; and these medical facilities should develop a strategy to coordinate and implement emergency response plans. Recent hurricanes have caused power outages affecting millions of individuals, including those in medical care facilities. For example, following Hurricane Harvey, 200,000 people lost power in south-east Texas. Additionally, in Florida, after Hurricane Irma made landfall, 4 million people lost power and failed air conditioning at a nursing home led to 11 deaths. DRRA Section 1208 may result in medical care facilities being better prepared for power outages and help mitigate the damage (and potential deaths) associated with power outages. <2.2. Section 1209: Guidance on Evacuation Routes> DRRA Section 1209 requires the FEMA Administrator, in coordination with the Administrator of the Federal Highway Administration (FHWA), to develop and issue guidance for state, local, and Indian tribal governments in identifying evacuation routes. Specifically, the FEMA Administrator is to revise existing guidance, or issue new guidance, on these evacuation routes. The FEMA Administrator, in developing this guidance, is to consider whether these evacuation routes have resisted disaster impacts and recovered quickly from disasters; the need to evacuate special needs populations; information sharing and public communications with evacuees; sheltering evacuees, including the care, protection, and sheltering of their animals; the return of evacuees to their homes; other issues or items the Administrator considers appropriate; methods that assist evacuation route planning and implementation; the ability of the evacuation routes to manage contraflow operations; the input of federal land management agencies where evacuation routes may cross or go through public land; and such other issues or items the FHWA Administrator considers appropriate. Section 1209 also states that the FEMA Administrator may, in coordination with the FHWA Administrator and local, state, territorial, and Indian tribal governments, conduct a study of the adequacy of available evacuation routes, and submit recommendations on how to assist with anticipated evacuation flow. Currently, FHWA uses various tools and technology for hurricane modeling, information sharing, and transportation (evacuation) modeling and analysis. DRRA Section 1209 codifies practices that FEMA and FHWA currently employ to address evacuation route planning and implementation of evacuations. <2.3. Section 1236: Guidance and Training by FEMA on Coordination of Emergency Response Plans> DRRA Section 1236 requires the FEMA Administrator, in coordination with other relevant agencies, to provide annual guidance and training on coordination of emergency response plans to local, state, territorial, and Indian tribal governments; first responders; and hazardous material storage facilities. Specifically, the annual guidance and training shall include: a list of required equipment for a release of hazardous substances and material; an outline of health risks associated with exposure to hazardous substances and materials; and published best practices for mitigating damage, and danger, to communities from hazardous materials. This required annual guidance and training is to be implemented not later than 180 days after DRRA's enactment (i.e., by April 3, 2019). Prior to DRRA and presently, the U.S. Department of Homeland Security (DHS) provides hazardous materials information from myriad sources, such as universities and other local and federal agencies. The available information includes procedures and resources for responding to different types of hazardous material releases, independent study training courses, and several resources related to medical management for chemical exposures, but the information is broadly distributed and may not be quickly accessible when responding to a hazardous materials incident. DRRA Section 1236 adds not only the plan coordination training requirement, but also requires the development of resources that may streamline information that can be incorporated into emergency response plans, such as the list of required equipment and health risks. <3. Mitigation> <3.1. Section 1234: National Public Infrastructure Pre-Disaster Hazard Mitigation14> DRRA Section 1234 authorizes the National Public Infrastructure Pre-Disaster Mitigation Fund (NPIPDM), which allows the President to set aside 6% from the Disaster Relief F und (DRF) with respect to each major disaster, establishes limitations on the receipt of pre-disaster hazard mitigation funding, and expands the criteria considered in awarding mitigation funds. Pre-Disaster Mitigation (PDM) funding is authorized by Stafford Act Section 203 Pre-Disaster Hazard Mitigation, with the goal of reducing overall risk to the population and structures from future hazard events, while also reducing reliance on federal funding from future disasters. For FY2019, the PDM program is funded through the DRF . Pre-DRRA, the amount available for PDM was appropriated separately on an annual basis, and financial assistance was limited by the amount available in the National Pre-Disaster Mitigation Fund. FEMA awarded PDM grants competitively, and 56 states and jurisdictions, as well as federally-recognized Indian tribal governments, were eligible to apply. Local governments, including Indian tribes or authorized tribal organizations, were required to apply to their state/territory as subapplicants. In FY2018, each state, jurisdiction, and tribe was eligible for a baseline level of financial assistance in the amount of the lesser of 1% of appropriated funding, or $575,000, although additional funding could be awarded competitively. No applicant was eligible to receive more than 15% of the appropriated funding. In FY2018, FEMA set aside 10% of the appropriation for federally recognized tribes. FEMA sets priorities annually for the competitive PDM funding, with priority given to applicants that have little or no disaster funding available through the Hazard Mitigation Grant Program (HMGP). In FY2018, FEMA awarded $235.2 million in PDM funding . DRRA authorizes the NPIPDM, for which the President may set aside from the DRF, with respect to each major disaster, an amount equal to 6% of the estimated aggregate amount of the grants to be made pursuant to the following sections of the Stafford Act: Section 403 Essential Assistance; Section 406 Repair, Restoration, and Replacement of Damaged Facilities; Section 407 Debris Removal; Section 408 Federal Assistance to Individuals and Households; Section 410 Unemployment Assistance; Section 416 Crisis Counseling Assistance and Training; and Section 428 Public Assistance Program Alternative Procedures. The amount set aside for PDM shall not reduce the amounts otherwise available under the sections above. Funding from the NPIPDM may be used to provide technical and financial mitigation assistance pursuant to each major disaster. An additional clause in DRRA provides that NPIPDM funds may be used "to establish and carry out enforcement activities and implement the latest published editions of relevant consensus-based codes, specifications, and standards that incorporate the latest hazard-resistant designs and establish minimum acceptable criteria for the design, construction, and maintenance of residential structures and facilities that may be eligible for assistance under this Act.... " The changes to PDM funding in DRRA may increase the focus on funding public infrastructure projects that improve community resilience before a disaster occurs, though FEMA has the discretion to shape the program in many ways. There is potential for significantly increased funding post-DRRA through the new transfer from the DRF, but it is not yet clear how FEMA will implement this new program. In the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) , Congress made $250 million available for PDM for FY2019, which may be merged with funds for the NPIPDM once it is fully implemented. The FY2019 PDM program will be the last PDM cycle before the rollout of the new DRRA Building Resilient Infrastructure and Communities (BRIC) Program. FEMA has authority to operate the legacy PDM program for FY2019, after which BRIC will replace the current PDM program. Funding not used in FY2019 will remain for the first year of BRIC, which will likely begin in FY2020. PDM projects already in progress will continue through closeout under the current PDM guidance. Any unobligated PDM funds may be rolled into a "carryover PDM" funding account which could be used for obligations of PDM projects underway when BRIC is implemented. Once BRIC is fully implemented, legacy PDM funds may be merged with BRIC funds, which may then be used for both PDM and BRIC work. FEMA is in the process of determining how funds under the 6% set-aside will be allocated to local, state, territorial, and Indian tribal governments. FEMA expects that BRIC will be funded entirely by the 6% set-aside; however, nothing prohibits Congress from appropriating additional funds for the program. FEMA anticipates setting aside the full 6% estimate from each major disaster declaration within 180 days after declaration. Based on the recent funding trends of the DRF, FEMA assumes that it would be a rare circumstance in which there is no set-aside. Other provisions in DRRA Section 1234 establish that mitigation funds under Stafford Act Section 203 would only be provided to states which had received a major disaster declaration in the past seven years, or any Indian tribal governments located partially or entirely within the boundaries of such states. Other provisions would expand the criteria to be considered in awarding mitigation funds, including the extent to which the applicants have adopted hazard-resistant building codes and design standards, and the extent to which the funding would increase resiliency. <3.2. Section 1235(a): Additional Mitigation Activities32> DRRA Section 1235(a) amends Stafford Act Section 404(a) Hazard Mitigation to include a provision authorizing the President to contribute up to 75% of the cost of hazard mitigation measures which the President has determined are cost effective and which increase resilience to future damage, hardship, loss, or suffering in any area affected by a major disaster. The pre-DRRA language only authorized funding for hazard mitigation measures which substantially reduce risk. DRRA does not include definitions of reducing risk or increasing resilience. However, DRRA Section 1235(d) requires FEMA to issue a rulemaking defining the terms resilient and resiliency , and although these definitions relate to Stafford Act Section 406 Repair, Restoration, and Replacement of Damaged Facilities, FEMA may consider using these definitions for mitigation activities as well. <3.3. Section 1205: Additional Activities33> DRRA Section 1205 amends Stafford Act Section 404 Hazard Mitigation by adding a section to allow recipients of hazard mitigation assistance provided under this section and Section 203 Pre-Disaster Hazard Mitigation to use the funding to conduct activities to help reduce the risk of future damage, hardship, loss, or suffering in any area affected by a wildfire or windstorm. The section includes a nonexclusive list of wildfire and windstorm mitigation activities that are eligible for funding. These activities were eligible for funding pre-DRRA, but this section is intended to clarify eligible uses of funding under FEMA's hazard mitigation grant programs. <3.4. Section 1217: Additional Disaster Assistance37> DRRA Section 1217 amends Section 209(c)(2) of the Public Works and Economic Development Act of 1965 such that, when assistance is given to communities whose economy has been injured by a major disaster or emergency and which have received a major disaster or emergency declaration under the Stafford Act, the Secretary of Commerce may encourage hazard mitigation if appropriate. The Public Works and Economic Development Act of 1965 did not have any previous mention of mitigation; however, this provision does not give the Secretary any additional tools by which to encourage hazard mitigation. <3.5. Section 1204: Wildfire Mitigation39> Section 1204 of DRRA amends Stafford Act Sections 420 Fire Management Assistance and 404(a) Hazard Mitigation to include HMGP for Fire Management Assistance Grant (FMAG) declarations. The Stafford Act authorizes three types of declarations that provide federal assistance to states and localities: (1) FMAG declarations, (2) emergency declarations, and (3) major disaster declarations. FMAGs provide federal assistance for fire suppression activities. Emergency declarations trigger aid that protects property, public health, and safety and lessens or averts the threat of an incident becoming a catastrophic event. A major disaster declaration constitutes the broadest authority for federal agencies to provide supplemental assistance to help state and local governments, families and individuals, and certain nonprofit organizations recover from the incident. Major disaster declarations also authorize statewide hazard mitigation grants to states and tribes through FEMA's HMGP. Authorized under Stafford Act Section 404 Hazard Mitigation, HMGP can be used to fund mitigation projects to protect either private or public property, provided that the project fits within local, state, territorial, and Indian tribal government mitigation strategies to address risk and complies with HMGP guidelines. HMGP grant amounts are provided on a sliding scale based on the percentage of funds spent for Public and Individual Assistance for each presidentially-declared major disaster declaration. For states and federally-recognized tribes with a FEMA-approved Standard State or Tribal Mitigation Plan, the formula provides for up to 15% of the first $2 billion of estimated aggregate amounts of disaster assistance, up to 10% for amounts between $2 billion and $10 billion, and 7.5% for amounts between $10 billion and $35.333 billion. DRRA Section 1204 also requires the FEMA Administrator to submit a report one year after enactment and annually thereafter containing a summary of any mitigation projects carried out, and any funding provided to those projects, to the Senate Committee on Homeland Security and Governmental Affairs (HSGAC), the House Committee on Transportation and Infrastructure, and the House and Senate Committees on Appropriations. One potential issue of congressional concern is the cost implications of providing mitigation funding for FMAG declarations. All things being equal, making HMGP available for FMAGs will increase federal expenditures for HMGP because it expands the number of incidents eligible for HMGP. The additional costs, however, may not be significant compared to HMGP funding for major disaster declarations. As previously discussed, HMGP grants are based on the percentage of funds spent for Public and Individual Assistance. Though it is unclear how the HMGP formula will be applied to FMAG declarations, HMGP grant amounts would likely be less than what is typically provided for major disasters because funding for major disasters is significantly more than what is provided for FMAGs. For example, from FY2017 to FY2018, $12.3 million has been obligated for FMAG declarations. In contrast, $1.7 billion has been obligated for Hurricane Matthew. Furthermore, HMGP funding for FMAGs could be considered an investment because the projects they fund can help save recovery costs for future disasters. <3.6. Section 1233: Additional Hazard Mitigation Activities46> DRRA Section 1233 authorizes recipients of hazard mitigation assistance to use the assistance to reduce the risk of earthquake damage, hardship, loss, or suffering for areas in the United States affected by earthquake hazards. DRRA Section 1233 addresses three areas of earthquake mitigation, all related to improving the capability for an earthquake early-warning system: improvements to regional seismic networks; improvements to geodetic networks; and improvements to seismometers, global positioning system (GPS) receivers, and associated infrastructure. The earthquake hazards and mitigation community long ago shifted away from an early focus on predicting earthquakes to mitigating earthquake hazards and reducing risk, and more recently to a focus on activities that would enhance the effectiveness of an earthquake early-warning system. An earthquake early-warning system would send a warning after an earthquake occurred but before the damaging seismic waves reach a community that would be affected by the earthquake-induced shaking. In contrast, an earthquake prediction would provide a date, time, and location of a future earthquake. The National Earthquake Hazards Reduction Program Reauthorization Act of 2018 ( P.L. 115-307 ) removed statutory language referencing the goal of earthquake prediction, substituting instead the goal of issuing earthquake early warnings and alerts. Since 2006, the U.S. Geological Survey (USGS), together with several cooperating institutions, has been working to develop a U.S. earthquake early-warning system. According to the USGS, the goal is to create and operate such a system for the nation's highest-risk regions, beginning with California, Oregon, and Washington. Other seismically active western states, such as Alaska, also may eventually be incorporated into an early-warning system, and possibly a region in the Midwest known as the New Madrid Seismic Zone. The authority provided in DRRA Section 1233 could help improve the U.S. early-warning capability because it addresses many of the components for earthquake detection (e.g., seismometers, the instruments that detect shaking), location (e.g., GPS receivers and infrastructure for more precise mapping of where shaking will occur), and improvements to the connected regional networks of seismometers and geodetic instruments. Part of the challenge in implementing an effective earthquake early-warning system is communicating the timing and location of dangerous shaking once the earthquake occurs. The section does not appear to address that challenge directly; however, improvements to the components specified in the section would likely improve overall early-warning system performance. <3.7. Section 1231: Guidance on Hazard Mitigation Assistance52> DRRA Section 1231 requires FEMA, not later than 180 days after enactment (April 3, 2019), to issue guidance regarding the acquisition of property for open space as a mitigation measure under Stafford Act Section 404 Hazard Mitigation. This guidance shall include a process by which the State Hazard Mitigation Officer (SHMO) appointed for the acquisition shall provide written notification to the local government, not later than 60 days after the applicant for assistance enters into an agreement with FEMA regarding the acquisition, that includes (1) the location of the acquisition; (2) the state-local assistance agreement for the Hazard Mitigation Grant Program; (3) a description of the acquisition; and (4) a copy of the deed restrictions. The guidance shall also include recommendations for entering into and implementing a memorandum of understanding between units of local government and the grantee or subgrantee, the state, and the regional FEMA Administrator that includes provisions to (1) use and maintain the open space consistent with Section 404 and all associated regulations, standards and guidance, and consistent with all adjoining property, so long as the cost of the maintenance is borne by the local government; and (2) maintain the open space pursuant to standards exceeding any local government standards defined in the agreement with FEMA. <3.8. Section 1215: Management Costs Hazard Mitigation54> DRRA Section 1215 amends Stafford Act Section 324(b)(2)(A) Management Costs by setting out specific management cost caps for hazard mitigation. A grantee under Stafford Act Section 404 Hazard Mitigation may be reimbursed not more than 15% of the total award, of which not more than 10% may be used by the grantee and 5% by a subgrantee. <4. Public Assistance58> <4.1. Section 1207(c) and (d): Program Improvements> DRRA Section 1207(c) amends Stafford Act Section 428(d) Public Assistance Program Alternative Procedures to prohibit the conditioning of federal assistance under the Stafford Act on the election of an eligible entity to participate in the alternative procedures set forth in Section 428 of the Stafford Act. Prior to enactment of this provision of DRRA, FEMA had the discretion to impose conditions on the use of Section 428 procedures. DRRA Section 1207(d) amends Section 428(e)(1) to add a provision that requires cost estimates submitted under Section 428 procedures that are certified by a professionally licensed engineer and accepted by the FEMA Administrator to be presumed to be reasonable and eligible costs unless there is evidence of fraud. Prior to enactment of this provision, FEMA had the discretion to make case-by-case determinations regarding whether costs were reasonable and eligible, and FEMA had the discretion to change the determinations even after an original cost estimate had been approved. <4.2. Section 1206(b): Eligibility for Code Implementation and Enforcement> DRRA Section 1206(b) amends Stafford Act Section 406 Repair, Restoration, and Replacement of Damaged Facilities to add base and overtime wages for extra hires to facilitate implementation and enforcement of adopted building codes as an allowable expense. Allowable base and overtime wages are authorized for not more than 180 days after a major disaster declaration is issued. <4.3. Section 1235(b), (c), and (d): Additional Mitigation Activities> DRRA Section 1235(b) amends Stafford Act Section 406 Repair, Restoration, and Replacement of Damaged Facilities to specify that eligible costs for assistance provided under Section 406 be based on estimates of repairing, restoring, reconstructing, or replacing a public facility or private nonprofit facility in conformity with "the latest published editions of relevant consensus-based codes, specifications, and standards that incorporate the latest hazard-resistant designs and establish minimum acceptable criteria for the design, construction, and maintenance of residential structures and facilities." DRRA Section 1235 also requires that such eligible costs include estimates of replacing eligible projects under Stafford Act Section 406 "in a manner that allows the facility to meet the definition of resilient" developed pursuant to Section 406(e)(1)(A). Prior to DRRA's enactment, FEMA required that such project cost estimates be based on more general language of "codes, specifications, and standards" in place at the time the disaster occurred. DRRA Section 1235(c) amends Stafford Act Section 406 to authorize the contributions for eligible costs to be provided on an actual cost basis or based on cost-estimation procedures and DRRA Section 1235(d) directs the FEMA Administrator, in consultation with the heads of relevant federal agencies, to establish new rules regarding defining "resilient" and "resiliency" for the purposes of eligible costs under Section 406 of the Stafford Act. DRRA directs the President, acting through the FEMA Administrator, to issue a final rulemaking notice on the new rules not later than 18 months after DRRA's enactment (i.e., by April 5, 2020), and requires a final report summarizing the regulations and guidance issued defining "resilient" and "resiliency" to be submitted to Congress no later than two years after DRRA's enactment (i.e., by October 5, 2020). <4.4. Section 1228: Inundated and Submerged Roads> DRRA Section 1228 requires the FEMA Administrator, in coordination with the FHWA Administrator, to develop and issue guidance for local, state, territorial, and Indian tribal governments regarding repair, restoration, and replacement of inundated and submerged roads damaged or destroyed by a major disaster. The guidance must address associated expenses incurred by the government for roads eligible for assistance under Stafford Act Section 406 Repair, Restoration, and Replacement of Damaged Facilities. Prior to DRRA's enactment, FEMA did not issue guidance specifically addressing inundated and submerged roads and alternatives in the use of federal disaster assistance for the repair, restoration, and replacement of roads damaged by a major disaster. <4.5. Section 1215: Management Costs Public Assistance> DRRA Section 1215 amends Stafford Act Section 324(b)(2)(B) Management Costs to place a cap on any direct administrative costs, and any other administrative associated expenses, of not more than 12% of the total award amount provided under Stafford Act Sections 403 Essential Assistance, 406 Repair, Restoration, and Replacement of Damaged Facilities, 407 Debris Removal, and 502 Federal Emergency Assistance. The 12% cap is to be divided between the primary grantee and subgrantees with the primary grantee receiving not more than 7%, and subgrantees receiving not more than 5% of the total award amount. <5. Individual Assistance69> <5.1. Section 1213: Multifamily Lease and Repair Assistance> DRRA Section 1213 amends Stafford Act Section 408(c)(1)(B)(ii) Federal Assistance to Individuals and Households, Temporary Housing, Direct Assistance, Lease and Repair of Rental Units for Temporary Housing to expand the eligible areas for multifamily lease and repair properties, and remove the requirement that the value of the improvements or repairs not exceed the value of the lease agreement. FEMA's Multifamily Lease and Repair program is a form of direct temporary housing assistance under Stafford Act Section 408. When eligible individuals and households are unable to use Rental Assistance due to a lack of available housing resources and when it is determined to be a cost-effective alternative to other temporary housing options, FEMA may enter into lease agreements with the owners of multifamily rental property units and may make improvements or repairs, in order to provide temporary housing. <5.1.1. Expanding the Areas Eligible for Multifamily Lease and Repair> FEMA guidance includes limitations on the conditions of eligibility required to authorize properties for multifamily lease and repair. Prior to DRRA's enactment, multifamily lease and repair properties had to be located in areas covered by an emergency or major disaster declaration. Following DRRA's enactment, however, eligible properties also include those "impacted by a major disaster." According to the House Transportation and Infrastructure Committee's Disaster Recovery Reform Act Report ( DRRA Report ), in amending this section of the Stafford Act, Congress intended to "allow greater flexibility and options for housing disaster victims." Thus, DRRA Section 1213 expands program eligibility for properties, which may increase the number of FEMA-leased multifamily rental properties. This may: increase available housing stock for eligible individuals and households; and reduce FEMA's reliance on other, less cost-effective forms of direct assistance (e.g., Transportable Temporary Housing Units (TTHUs)). Although it was released following DRRA's enactment, FEMA's most recent guidance the Individual Assistance Program and Policy Guide ( IAPPG ) states that in order to be eligible for multifamily lease and repair, "[t]he property must be located in an area designated for IA [Individual Assistance] included in a major disaster declaration," which is inconsistent with Stafford Act Section 408(c)(1)(B)(ii)(I)(aa), as amended by DRRA. The IAPPG does, however, add the ability for FEMA to add counties/jurisdictions to the major disaster declaration designed for IA "specifically for the purpose of implementing MLR [Multifamily Lease and Repair]." Thus, while FEMA's most recent guidance expands the agency's ability to implement MLR, it still states that properties must be in designated areas. In order to reflect the changes to the Multifamily Lease and Repair program post-DRRA, FEMA would need to update its guidance to be consistent with Stafford Act Section 408(c)(1)(B)(ii)(I)(aa), as amended, and may consider defining what it means for a property to be "impacted by a major disaster," and any additional, related eligibility criteria. <5.1.2. Determining the Cost-Effectiveness of Potential Multifamily Lease and Repair Properties> Prior to DRRA's enactment, the value of the improvements or repairs were not permitted to exceed the value of the lease agreement, which, per FEMA policy, could not be greater than the Fair Market Rent (FMR). Post-DRRA, the restriction that improvements or repairs not exceed the value of the lease agreement has been removed from Stafford Act Section 408(c)(1)(B)(ii)(II) Federal Assistance to Individuals and Households, Temporary Housing, Direct Assistance, Lease and Repair of Rental Units for Temporary Housing, as amended. Additionally, and as was the case prior to DRRA, the cost-effectiveness of the potential multifamily lease and repair property must still be considered when FEMA determines whether or not to enter into a lease agreement with a property owner for the purpose of providing Multifamily Lease and Repair assistance. As stated above, when eligible individuals and households are unable to use Rental Assistance and when it is determined to be a cost-effective alternative to other temporary housing options, FEMA may use multifamily lease and repair to provide temporary housing. According to FEMA's guidance, the process by which the agency determines the cost-effectiveness of a potential multifamily lease and repair property is that "FEMA will determine the value of the lease agreement by multiplying the approved monthly Rental Assistance rate by the number of units, and then multiplying the number of months remaining between the date the repairs are completed and the end of the 18-month period of assistance." FEMA guidance, however, currently states that there are three steps that FEMA must take to determine the cost-effectiveness of a potential multifamily lease and repair property. FEMA would need to update the IAPPG to clarify the process by which FEMA determines cost-effectiveness and to reflect the fact that the cost-effectiveness determination is not based on a three-step test. Additionally, it is unclear whether the removal of the restriction that improvements or repairs not exceed the value of the lease agreement will have a significant impact on program administration. There are several reasons the impact of this legislative change may not be significant including: the property must be found to be cost-effective even if a potential property requiring improvements or repairs in excess of the value of the lease agreement may be otherwise eligible; and prior to DRRA's enactment, it was possible for FEMA to enter into lease agreements when the value of the improvements or repairs exceeded the value of the lease agreement, provided the necessary written justification was submitted and approved. Finally, within two years (i.e., due by October 5, 2020), the Inspector General (IG) of DHS must assess the use of FEMA's direct assistance authority, including the adequacy of the benefit-cost analysis conducted, to justify this alternative to other temporary housing options, and submit a report to Congress. <5.2. Section 1211: State Administration of Assistance for Direct Temporary Housing and Permanent Housing Construction> <5.2.1. The State or Tribal Government's Role in Providing Direct Temporary Housing Assistance and Permanent Housing Construction> DRRA Section 1211(a) amends Stafford Act Section 408(f) Federal Assistance to Individuals and Households, State Role to expand the types of FEMA Individuals and Households Program (IHP) assistance that a state, territorial, or Indian tribal government may request to administer under Stafford Act Section 408(f)(1)(A) to include Direct Temporary Housing Assistance under Section 408(c)(1)(B) and Permanent Housing Construction under Section 408(c)(4), in addition to Other Needs Assistance (ONA) under Section 408(e). Prior to DRRA's enactment, Stafford Act Section 408(f)(1) only allowed state, territorial, and Indian tribal governments to request financial assistance to manage ONA. According to Senate HSGAC's Disaster Recovery Reform Act of 2018 Report ( DRRA Report ), this section of DRRA "emphasizes the need for and provides tools to execute an effective local response to disasters ... [in part by] empowering states to administer housing assistance efforts." FEMA has also stated that: [s]tate and tribal officials have the best understanding of the temporary housing needs for survivors in their communities. This provision incentivizes innovation, cost containment and prudent management by providing general eligibility requirements while allowing them the flexibility to design their own programs. These statements highlight a key aspect of this amendment to the Stafford Act that, because the federal share of eligible housing costs is 100%, in effect, FEMA may now provide state, territorial, and Indian tribal governments with a block grant for disaster housing assistance, provided certain requirements are met (see below). Allowing state, territorial, or Indian tribal governments to administer these housing programs, in addition to ONA, using a flexible, block-grant program that "leverag[es] state autonomy" "to tailor a solution that specifically addresses the needs of disaster victims" may expedite and enhance disaster recovery. Despite these benefits, the ability for state, territorial, or Indian tribal governments to design and administer customized versions of these programs has the potential to result in challenges. For example: individuals and households may face challenges to participating in these programs if application processes and program requirements are not clearly defined, or if their past participation in these programs differs from future program implementation; client advocates and case managers may have trouble supporting individuals and households seeking to and/or participating in these programs if application processes and program administration differ from jurisdiction to jurisdiction, or if a state/territorial/Indian tribal government implements the programs differently for different disasters; state, territorial, and Indian tribal governments seeking to administer these programs may also struggle to administer active programs with different application processes and program administration requirements, and may find it difficult to manage programs when future program implementation differs from past program implementation; and federal partners supporting state, territorial, and Indian tribal governments may find it difficult to keep track of application processes and program administration that differs from jurisdiction to jurisdiction, or when future program implementation differs from past program implementation. In addition to the programmatic flexibility accorded by this amendment to the Stafford Act, state, territorial, or Indian tribal governments that elect to administer housing assistance and/or ONA under Section 408(f) are eligible to expend up to 5% of the amount of the grant for administrative costs. This may increase their capacity to quickly and effectively administer these programs. With the addition of the ability of state, territorial, or Indian tribal governments to administer Direct Temporary Housing Assistance and Permanent Housing Construction, it is possible that the state, territorial, or Indian tribal government may be required to select an option for administration of assistance, as in the case with ONA. Within two years of DRRA's enactment (i.e., by October 5, 2020), FEMA is required to issue final regulations to establish how a state, territorial, or Indian tribal government is to administer Direct Temporary Housing Assistance and Permanent Housing Construction. In the intervening period, FEMA has the ability to administer this as a pilot program until the final regulations are promulgated (an example of such a regulation can be found in 44 C.F.R. 206.120 State Administration of Other Needs Assistance, which sets out the regulations for state administration of ONA). <5.2.2. New Requirements> In addition to expanding the types of assistance state, territorial, and Indian tribal governments may administer, DRRA adds requirements for the receipt of approval to administer such assistance. Prior to DRRA's enactment, in order to administer ONA, a governor had to request a grant to provide financial assistance. Post-DRRA, if a state, territorial, or Indian tribal government would like to administer Direct Temporary Housing Assistance, Permanent Housing Construction, and/or ONA, then it must "submit to the President an application for a grant to provide financial assistance under the program [emphasis added]." DRRA also includes criteria for the approval of applications, as follows: (i) a requirement that the State or Indian tribal government submit a housing strategy under subparagraph (C) [Requirement of Housing Strategy]; (ii) the demonstrated ability of the State or Indian tribal government to manage the program under this section; (iii) there being in effect a plan approved by the President as to how the State or Indian tribal government will comply with applicable Federal laws and regulations and how the State or Indian tribal government will provide assistance under its plan; (iv) a requirement that the State or Indian tribal government comply with rules and regulations established pursuant to subsection (j); and (v) a requirement that the President, or the designee of the President, comply with subsection (i) [Verification Measures]. Three requirements intended to ensure the state, territorial, or Indian tribal government that seeks to administer these programs has the capacity to do so, include: the state, territorial, or Indian tribal government must have an approved housing strategy, which may encourage the development of disaster housing strategies to better enable effective local response to disasters; the state, territorial, or Indian tribal government must have the demonstrated ability to manage the program although it is unclear what evidence may be used to demonstrate the capacity to manage the housing-related programs (note that FEMA is developing guidance for the administration of Direct Temporary Housing and Permanent Housing Construction). An approved State Administrative Plan is a requirement to administer ONA, and FEMA considers this sufficient to demonstrate the state, territorial, or Indian tribal government's capability to manage ONA; and the President or designee shall implement policies, procedures, and internal controls to prevent "waste, fraud, abuse, and program mismanagement"; it is possible for the President to withdraw the approval for the state, territorial, or Indian tribal government to administer Direct Temporary Housing Assistance, Permanent Housing Construction, or ONA. FEMA may need to clarify the application and approval requirements because it is unclear (1) how concepts such as "waste" and "abuse" are defined in this context; (2) how the determination that "the State or Indian tribal government is not administering the program ... in a manner satisfactory to the President" will be made although DRRA includes a requirement that the DHS IG periodically audit the programs administered by the state, territorial, or Indian tribal governments, and these audits may be used to assess program administration; and (3) how program administration will be managed following a withdrawal of approval and/or whether there will be an opportunity for the state, territorial, or Indian tribal government to remedy any issues identified with regard to program administration or appeal a decision withdrawing approval. Within two years of DRRA's enactment (i.e., by October 5, 2020), FEMA is required to issue final regulations on the administration of this program, in which FEMA may consider addressing the administration of the application and approval processes and requirements, including the requirements for demonstrating the capacity to manage the program, and the process for the withdrawal of approval and any remedies the state, territorial, or Indian tribal government may have. <5.2.3. State and Local Reimbursement for Implementing a Housing Solution> DRRA Section 1211(b) provides a mechanism for state and local units of government to be reimbursed in the event they do not request a grant to administer housing assistance, if the solution they implement satisfies several conditions. Specifically, DRRA Section 1211(b) notes that FEMA shall reimburse state and local "units of government" for locally-implemented housing solutions that meet three requirements, provided the request for reimbursement is received within a three-year period after a major disaster declaration under Stafford Act Section 401 Procedure for Declaration. The three requirements are that the solution: (1) costs 50 percent of comparable FEMA solution or whatever the locally implemented solution costs, whichever is lower; (2) complies with local housing regulations and ordinances; and (3) the housing solution was implemented within 90 days of the disaster. It is unclear how and when a reimbursement will be provided when a housing solution meets the proper eligibility conditions set forth above. FEMA may issue a new rulemaking and/or policy guidance to establish how the cost of the locally-implemented solution will be assessed and compared with the FEMA solution, as well as how reimbursement requests will be processed. <5.3. Section 1212: Assistance to Individuals and Households> DRRA Section 1212 amends Stafford Act Section 408(h) Federal Assistance to Individuals and Households, Maximum Amount of Assistance to create separate caps for the maximum amount of financial assistance eligible individuals and households may receive for housing assistance and for ONA, and allow for accessibility-related costs. Under FEMA's IHP, financial assistance (e.g., assistance to rent alternate housing accommodations, conduct home repairs, and ONA) and/or direct assistance (e.g., Multifamily Lease and Repair and TTHUs) may be available to eligible individuals and households who, as a result of a disaster, have uninsured or under-insured necessary expenses and serious needs that cannot be met through other means or forms of assistance. Prior to DRRA, an individual or household could receive up to $33,300 (FY2017; adjusted annually) in financial assistance, which included both housing assistance and ONA. Post-DRRA, financial assistance for housing-related needs may not exceed $34,900 (FY2019; adjusted annually), and, separate from that , financial assistance for ONA may not exceed $34,900 (FY2019; adjusted annually). Thus, separate caps of equal amounts have been established for financial housing assistance and ONA. In addition, financial assistance to rent alternate housing accommodations is not subject to the cap . As of the date of this report's publication, FEMA's IAPPG has not been updated to reflect DRRA's changes to the maximum amount of financial assistance. It still notes that Rental Assistance is subject to the cap, which has the potential to create confusion for local, state, territorial, Indian tribal, and federal governments, nonprofit partners, and other entities that assist disaster survivors seeking to rely on the IAPPG as a resource for FEMA's IA policies and procedures. However, FEMA has posted a memorandum on the policy changes to its website, and has stated that the changes will be "incorporated into a subsequent publication of the IAPPG." DRRA Section 1212 also amends Stafford Act Section 408(h) to create exclusions to the maximum amount of assistance for individuals with disabilities for expenses to repair or replace: accessibility-related property improvements under FEMA's Repair Assistance, Replacement Assistance, and Permanent Housing Construction; and accessibility-related personal property under Financial Assistance to Address Other Needs Personal Property, Transportation, and Other Expenses Assistance. Thus, the addition of Stafford Act Section 408(h)(4) may expand the eligibility of individuals with disabilities for financial assistance. In response to the IHP changes post-DRRA, FEMA began processing retroactive payments to applicants who either reached or exceeded the financial cap for disasters declared on or after August 1, 2017, and stated that, in April 2019, it would begin evaluating applications to assess whether some survivors may be eligible for additional rental assistance, which may enable eligible applicants to receive additional funds. Administrative challenges may arise if eligible applicants who received the previous maximum amount of financial assistance now request additional financial assistance for programs to which they did not previously apply. For example, an eligible applicant may not have requested ONA if their request for Repair Assistance already equaled or exceeded the cap. In the past, the combined housing assistance and ONA cap on the maximum amount of financial assistance that an individual or household was eligible to receive may have resulted in applicants with significant home damage and/or other needs having insufficient funding to meet their disaster-caused needs, including little to no remaining funding available to pay for rental assistance. Thus, changes to Stafford Act Section 408(h) post-DRRA have the potential to result in increased assistance to eligible disaster survivors, and increased federal spending on temporary disaster housing assistance and ONA. This may help to better meet the recovery-related needs of individuals and households who experience significant damage to their primary residence and personal property as a result of a major disaster. However, there is also the potential that this change may disincentivize sufficient insurance coverage because of the new ability for eligible individuals and households to receive separate and increased housing assistance and ONA awards that more comprehensively cover disaster-related real and personal property losses. <5.4. Section 1216: Flexibility> <5.4.1. Discretionary Ability to Waive Debts> DRRA Section 1216(a) allows FEMA to waive debts owed to the United States related to assistance provided under Stafford Act Section 408 Federal Assistance to Individuals and Households. Federal laws require federal agencies, including FEMA, to identify and recover improper payments . Specifically, the Improper Payments Information Act of 2002 (IPIA, P.L. 107-300 ) and the Improper Payments Elimination and Recovery Act of 2010 (IPERA, P.L. 111-204 ) direct the head of each federal agency to review and identify all programs and activities administered by the agency that may be "susceptible to significant improper payments." IPERA also includes the requirement that the agency take action to collect overpayments. Several federal programs account for a significant portion of improper payments, including FEMA's IHP. The dual and sometimes conflicting goals of (1) expediting FEMA assistance to disaster survivors and (2) maintaining administrative controls to ensure program eligibility may contribute to improper payments. Nonetheless, FEMA reviews disaster assistance payments following every disaster and works to collect overpayments. FEMA does have some discretion not to pursue recoupment. Additionally, the need for FEMA to have discretion with regard to recoupment was previously identified albeit for a limited period of time. Congressional "concerns about the fairness of FEMA collecting improper payments caused by FEMA error especially when a significant amount of time had elapsed before FEMA provided actual notice to the debtors" led to the passage of the Disaster Assistance Recoupment Fairness Act of 2011 (DARFA, Division D, Section 565 of the Consolidated Appropriations Act, 2012, P.L. 112-74 ). DARFA provided FEMA with the discretionary authority to waive debts arising from improper payments for disasters declared between August 28, 2005, and December 31, 2010 which included Hurricanes Katrina and Rita, as well as other disasters. DRRA Section 1216(a) mirrors the factors included in DARFA. Following DRRA's enactment, FEMA may waive a debt related to covered assistance if: distributed in error by FEMA; there was no fault on behalf of the debtor; and collection would be "against equity and good conscience." This section is retroactive, and applies to major disasters or emergencies declared on or after October 28, 2012. Thus, DRRA Section 1216(a) expands FEMA's discretionary ability with regard to debt collection by authorizing FEMA to waive the collection of a debt as long as the above-listed factors are also satisfied the exception is if the debt involves fraud, a false claim, or misrepresentation by the debtor or party having an interest in the claim. However, if FEMA's distributions of covered assistance based on federal agency error exceed 4% of the total amount of covered assistance distributed in any 12-month period, then the DHS IG, charged with monitoring the distribution of covered assistance, shall remove FEMA's waiver authority based on an excessive error rate. That said, according to the House Transportation and Infrastructure Committee's DRRA Report , "FEMA has implemented controls to avoid improper payments ... [and] FEMA's current error rate for improper payments to individuals is less than two percent." It is unclear how FEMA will review and process waivers of improper payments, although FEMA may use the DHS IG's recommendations put forth post-DARFA for reviewing and processing future debt recoupment cases as outlined in its FEMA's Efforts to Recoup Improper Payments in Accordance with the Disaster Assistance Recoupment Fairness Act of 2011 report. FEMA may also consider issuing a rulemaking and/or policy guidance to require that FEMA's comprehensive quality assurance review procedures apply to the review of recoupment cases, per the DHS IG's recommendation; establish an audit trail for FEMA waiver of recoupment decisions, per the DHS IG's recommendation; and clarify the considerations for approving a waiver (e.g., defining the circumstances under which collection of the debt would be "against equity and good conscience"), which may be especially important given that disaster survivors may face financial hardship if required to repay assistance that they have already spent on recovering from a disaster. <5.4.2. Prohibition on Collecting Certain Assistance> DRRA Section 1216(b) restricts FEMA's ability to recoup assistance provided under Stafford Act Section 408 Federal Assistance to Individuals and Households. Specifically, Section 1216(b) states: unless there is evidence of civil or criminal fraud, [FEMA] may not take any action to recoup covered assistance ... if the receipt of such assistance occurred on a date that is more than 3 years before the date on which the Agency first provides to the recipient written notification of an intent to recoup [emphasis added]. This section is retroactive, and applies to major disasters or emergencies declared on or after January 1, 2012. According to the House Transportation and Infrastructure Committee's DRRA Report , this provision "will help ensure that FEMA initiates any collection actions as quickly as possible, reduce administrative costs, and provide more certainty to individuals recovering from disasters." FEMA stated that the agency's understanding of this provision is that it establishes a three-year statute of limitations on the agency's ability to recoup debts provided under IHP. Despite apparent congressional and agency intent, FEMA's guidance states that: [w]hile there is no statute of limitations on initiating recoupment of IHP debt owed to the U.S. Government through administrative means, FEMA's goal is to notify applicants of any potential debt owed within three years after the date of the final IHP Assistance payment. FEMA's failure to meet this goal will not preclude it from initiating recoupment of potential debt when otherwise appropriate.... FEMA may notify applicants of any potential debt beyond three years after the date of the final IHP Assistance payment in cases where it considers recovery of funds to be in the best interest of the Federal government.... Congress may require FEMA to update its guidance to reflect DRRA Section 1216(b). Additionally, the legislative language in DRRA Section 1216(b) may result in confusion when interpreting whether the section is discretionary or mandatory. This is because the legislation states that FEMA " may not take any action to recoup covered assistance ... " as opposed to FEMA " shall not take any action to recoup covered assistance.... " Thus, confusion may exist despite the apparent congressional intent that FEMA should not be able to take any action to recoup covered assistance three years after its receipt and the fact that FEMA has stated it interprets the provision as being mandatory. One action available to Congress is to clarify, through legislation, that this section is mandatory (if that is the intent of Congress) in order to avoid potential ambiguity when interpreting the law. An additional consideration with regard to this provision is that the three-year window to recoup IHP payments will be different for each award to an individual/household, and this will likely pose an administrative challenge for FEMA given the volume of awards provided under the IHP program. <5.4.3. Statute of Limitations Public Assistance> DRRA Section 1216(c) amends Stafford Act Section 705 Disaster Grant Closeout Procedures to change how the statute of limitations for Public Assistance (PA) is defined. Prior to DRRA's enactment, the statute of limitations on FEMA's ability to recover payments made to a state or local government was three years after the date of transmission of the final expenditure report for the disaster or emergency . DRRA amends the statute of limitations such that no administrative action to recover payments can be initiated " after the date that is 3 years after the date of transmission of the final expenditure report for project completion as certified by the grantee [emphasis added] ." Additionally, this provision applies retroactively to disaster or emergency assistance provided on or after January 1, 2004, and any pending administrative actions were terminated as of the date of DRRA's enactment, if prohibited under Stafford Act Section 705(a)(1), as amended by DRRA. It may take years to close all of the projects associated with a disaster, and, prior to DRRA, FEMA could recoup funding from projects that may have been completed and closed years prior to FEMA's pursuit of funding because the disaster was still open. This post-DRRA project-by-project statute of limitations is a significant change that has the potential to ease the administrative and financial burden that the management of disaster recovery programs places on state, territorial, and Indian tribal governments because it creates certainty as to the projects that may be subject to recoupment. It may also incentivize the timely closeout of PA projects by state and local governments, which may also ease FEMA's administrative and financial burdens. <6. Floodplain Management and Flood Insurance165> <6.1. Section 1206(a): Eligibility for Code Implementation and Enforcement> DRRA Section 1206(a) amends Stafford Act Section 402 General Federal Assistance to allow state and local governments to use general federal assistance funds for the administration and enforcement of building codes and floodplain management ordinances, including inspections for substantial damage compliance. If a building in a Special Flood Hazard Area (SFHA) is determined to be substantially damaged, it must be brought into compliance with local floodplain management standards. Local communities can require the building to be rebuilt to current floodplain management requirements even if the property previously did not need to do so. For instance, the new compliance standard may require the demolition and elevation of the rebuilt building to above the Base Flood Elevation. FEMA does not make a determination of substantial damage; this is the responsibility of the local government, generally by a building department official or floodplain manager. Similarly, the enforcement of building codes and floodplain management ordinances are the responsibility of local government. Particularly following a major flood, communities may be required to assess a large number of properties at the same time, and, as a result, additional resources may be needed. This provision affords an additional source of funding to support communities in carrying out such activities. <6.2. Section 1207(b): Program Improvements> DRRA Section 1207(b) amends Stafford Act Section 406(d)(1) Repair, Restoration, and Replacement of Damaged Facilities to provide relief from a reduction in disaster assistance for certain public facilities and private nonprofit facilities with multi-structure campuses which were damaged by disasters in 2016 to 2018. Applicants for Public Assistance (PA) for repair, restoration, reconstruction, and replacement are required to obtain flood insurance on damaged insurable facilities (buildings, equipment, contents, and vehicles) as a condition of receiving PA grant funding. Insurance coverage must be subtracted from all applicable PA grants in order to avoid duplication of financial assistance. In addition, the applicant must maintain flood insurance on these facilities in order to be eligible for PA funding in future disasters, whether or not a facility is in the SFHA. If an eligible insurable facility damaged by flooding is located in a SFHA that has been identified for more than one year and the facility is not covered by flood insurance or is underinsured, FEMA will reduce the amount of eligible PA funding for flood losses in the SFHA by the maximum amount of insurance proceeds that would have been received had the buildings and contents been fully covered by a standard National Flood Insurance Program (NFIP) policy. For nonresidential buildings, this is currently a maximum of $500,000 for contents and $500,000 for the building. The Stafford Act previously required that this reduction in disaster assistance should be applied to each individual building in the case of multi-unit campuses, which could result in a significant reduction in PA funding for entities with uninsured multi-structure campuses. The new provision in DRRA provides that the reduction in assistance shall not apply to more than one building of a multi-structure educational, law enforcement, correctional, fire, or medical campus. This amendment applies to disasters declared between January 1, 2016, and December 31, 2018. This means that organizations without flood insurance that had Public Assistance funding reduced under the pre-DRRA Stafford Act provisions will have funding restored for floods such as the 2016 Louisiana floods, and Hurricanes Matthew, Harvey, Irma, Maria, and Florence. <6.3. Section 1240: Report on Insurance Shortfalls> DRRA Section 1240 requires FEMA to submit a report to Congress not later than two years after enactment, and each year after until 2023, on Public Assistance self-insurance shortfalls. As described in " Section 1207(b): Program Improvements ," applicants for PA for repair, restoration, reconstruction, and replacement in an SFHA are required to obtain flood insurance on damaged insurable facilities as a condition of receiving PA grant funding, and maintain insurance on these facilities in order to be eligible for PA funding in future disasters. However, an applicant may apply in writing to FEMA to use a self-insurance plan to comply with the insurance requirement. The details required for the self-insurance plan are set out in FEMA guidance. The DHS IG has issued four reports on applicants' compliance with PA insurance requirements that have identified concerns with applicant compliance with these requirements and FEMA's tracking of applicants' compliance. However, these reports have not focused specifically on self-insurance. The new reports under DRRA Section 1240 will include information on the number of instances and the estimated amounts involved, by state, in which self-insurance amounts have been insufficient to address flood damages. <7. Other Provisions> <7.1. Section 1224: Agency Accountability174> DRRA Section 1224 amends Title IV of the Stafford Act to establish a new section, Section 430 Agency Accountability, addressing public assistance, mission assignments, disaster relief monthly reports, contracts, and the collection of public assistance recipient and subrecipient contracts. Subsection (a) of the new Stafford Act Section 430, established by DRRA Section 1224, requires the FEMA Administrator to publish on the FEMA website award information for grants awarded under Stafford Act Section 406 Repair, Restoration, and Replacement of Damaged Facilities in excess of $1,000,000. For each such grant, FEMA shall provide the following information: FEMA region; declaration number; whether the grantee is a private nonprofit organization; damage category code; amount of the federal share obligated; and the date of the award. Prior to DRRA's enactment, FEMA did not publish contract information on the FEMA website. Stafford Act Section 430(d) requires the FEMA Administrator to publish information about each contract executed by FEMA in excess of $1,000,000 on the FEMA website within the first 10 days of each month. For each such contract, FEMA shall provide the following information: contractor name; date of contract award; amount and scope of the contract; whether the contract was competitively bid; whether and why there was a no competitive bid; the authority used to bypass competitive bidding if applicable; declaration number; and the damage category code. Section 430(d) also requires the FEMA Administrator to provide a report to the appropriate congressional committees on the number of contracts awarded without competition, reasons why there was no competitive bidding process, total amount of the no-competition contracts, and the applicable damage category codes for such contracts. Section 430(e) requires the FEMA Administrator to initiate efforts to maintain and store information on contracts entered into by a Public Assistance recipient or subrecipient of funding through Stafford Act Sections 324 Management Costs, 403 Essential Assistance, 404 Hazard Mitigation, 406 Repair, Restoration, and Replacement of Damaged Facilities, 407 Debris Removal, 428 Public Assistance Program Alternative Procedures, and 502 Federal Emergency Assistance for contracts with an estimated value of more than $1,000,000. Collected contract information shall include the following: disaster number; project worksheet number; category of work; name of contractor; date of the contract award; amount of the contract; scope of the contract; period of performance for the contract; and whether the contract was awarded through a competitive bid process. The FEMA Administrator is required to make such collected information available to the DHS IG, the Government Accountability Office (GAO), and appropriate congressional committees upon request. The FEMA Administrator is also required to submit a report to relevant committees within 365 days of DRRA's enactment on the efforts of FEMA to collect the required contract information (i.e., by October 5, 2019). Prior to DRRA's enactment, FEMA did not appear to have comprehensive contract information to make available upon request and did not submit annual reports to Congress regarding collection of such information. <7.2. Section 1221: Closeout Incentives178> DRRA Section 1221 amends Stafford Act Section 705 Disaster Grant Closeout Procedures to authorize the FEMA Administrator to develop incentives and penalties relating to grant closeout activities to encourage grantees to close out disaster-related expenditures on a timely basis. DRRA Section 1221 also requires the FEMA Administrator to improve closeout practices and reduce the time between awarding a grant under Stafford Act provisions and closing out expenditures for the award. The FEMA Administrator is also directed to issue regulations relating to facilitating grant closeout. Prior to DRRA's enactment, FEMA had discretion to engage in activities that would incentivize or penalize grantees for delayed closeouts. This provision made such activities a requirement rather than at FEMA's discretion. Congress designed Section 1221 to improve the timeliness of closeout procedures by limiting or preventing delays in the process. <7.3. Section 1225: Audit of Contracts180> DRRA Section 1225 prohibits the FEMA Administrator from reimbursing grantees for any activities made pursuant to a contract entered into after August 1, 2017, that prohibits the FEMA Administrator or the Comptroller General of the United States from auditing or reviewing all aspects relating to the contract. <7.4. Section 1237: Certain Recoupment Prohibited182> DRRA Section 1237 directs FEMA to "deem any covered disaster assistance to have been properly procured, provided, and utilized, and shall restore any funding of covered disaster assistance previously provided but subsequently withdrawn or deobligated." "Covered disaster assistance" is defined as assistance provided to a local government under Stafford Act Sections 403 Essential Assistance, 406 Repair, Restoration, and Replacement of Damaged Facilities, or 407 Debris Removal in which the DHS IG has made a determination, through an audit, that the following conditions were present: (A) the Agency deployed to the local government a Technical Assistance Contractor to review field operations, provide eligibility advice, and assist with day-to-day decisions; (B) the Technical Assistance Contractor provided inaccurate information to the local government; and (C) the local government relied on the inaccurate information to determine that relevant contracts were eligible, reasonable, and reimbursable. <7.5. Section 1210: Duplication of Benefits185> DRRA Section 1210 amends Stafford Act Section 312(b) by providing the President the authority to waive the prohibition on duplication of benefits (upon a gubernatorial request) if the "waiver is in the public interest and will not result in waste, fraud, or abuse." When making the waiver decision, the President may consider (1) recommendations from the Administrator of FEMA or other agencies administering the duplicative program; (2) if granted, whether the assistance is cost effective; (3) "equity and good conscience"; and (4) "other matters of public policy considered appropriate by the President." Duplication of benefits has been an ongoing issue of congressional concern and DRRA Section 1210 is the most recent attempt to reduce hardships caused by duplication of benefits recoupment. Individuals and households often need to use multiple sources of assistance to fully recover from a major disaster. If the assistance exceeds their unmet disaster needs, then the assistance is considered a "duplication of benefits." Stafford Act Section 312(a) Duplication of Benefits prohibits the "financial assistance to persons, business concerns, or other entities suffering losses as a result of a major disaster or emergency ... [for] which he has received financial assistance under any other program or from insurance or any other source." Stafford Act Section 312(c) states that the recipient of duplicative assistance is liable to the United States and that the agency that provided the duplicative assistance is responsible for debt collection. The federal duplication of benefits policy is intended to prevent waste, fraud, and abuse of program assistance. 44 C.F.R. 206.191 provides procedural guidance known as a "delivery sequence" to prevent the duplication of benefits between federal assistance programs such as FEMA's Individuals and Households Program and the Small Business Administration's (SBA's) Disaster Loan Program, state assistance programs, other assistance programs (e.g., volunteer programs), and insurance benefits (see Figure 1 ). An organization's position within the delivery sequence determines the order in which it should provide assistance and what other resources need to be considered before that assistance is provided. The regulation requires individuals to repay all duplicated assistance to the agency providing the assistance based on the delivery sequence hierarchy that outlines the order assistance should be provided. Critics have argued that the delivery sequence lacks specificity. For example, the U.S. Department of Housing and Urban Development's (HUD's) Community Development Block Grant Disaster Recovery (CDBG-DR) Program, which is often duplicated with other assistance sources, is not listed in the delivery sequence. However, in addition to prohibiting duplication of benefits, Stafford Act Section 312 also stipulates that assistance cannot be withheld. Section 312(b)(1) states: this section shall not prohibit the provision of federal assistance to a person who is or may be entitled to receive benefits for the same purposes from another source if such person has not received such other benefits by the time of application for federal assistance and if such person agrees to repay all duplicative assistance to the agency providing the federal assistance. The delivery sequence, therefore, is not rigid it can be broken in certain cases. The most common example is when adhering to the delivery sequence prevents the timely receipt of essential assistance. In some cases, assistance can be provided more quickly by an organization or agency that is lower in the sequence than an agency or organization that is at a higher level. For example, SBA disaster loans can generally be processed more quickly than FEMA grants; CDBG-DR grants take longer still because CDBG-DR disaster funding generally requires Congress to pass an appropriation. Once appropriated, the funding is usually released to the state in the form of a block grant, which is then disbursed by the state to disaster survivors. The underlying rationale for providing assistance when it becomes immediately available instead of rigidly adhering to the delivery sequence is to make sure disaster survivors receive aid as quickly as possible. Advocates of this view argue that preventing duplication of benefits is of secondary importance it can be rectified and recouped later. This practice, however, has led to problems, particularly for individuals and households. In some cases, the federal government may fail to identify the duplication. In others cases, it may take a prolonged period of time to identify the duplication and the recoupment notification that they owe money to the federal government may come as a surprise to disaster survivors who did not realize they exceeded their allowable assistance. In some cases they may have spent all of the assistance on recovery, and repaying duplicative assistance constitutes a financial burden to the disaster survivor. One of the most significant changes instituted by DRRA Section 1210 is that it prohibits the President from determining loans as duplicative assistance provided all federal assistance is used toward loss resulting from an emergency or major disaster under the Stafford Act. This arguably removes SBA disaster loans from the delivery sequence. However, the rulemaking on this policy has not been issued. Thus, it remains to be seen how this provision of DRRA will be implemented. Finally, DRRA Section 1210(a)(5) requires the FEMA Administrator, in coordination with relevant federal agencies, to provide a report with recommendations to improve "the comprehensive delivery of disaster assistance to individuals following a major disaster or emergency declaration." The report must include (1) actions planned or taken by the agencies as well as legislative proposals to improve coordination between agencies with respect to delivering disaster assistance; (2) a clarification of the delivery sequence; (3) a clarification of federal-wide interpretation of Stafford Act Section 312 when providing assistance to individuals and households; and (4) recommendations to improve communication to disaster assistance applicants, including the breadth of programs available and the potential impacts of utilizing one program versus another. <7.6. Section 1239: Cost of Assistance Estimates; Section 1232: Local Impact192> DRRA Section 1239 Cost of Assistance Estimates and Section 1232 Local Impact both require FEMA to review and initiate a rulemaking to update the factors considered when evaluating a governor's request for a major disaster declaration, including how FEMA estimates the cost of major disaster assistance. They also require FEMA to consider anything that may affect a local jurisdiction's capacity to respond to a disaster. Section 1232 in particular requires FEMA to give greater consideration to severe local impact or recent multiple disasters. Both sections address the way FEMA has made major disaster recommendations to Presidents. FEMA uses factors about the severity of the incident (including how the state was affected by the incident) to assess the state's need for federal assistance. The estimated cost of assistance (also known as the per capita threshold) has been a key factor used by FEMA to evaluate the disaster's severity and to determine if the state has the capacity to handle the disaster without federal assistance. Two thresholds are used for estimated cost of assistance: (1) $1 million in public infrastructure damages and (2) a formula based on the state's population (according to the most recent census data) and public infrastructure damages. Based on these thresholds, FEMA has generally recommended that a major disaster be declared if public infrastructure damages exceed $1 million and meet or exceed $1.50 per capita. The underlying rationale for using a per capita threshold is that state fiscal capacity should be sufficient to deal with the disaster if damages and costs fall under the per capita amount. However, concerns related to relying on the per capita threshold include that: the per capita threshold may be difficult to reach for some states. For example, a rural area in a highly populated state may be denied federal disaster assistance because damages and costs do not exceed the per capita threshold; these incidents still warrant federal assistance because they overwhelm local response and recovery capacity in spite of not exceeding the statewide threshold; and the application of the per capita threshold is inequitable because the same incident may affect multiple states but only result in a major disaster declaration for some states by virtue of differences in state population. Pursuant to DRRA Section 1239, within two years of DRRA's enactment (i.e., by October 5, 2020), FEMA is required to initiate a rulemaking to update the factors considered when evaluating a governor's request for a major disaster declaration, including how the cost of assistance is estimated, as well as other impacts on the jurisdiction's response capacity. As part of the review and rulemaking, FEMA may consider whether the per capita threshold is an appropriate mechanism for evaluating capacity, and additional information, such as the results of the 2020 U.S. Census, may factor into the final rule. DRRA Section 1232 also requires FEMA to adjust agency policy and regulations to grant greater consideration to severe local impact or recent multiple disasters, which may enable jurisdictions that struggle to reach the per capita threshold to provide evidence supporting the request for a major disaster declaration as no single factor is dispositive and the determination to grant a request for a major disaster is at the President's discretion. FEMA currently uses nine factors to evaluate a state or territory's request for a major disaster declaration (see Table 2 ). To some, these factors entail a more nuanced evaluation of major disaster requests by assessing both damages and state and local resources. However, it appears that the per capita threshold is still being applied to determine the "amount and type of damages caused by the incident." If that is the case, per capita damages may still figure more prominently than other factors such as local impacts when making major disaster declaration recommendations to the President. <7.7. Section 1219: Right of Arbitration196> DRRA Section 1219 amends Stafford Act Section 423 Appeals of Assistance Decisions to add a right of arbitration. Per Stafford Act Section 423, applicants for assistance have the right to appeal decisions regarding "eligibility for, from, or amount of assistance" within 60 days after receiving notification of award or denial of award. FEMA then has to render a decision within 90 days of receiving a notice of appeal. Prior to DRRA, the appeal process outlined in the Stafford Act only provided a way for FEMA to review its own decisions, and did not include a way for applicants to bring claims before an independent arbiter. The need for arbitration, however, was recognized by Congress following Hurricanes Katrina and Rita, which made landfall in 2005, due to disputes that arose from public assistance payments under Stafford Act Sections 403 Essential Assistance, 406 Repair, Restoration, and Replacement of Damaged Facilities, and 407 Debris Removal. Post-Hurricanes Katrina and Rita, the arbitration process was established pursuant to the authority granted under Section 601 of the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). Notwithstanding any other provision of law, the President shall establish an arbitration panel under the Federal Emergency Management Agency public assistance program to expedite the recovery efforts from Hurricanes Katrina and Rita within the Gulf Coast Region. The arbitration panel shall have sufficient authority regarding the award or denial of disputed public assistance applications for covered hurricane damage under section 403, 406, or 407 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170b, 5172, or 5173) for a project the total amount of which is more than $500,000. FEMA's public assistance appeal process remains in effect following DRRA's enactment. In addition, post-DRRA a right of arbitration has been added to Stafford Act Section 423 under the authority granted under ARRA Section 601. Applicants, which are states in the context of this section, may request arbitration in order to "dispute the eligibility for assistance or repayment of assistance provided for a dispute of more than $500,000 for any disaster that occurred after January 1, 2016." (Applicants in rural areas are eligible to pursue arbitration if the amount of assistance is $100,000. ) FEMA's Public Assistance Appeals and Arbitration Under the Disaster Recovery Reform Act fact sheet notes that applicants may file a second appeal or request arbitration pursuant to Section 423(d) either (1) within 60 days after receipt of the first appeal decision (if the decision is not appealed or arbitration is not requested, then the first level appeal decision becomes the final agency determination and the applicant no longer has a right to appeal or arbitrate); or (2) at any time after 180 days of filing a first level appeal if the applicant has not received a decision from the agency in which case they may withdraw the first level appeal and request Section 423 arbitration. In the event an applicant requests arbitration, the Civilian Board of Contract Appeals (CBCA) will conduct the arbitration, and their decision shall be binding. FEMA has stated that the Agency intends to "initiate rulemaking to implement Section 423 arbitration and revise 44 C.F.R. 206.206," including amending regulations that provide for only a first and second level appeal process. In the interim, FEMA has stated that it will rely on the Public Assistance Appeals and Arbitration Under the Disaster Recovery Reform Act fact sheet and the CBCA's Interim Fact Sheet . The CBCA published proposed rules of procedure to implement Section 423 arbitration in the Federal Register on March 5, 2019. Additionally, while new regulations are being promulgated, FEMA will provide information on how applicants may request either a second level appeal or arbitration when FEMA provides first level appeal denials for disputes arising from declarations for disasters occurring after January 1, 2016. There is disagreement regarding whether the arbitration process expedites dispute resolution. The House Transportation and Infrastructure Committee's DRRA Report states that the CBCA panel provides a faster resolution, citing that arbitration was used as a tool for resolving disputes following both Hurricanes Katrina and Sandy to facilitate recovery. FEMA, however, in an earlier version of its Public Assistance Arbitration fact sheet stated that the arbitration process often takes years to arrive at a resolution. This may be, in part, because of the process required some steps may take multiple weeks or months to complete which includes: a first level appeal; the applicant opting into arbitration; submission of responses; the selection of the arbitration panel; the preliminary conference; the hearing and any follow-up; and the panel's rendering of the final decision. The length of the arbitration process may depend on the complexity of the disputed project and its associated costs for which the applicant is seeking an award of assistance. Additionally, the arbitration process may be costly as there are fees associated with the panel, experts, attorney's fees, and other fees, which are the responsibility of the parties, including both the applicant and FEMA. According to the Senate HSGAC's DRRA Report , the Congressional Budget Office (CBO) estimates that "implementing this provision would cost $4 million over the 2019-2023 period" based on information provided by FEMA on the expected number of arbitration requests. It is unclear, however, whether the evaluation of the cost of implementing this provision included considerations such as the individual cost of the project being arbitrated, the complexity of the project, and the nature of the dispute. Congress may consider tasking the Comptroller General of the United States with conducting a review of the arbitration process to evaluate its effectiveness, including whether arbitration expedites the disaster recovery process and if it is cost effective. Congress may also consider ways to improve the process's efficiency and effectiveness, if warranted based on the results of any such program evaluation. <7.8. Section 1218: National Veterinary Emergency Teams219> DRRA Section 1218 authorizes, but does not require, that the FEMA Administrator establish one or more national veterinary emergency teams at accredited colleges of veterinary medicine. Such a team(s) shall (1) deploy with Urban Search and Rescue (US&R) response teams to care for canine search teams, companion animals, service animals, livestock, and other animals; (2) recruit, train, and certify veterinary professionals, including veterinary students, regarding emergency response; (3) assist state governments, Indian tribal governments, local governments, and nonprofit organizations in emergency planning for animal rescue and care; and (4) coordinate with other federal, state, local, and Indian tribal governments, veterinary and health care professionals, and volunteers. Veterinary professionals serve in several emergency support capacities aiding in agriculture emergencies by controlling diseases in domestic animals; protecting natural resources by addressing wildlife health impacts; assisting with various emergency public health efforts, such as assuring food safety; and furnishing care to working animals such as search and rescue canines and service animals. Several pre-existing authorities address veterinary support in emergencies in different contexts. The Stafford Act does not specifically mention veterinary services. However, among the work and services authorized for essential assistance is "provision of rescue, care, shelter, and essential needs (i) to individuals with household pets and service animals; and (ii) to such pets and animals," which could include veterinary services. In addition, the Stafford Act requires state and local recipients of emergency preparedness planning grants to address the needs of individuals with household pets and service animals in their emergency preparedness plans. The federal department principally responsible for coordinating veterinary support in emergencies often depends upon the principal work performed, in particular whether it involves public health or animal health. Authority for the National Disaster Medical System (NDMS), an operational emergency response asset of the U.S. Department of Health and Human Services (HHS), does not expressly list which health professionals shall constitute NDMS teams. Rather, it states that the system is intended to "provide health services, health-related social services, other appropriate human services, and appropriate auxiliary services to respond to the needs of victims of a public health emergency ." NDMS currently supports veterinary response teams. Another HHS asset, the Commissioned Corps of the U.S. Public Health Service (USPHS), supports a veterinary professional category. The U.S. Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS) maintains capacity to respond to animal health emergencies affecting domestic livestock and poultry. <7.9. Section 1229: Extension of Assistance226> DRRA Section 1229 retroactively extended Disaster Unemployment Assistance (DUA). When the President declares a major disaster, individuals who would typically be ineligible for Unemployment Compensation (UC) may be eligible for DUA. After the disaster declaration, the DUA benefits are available to eligible individuals as long as the major disaster continues, for a period of up to 26 weeks. In some cases, UC beneficiaries who had an entitlement to UC benefits of fewer than 26 weeks and who became unemployed as a direct result of a disaster and exhausted their weeks of UC entitlement may be entitled to some DUA benefits. No more than a total of 26 weeks of total benefits (UC plus DUA) are allowable in this situation. The maximum number of available weeks of DUA has been temporarily extended three times, most recently by DRRA. DRRA Section 1229 retroactively extended DUA for an additional 26 weeks for persons who were unemployed in Puerto Rico and the U.S. Virgin Islands as a direct result of the 2017 Hurricane Irma or Hurricane Maria disasters. (This created a total potential entitlement to DUA of up to 52 weeks for some individuals.) Because the disasters had both been declared more than 52 weeks before DRRA's enactment, the remaining DUA weeks will be paid retroactively. Individuals who worked in these areas and exhausted entitlement to UC may be eligible for DUA benefits for any remaining uncompensated weeks, up to 52 weeks total (UC plus DUA). <7.10. Section 1226: Inspector General Audit of FEMA Contracts for Tarps and Plastic Sheeting233> DRRA Section 1226 requires the DHS IG to audit the contracts that FEMA awarded for tarps and plastic sheeting for the Commonwealth of Puerto Rico and the U.S. Virgin Islands in response to Hurricanes Irma and Maria. Specifically, the DHS IG must review FEMA's contracting process for evaluating offerors and awarding contracts for tarps and plastic sheeting; FEMA's assessment of contractor past performance; FEMA's assessment of the contractors' capacity to carry out the contracts; how FEMA ensured contractors met the terms of the contracts; and whether the failure of contractors to meet the terms of the contracts, and FEMA's cancellation of the contracts affected the provision of tarps and plastic sheeting. In addition, the DHS IG must submit a report containing the audit's findings and recommendations to the House Transportation and Infrastructure Committee and Senate HSGAC no later than 270 days after the audit is initiated. According to the 2017 Hurricane Season FEMA After-Action Report , during Hurricanes Harvey and Irma response operations, FEMA exhausted its pre-negotiated contracts including contracts to provide tarps. To meet the need for tarps in response to Hurricane Maria, FEMA awarded new contracts, reportedly awarding contracts to "entities that were assessed as technically acceptable and committed to meeting the requirements, in accordance with the provisions of the Federal Acquisition Regulation." FEMA stated that, overall, it "executed a successful acquisitions process, with the Agency canceling just three contracts." Included in the cancelled contracts were contracts for tarps and plastic sheeting. FEMA went on to state that, "[t]hese cancellations did not hinder FEMA's ability to deliver on its mission." However, FEMA later acknowledged that the issues with the contracts delayed the delivery of plastic tarps to Puerto Rico. The DHS IG audit requirement included in DRRA may have arisen from congressional concerns regarding FEMA's management of contracts for tarps and plastic sheeting during its 2017 hurricane season response operations. For example, a 2018 report issued by the minority staff of Senate HSGAC concluded that FEMA's acquisition strategy and process, including the use of pre-negotiated, advance contracts during the 2017 hurricane season, was not successful. The Senate HSGAC minority staff report identified several deficiencies in FEMA's contracting process, including that: FEMA did not adequately use prepositioned contracts and awarded new contracts before using prepositioned contracts; FEMA awarded contracts without adequate vetting, including $73 million for tarps and plastic sheeting to two contractors with no relevant past performance, and these contracts were cancelled due to the companies' failure to deliver; and FEMA's bid process did not ensure adequate competition, in part due to limited notice provided to prospective vendors and short timeframes for proposal submission. According to the Senate HSGAC minority staff report, the two contracts for tarps and plastic sheeting that were cancelled were intended to provide a total of 1.1 million tarps and 60 thousand rolls of plastic sheeting. The report also identified additional issues that delayed the delivery of tarps and plastic sheeting, such as other companies that were awarded contracts for tarps and plastic sheeting struggling to meet delivery timeframes, and other logistical issues, such as FEMA's exhausted inventory of commodities following Hurricanes Harvey and Irma, commodity delivery challenges (e.g., delivery truck and driver shortages), and shortages of contractors to perform repairs. The Chairman of the Senate Budget Committee, Senator Mike Enzi, also questioned how FEMA identified, vetted, and awarded contracts following Hurricane Maria, stating "[i]t appears that FEMA has not properly vetted some of the companies that receive contracts and therefore may have wasted millions of taxpayer dollars, while simultaneously denying services to citizens in need of them." Following Hurricane Katrina and the passage of the Post-Katrina Emergency Management Reform Act of 2006 ( P.L. 109-295 ), FEMA worked to maximize the use of advance contracts for goods and services; however, in a 2015 report, the GAO found deficiencies with FEMA's contracting guidance. This remains an issue; in the GAO's assessment of FEMA's 2017 advance contracting, it recommended that FEMA, among other things update its strategy for advance contracting, including defining objectives and how advance contracts should be prioritized in relation to new post-disaster contract awards; update the Disaster Contracting Desk Guide to include guidance for using advance contracts prior to making new post-disaster contract awards, and provide semi-annual training to contracting officers on said guidance; and update and implement existing guidance to identify acquisition planning timeframes and considerations. The GAO also stated that "an outdated strategy and lack of guidance to contracting officers resulted in confusion about whether and how to prioritize and use advance contracts to quickly mobilize resources in response to the three 2017 hurricanes.... " In May 2019, the DHS IG released a report concluding that FEMA should not have awarded two contracts to Bronze Star LLC one for tarps and one for plastic sheeting. FEMA cancelled both contracts due to nondelivery. The findings of this audit, which are included in the DHS IG's report, FEMA Should Not Have Awarded Two Contracts to Bronze Star LLC , and accompanied by recommendations, may contribute to the audit and report requirements included in DRRA Section 1226. Depending on the DHS IG's findings, Congress may require FEMA to update its contracting strategy, as well as its policies and procedures related to prepositioning supplies and quickly ramping up procurement operations (i.e., using advance contracts and executing new contracts for commodities and services). FEMA's acquisition personnel may also benefit from additional guidance and training regarding advance contracting, including how to determine whether potential contractors have the capacity to successfully perform the requirements of the contract. <8. Concluding Observations> DRRA amends many sections of the Stafford Act, and establishes numerous reporting and rulemaking requirements. The implementation of DRRA includes "more than 50 provisions that require FEMA policy or regulation changes...." Thus, it could be argued that much of DRRA's implementation is at FEMA's discretion. Although FEMA is working on DRRA implementation, it is unclear at this time how FEMA will address many of DRRA's requirements and recommendations. Congress may oversee the implementation of DRRA through hearings or other inquiries to ensure that the post-DRRA changes to disaster assistance programs and policies fulfill congressional intent and the interests of Congress. Congress may also review the effectiveness and impacts of FEMA's DRRA-related regulations and policy guidance, including assessing the effects of DRRA-related changes to federal assistance for past and future disasters. Appendix A. Tables of Deadlines Associated with the Implementation Actions and Requirements of the Disaster Recovery Reform Act of 2018 In addition to numerous amendments to the Stafford Act, DRRA includes standalone authorities. DRRA requires reports to Congress, rulemaking/regulatory actions, and other actions to support disaster preparedness, and increase transparency and accountability with regard to FEMA. The following three tables of deadlines are associated with DRRA's reporting, rulemaking/regulatory, and other implementation actions and requirements: Table A-1 . DRRA Reporting Requirements (i.e., reports to Congress); Table A-2 . DRRA Rulemaking and Regulations Requirements; and Table A-3 . DRRA Guidance and Other Required Actions. The tables are organized by deadline for implementation in chronological order, and include: the relevant DRRA Section; referenced Stafford Act Section(s), if applicable; a brief description of the requirement; the entity responsible for accomplishing the requirement; the recipient of the information/action; the due date described in DRRA; and the deadline expressed as a calendar date. Some sections of DRRA include multiple implementation actions and requirements and, as such, are included in multiple tables and may appear multiple times. Additionally, some sections of DRRA do not specify the date by which the implementation action or requirement must be completed. For these sections, the due date and calendar deadline are listed as "N/A." Some sections of DRRA include requirements for ongoing actions (e.g., monthly reporting requirements). For these sections, the deadline is listed as "ongoing." Acronyms used in the tables are defined in the associated notes sections. Note that information included in the three tables of deadlines associated with DRRA implementation may be subject to change, and the following tables may not be up-to-date following the publication of this report. Appendix B. Acronym Table The following acronyms for entities, programs, and legislation are used throughout this report: Appendix C. Brief Legislative History DRRA includes provisions taken from numerous bills aimed at reforming aspects of FEMA. Some of these bills and the provisions incorporated into DRRA include: Disaster Recovery Reform Act ( H.R. 4460 , introduced) included many provisions duplicated or incorporated into DRRA with modifications; Disaster Recovery Reform Act of 2018 ( S. 3041 , introduced) included many provisions duplicated or incorporated into DRRA with modifications; Disaster Assistance Fairness and Accountability Act of 2017 ( H.R. 3176 , introduced) included the provision prohibiting the recoupment of certain assistance (incorporated into DRRA as Section 1216(b) Flexibility); To amend the Robert T. Stafford Disaster Relief and Emergency Assistance Act concerning the statute of limitations for actions to recover disaster or emergency assistance payments, and for other purposes ( H.R. 1678 , passed House) amended the Stafford Act such that no administrative action to recover payments may be initiated after the date that is three years after the date of transmission of the final expenditure report for project completion as certified by the grantee (incorporated into DRRA as Section 1216(c) Flexibility); Disaster Assistance Support for Communities and Homeowners Act of 2017 ( H.R. 1684 , passed House) included the provision requiring FEMA to provide technical assistance to a common interest community that provides essential services of a governmental nature on actions they may take to be eligible for reimbursement (incorporated into DRRA as Section 1230 Guidance and Recommendations); Community Empowerment for Mitigated Properties Act of 2017 ( H.R. 1735 , introduced) included a provision for the acquisition of property for open space as a mitigation measure (incorporated into DRRA as Section 1231 Guidance on Hazard Mitigation Assistance); Disaster Declaration Improvement Act ( H.R. 1665 , passed House) included the provision that the FEMA Administrator shall give greater weight and consideration to severe local impact or recent multiple disasters when recommending a major disaster declaration (incorporated into DRRA as Section 1232 Local Impact); Pacific Northwest Earthquake Preparedness Act of 2017 ( H.R. 654 , passed House) included a provision on the use of mitigation assistance to reduce the risk and impacts of earthquake hazards (incorporated into DRRA as Section 1233 Additional Hazard Mitigation Activities); Supporting Mitigation Activities and Resiliency Targets for Rebuilding Act, or SMART Rebuilding Act ( H.R. 4455 , introduced) included a provision on the National Public Infrastructure Pre-Disaster Hazard Mitigation Fund; however, it differed from DRRA Section 1234 National Public Infrastructure Pre-Disaster Hazard Mitigation in that the SMART Rebuilding Act established the fund as a separate account, but DRRA allows for a set-aside from the Disaster Relief Fund. It also includes a provision allowing the President to contribute up to 75% of the cost of hazard mitigation measures determined to be cost effective and which substantially reduce risk or increase resilience (incorporated into DRRA as Section 1235 Additional Mitigation Activities).

The Disaster Recovery Reform Act of 2018 (DRRA, Division D of P.L. 115-254 ) was enacted on October 5, 2018. DRRA is the most comprehensive reform of the Federal Emergency Management Agency's (FEMA's) disaster assistance programs since the passage of the Sandy Recovery Improvement Act of 2013 (SRIA, Division B of P.L. 113-2 ) and the Post-Katrina Emergency Management Reform Act of 2006 (PKEMRA, P.L. 109-295 ). DRRA focuses on improving pre-disaster planning and mitigation, response, and recovery, and increasing FEMA accountability. As such, it amends many sections of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act, P.L. 93-288 , as amended; 42 U.S.C. §§5121 et seq.) and also includes new standalone authorities. In addition, DRRA requires reports to Congress, rulemaking, and other actions. This report provides an overview of selected sections of DRRA that significantly change the provision of services or authorities under the Stafford Act, and includes: an overview of programs as they existed prior to DRRA's enactment, and how they were modified following DRRA; the context or rationale for program modifications or changes to disaster assistance policies following DRRA's enactment; potential considerations and issues for Congress; a table of amendments to the Stafford Act following DRRA's enactment; and tables of deadlines associated with DRRA's reporting, rulemaking and regulations, and other implementation actions and requirements. This report does not specifically address every section included in DRRA, nor does it address every subsection or paragraph of those DRRA sections which are addressed herein.

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<1. Introduction> Beneficial ownership refers to the natural person or persons who invest in, control, or otherwise reap gains from an asset, such as a bank account, real estate property, company, or trust. In some cases, an asset's beneficial owner may not be listed in public records or disclosed to federal authorities as the legal owner. For some years, the United States has been criticized by international bodies for gaps in the U.S. anti-money laundering (AML) system related to a lack of systematic beneficial ownership disclosure. While beneficial ownership information is relevant to several types of assets, attention has focused on the beneficial ownership of companies, and in particular, the use of so-called "shell companies" to anonymously purchase assets, such as real property, and to store and move money, including through bank accounts and wire transfers. While such companies may be created for a legitimate purpose, there are also concerns that the use of some of these companies can facilitate crimes, such as money laundering. Recent U.S. regulatory steps and legislation have particularly focused on beneficial ownership disclosure related to the use of shell companies with hidden owners that conduct financial transactions or purchase assets. In the context of AML regimes, law enforcement authorities as well as financial institutions and their regulators may seek beneficial ownership information to identify or verify the natural persons who benefit from or control financial assets held in the name of legal entities, such as corporations and limited liability companies. Drug traffickers, terrorist financiers, tax and sanctions evaders, corrupt government officials, and other criminals have been known to obscure their beneficial ownership of legal entities for money laundering purposes. To do so, they may form nominal legal entities, or "shell companies," which have no physical presence and generate little to no economic activity, but are used to anonymously store and transfer illicit proceeds. By relying on third-party nominees to serve as the legal owners of record for such shell companies, criminals can control and enjoy the benefits of the assets held by such companies while shielding their identities from investigators. Although concealing beneficial ownership has long been a central element of many money laundering schemes, many jurisdictions around the world have not established or implemented policy measures that address beneficial ownership disclosure and transparency. According to the Financial Action Task Force (FATF) an intergovernmental standards-setting body for AML and countering the financing of terrorism (CFT) financial crime investigations are frequently hampered by the absence of adequate, accurate, and timely information on beneficial ownership. FATF has accordingly identified beneficial ownership transparency as an enduring AML/CFT policy challenge. Some U.S. government agencies have also long recognized that the ability to create legal entities without accurate beneficial ownership information is a key vulnerability in the U.S. financial system. Such ongoing vulnerabilities have placed the United States under domestic and international pressure, including from the FATF, to tighten its AML/CFT regime with respect to beneficial ownership disclosure requirements. In recent years, various U.S. regulators have taken actions to address this issue, and congressional interest in this topic has increased. This report first provides selected case studies of high-profile situations where beneficial ownership has been obscured. It then provides an overview of beneficial ownership issues relating to corporate formation and in real estate transactions. Next, it describes the recent history of beneficial ownership policy and legislation. The report then discusses recent U.S. regulatory changes to address aspects of beneficial ownership transparency. Thereafter, the report analyzes selected current policy issues, including sectors not covered by existing Treasury regulations, the status of international efforts to address beneficial ownership, and the evolution of the Global Legal Entity Identifier (LEI) program. Finally, the report analyzes selected legislative proposals in the 116 th Congress. <2. Overview> <2.1. Beneficial Ownership and U.S. Corporate Formation> While beneficial ownership information is relevant to a variety of assets, recent policy attention has focused on the beneficial ownership of companies, and in particular, the use of shell companies to anonymously purchase assets, such as real property, and to store and move money, including through bank accounts and wire transfers. FATF has estimated that over 30 million "legal persons" exist in the United States, and about 2 million new such legal persons are created each year in the states and territories owned by the United States. FATF defines legal persons to include entities such as corporations, limited liability companies (LLCs), various forms of partnerships, foundations, and other entities that can own property and are treated as legal persons. FATF considers trusts, which share some of the same characteristics, to be "legal arrangements." FATF recommends that countries mandate some degree of transparency in identifying beneficial owners, at least for law enforcement and regulatory purposes, for legal persons and legal arrangements. There are a range of legitimate reasons for wanting to create such entities, including diversification of risk with joint owners, tax purposes, limiting liability, and other reasons. However, such legal persons and arrangements can also be used to hide the identities of owners of assets, thereby facilitating money laundering, corruption, and financial crime. For this reason, FATF recommends countries take steps to ensure that accurate and updated information on the identities of beneficial owners be maintained and accessible to authorities. In the United States, corporations, LLCs, and partnerships are formed at the state level, not the federal level. Corporation laws vary from state to state, and the "promoter" of the corporation can choose in which state to incorporate or in which to form another legal entity, often paying a "corporate formation agent" within the state to file the required state-level paperwork. Such corporate formation agents may be attorneys, but are not always required to be attorneys. While state laws vary, most states share some basic requirements for forming a corporation or other entity, including the filing of the entity's articles of incorporation with the secretary of state. These articles often include the corporation's name, the business purpose of the corporation, and the corporation's registered agent and address for the purpose of accepting legal service of process if it is sued. While state requirements vary, most states do not collect, verify, or update identifying information on beneficial owners. Because no federal standards currently exist, a promoter of a corporation can choose to incorporate in a state with fewer disclosure requirements if they wish. The FATF evaluation of the United States' AML system found that "measures to prevent or deter the misuse of legal persons and legal arrangements are generally inadequate" in the United States. FATF reported there were no mechanisms in place to record or verify beneficial ownership information in the states during corporate formation. They also warned that "the relative ease with which U.S. corporations can be established, their opaqueness and their perceived global credibility makes them attractive to abuse for money laundering and terrorism financing, domestically as well as internationally." In a Senate Judiciary Committee hearing on June 19, 2019, witness Adam Szubin, former Under Secretary for the Treasury's Office of Terrorism and Financial Intelligence, noted in the question-and-answer portion that the position of the United States as a leader in the financial system at times gave additional credibility to shell companies that had been formed in the United States anonymously by international criminals, enabling them to transact business or open bank accounts outside the United States through these companies with less scrutiny than they might otherwise have received. <2.2. Beneficial Ownership and U.S. Real Estate> <2.2.1. Overview of Real Estate Transactions> Some argue that land ownership, even more than ownership of other resources, involves both public and private aspects such as urban planning, resources and environmental planning, and tax consequences. In the United States, however, unlike in many European countries, the federal government has almost no role in the purchase and sale of real estate. Real estate transactions in the United States are largely private contracts, and transfers may or may not be recorded publicly, although many buyers find it advantageous to do so. Most buyers of property finance their purchases with mortgages from banks. Investors or those who do not require such loans may engage in "all-cash" purchases, which simply means that no loans are involved and that the purchasers must come up with the necessary funds on their own. According to the National Association of REALTORS , approximately 23% of residential real estate sales transactions were all-cash in 2017. Data from real estate data firm CoreLogic for 2016, however, put the figure at 46% for New York state, and similarly higher for some additional states. In addition to realtors, who may represent buyers or sellers (but are not required to be involved in transactions), escrow agents and title company agents also play a role in real estate transactions in the United States. Escrow agents essentially act as neutral middlemen in real estate sales, temporarily holding funds for either side. In cases where purchases are made in the name of an LLC, for instance, an escrow agent will look at operating agreements of the LLC to identify the person legally authorized to sign documents, but they generally have no specific duties to locate or identify beneficial owners. Usually, escrow agents are not part of title insurance companies or independent title agencies. After a buyer and seller agree on a sales price and sign a purchase and sales contract, real estate transactions are transferred to a land title company, most likely the American Land Title Association (ALTA). ALTA represents 6,300 title insurance agents and companies, from small, single-county operators to large national title insurers. Title insurance is a form of insurance that protects the holder from financial loss if there are previously undiscovered defects in a title to a property (such as previously undiscovered fraud or forgery, or various other situations). A typical title insurance company, before providing coverage to the buyer of a property, usually investigates prior sales of the property. This process often starts with examining public records tracing the property's history, its owners, sales, and any partial property rights that may have been given away. This title search investigation also normally includes tax and court records to give title companies an understanding of what they might be able to insure in their policies issued to buyers. Title insurers are the only professionals in the real estate community who currently have money laundering requirements, which were imposed through FinCEN's Geographic Targeting Orders (GTOs), as detailed below. As part of this process, when real estate transactions fit the thresholds set in GTOs for certain covered metropolitan areas, title insurance companies work with real estate professionals representing buyers to collect the required beneficial ownership information. <2.2.2. Money Laundering Risks Through Real Estate and Shell Companies> The FATF 2016 evaluation warned that the lack of AML requirements on real estate professionals constituted a significant vulnerability for the United States' AML system. As detailed below, FinCEN exempted the real estate sector from AML requirements pursuant to the USA PATRIOT Act of 2001 ( P.L. 107-56 ). In a 2015 study of the New York luxury property market, the New York Times found that LLCs with anonymous owners were being increasingly utilized in the New York luxury property market. The Times reported that in 2003, for example, one-third of the units sold in one high-end Manhattan building the Time Warner building were purchased by shell companies. By 2014, however, that figure had risen to over 80%, according to the article. And nationwide, the Times reported, nearly half of residential purchases of over $5 million were made by shell companies rather than named people, according to data from property data provider First American Data Tree studied by the Times . According to FinCEN, in 2017, 30% of all high-end purchases in six geographic areas involved a beneficial owner or purchaser representative who was also the subject of a previous suspicious activity report (SAR). A 2017 study by the U.S. Government Accountability Office (GAO) reviewed available information on the ownership of General Services Administration (GSA) leased space that required higher levels of security as of March 2016, and found that GSA was leasing high-security space from foreign owners in 20 buildings. GAO could not obtain the beneficial owners of 36% of those buildings for high-security facilities leased by the federal government, including by the Federal Bureau of Investigation. The Appendix provides an example of how an LLC with hidden owners might be used to purchase real estate in the United States with minimal information as to the natural persons behind the purchase or sale of the property. <3. U.S. Policy Responses> <3.1. History of U.S. Beneficial Ownership Policy and Legislation> As previously noted, the U.S. government has long recognized the ability to create legal entities without accurate beneficial ownership information as a key vulnerability of the U.S. financial system. In 2006, GAO published a report entitled Company Formations: Minimal Ownership Information Is Collected and Available , which described the challenges of collecting beneficial owner data at the state level. The U.S. Department of the Treasury's 2015 National Money Laundering Risk Assessment and its 2018 update identify the misuse of legal entities as a key vulnerability in the banking and securities sectors. The 2018 risk assessment additionally clarified that such vulnerability is further compounded by shell companies' ability to transfer funds to other overseas entities. Such ongoing vulnerabilities have placed the United States under domestic and international pressure, including from FATF, to tighten its AML/CFT regime with respect to beneficial ownership disclosure requirements. In its 2016 review of the U.S. government's AML/CFT regime, FATF noted that the "lack of timely access to beneficial ownership information remains one of the most fundamental gaps in the U.S. context." According to FATF, this gap exacerbates U.S. vulnerability to money laundering by preventing law enforcement from efficiently obtaining such information during the course of investigations. FATF further noted that this gap in the U.S. AML/CFT regime limits U.S. law enforcement's ability to respond to foreign mutual legal assistance requests for beneficial ownership information. By contrast, for instance, the European Union (E.U.), in 2015, enacted the E.U. Fourth Anti-Money Laundering Directive, which required member states to collect and share beneficial ownership information. Since at least the 110 th Congress, legislation has been introduced to address long-standing concerns raised by law enforcement, FATF, and other observers over the lack of beneficial ownership disclosure requirements. For example, in the 110 th Congress, Senator Carl Levin introduced S. 2956 , the Incorporation Transparency and Law Enforcement Assistance Act, on May 1, 2008. In his floor statement introducing the bill, Senator Levin noted that the National Association of Secretaries of State (NASS) had requested that he delay introduction of a bill in order for the NASS to first convene a task force in 2007 to examine state company formation practices. In July 2007, the NASS task force issued a proposal. Rather than cure the problem, however, the proposal was full of deficiencies, leading the Treasury Department to state in a letter that the NASS proposal "falls short" and "does not fully address the problem of legal entities masking the identity of criminals." . That is why we are introducing Federal legislation today. Federal legislation is needed to level the playing field among the States, set minimum standards for obtaining beneficial ownership information, put an end to the practice of States forming millions of legal entities each year without knowing who is behind them, and bring the U.S. into compliance with its international commitments. The 115 th Congress considered a number of bills concerning beneficial ownership reporting, including S. 1454 , the True Incorporation Transparency for Law Enforcement (TITLE) Act and the Corporate Transparency Act of 2017 ( H.R. 3089 and S. 1717 ). In the 116 th Congress, the House Committee on Financial Services on June 11, 2019, passed and ordered to be reported to the House an amendment in the nature of a substitute to H.R. 2513 , the "Corporate Transparency Act of 2019," introduced by Representative Maloney. Also, in the Senate, S. 1889 was introduced on June 19, 2019, by Senator Whitehouse with cosponsors, and a discussion draft bill was circulated June 10, 2019, by Senators Warner and Cotton. This report concludes with an analysis of selected introduced legislative proposals in the 116 th Congress. <3.2. Current Beneficial Ownership Requirements> Several federal tools are available to address money laundering risks posed by entities that obscure beneficial ownership information, including Treasury's Customer Due Diligence (CDD) rule, use of Geographic Targeting Orders (GTOs), and a provision in Section 311 of the USA PATRIOT Act. Treasury also uses various elements of its economic sanctions programs to address such risks. Finally, with regard to international cooperation, the U.S. government may obtain and share beneficial ownership information with foreign governments in the course of law enforcement investigations (see text box below). In other policy contexts that reach beyond money laundering issues, beneficial ownership has emerged as a concern related to entities' disclosure of U.S. ownership for tax purposes and entities that lease high-security government office spaces. Beneficial ownership issues are also relevant in other areas, such as securities, which are beyond the scope of this report. <3.2.1. Treasury's Customer Due Diligence (CDD) Rule> Pursuant to its regulatory authority under the Bank Secrecy Act (BSA) the principal federal AML statute FinCEN has long administered regulations requiring various types of financial institutions to establish AML programs. The centerpiece of FinCEN's response to concerns about beneficial ownership transparency is its Customer Due Diligence Rule (CDD Rule), which went into effect in May 2018. Under the CDD Rule, certain U.S. financial institutions must establish and maintain procedures to identify and verify the beneficial owners of legal entities that open new accounts. The regulation covers financial institutions that are required to develop AML programs, including banks, securities brokers and dealers, mutual funds, futures commission merchants, and commodities brokers. Under the rule, covered financial institutions must now collect certain identifying information on individuals who own 25% or more of legal entities that open new accounts. The CDD Rule also requires covered financial institutions to develop customer risk profiles and to update customer information on a risk basis for the purposes of ongoing monitoring and suspicious transaction reporting. These requirements make explicit what has been an implicit component of BSA and AML compliance programs. <3.2.2. Geographic Targeting Orders (GTOs)> FinCEN has the authority to impose additional recordkeeping and reporting requirements on domestic financial institutions and nonfinancial businesses in a particular geographic area in order to assist regulators and law enforcement agencies in identifying criminal activity. This authority to impose so-called "Geographic Targeting Orders" (GTOs) dates back to 1988. GTOs may remain in effect for a maximum of 180 days unless extended by FinCEN. Section 274 of the Countering America's Adversaries Through Sanctions Act ( P.L. 115-44 ) replaced statutory language referring to coins and currency with "funds," thereby including a broader range of financial services, such as wire transfers. Several bills in the 116 th Congress seek to address the use of GTOs to disclose the beneficial owners of entities involved in the purchase of all-cash real estate transactions (see text box below). <3.2.3. Special Measures Applied to Jurisdictions, Financial Institutions, Classes of Transactions, or Types of Accounts of Primary Money Laundering Concern> Section 311 of the USA PATRIOT Act ( P.L. 107-56 ) added a new provision to the Bank Secrecy Act at 31 U.S.C. 5318A. This provision, popularly referred to as "Section 311," authorizes the Secretary of the Treasury to impose regulatory restrictions, known as "special measures," upon finding that a foreign jurisdiction, a financial institution outside the United States, a class of transactions involving a foreign jurisdiction, or a type of account, is "of primary money laundering concern." The statute outlines five special measures that Treasury may impose to address money laundering concerns. The second special measure authorizes the Secretary to require domestic financial institutions and agencies to take reasonable and practicable steps to collect beneficial ownership information associated with accounts opened or maintained in the United States by a foreign person (other than a foreign entity whose shares are subject to public reporting requirements or are listed and traded on a regulated exchange or trading market), or a representative of such a foreign person, involving a foreign jurisdiction, a financial institution outside the United States, a class of transactions involving a jurisdiction outside the United States, or a type of account "of primary money laundering concern." Based on a review of Federal Register notices, FinCEN has neither proposed nor imposed the special measure involving the collection of beneficial ownership information. <3.2.4. Treasury's Sanctions Programs and the 50% Rule Affecting Entities Owned by Sanctioned Persons> Beneficial ownership information is valuable in the context of economic sanctions administered by the Treasury Department's Office of Foreign Assets Control (OFAC). Under economic sanctions programs, assets of designated persons (i.e., individuals or entities) may be blocked (i.e., frozen), thereby prohibiting transfers, transactions, or dealings of any kind, extending to property and interests in property subject to the jurisdiction of the United States as specified in OFAC's specific regulations. As additional persons, including shell and front companies, are discovered to be associated (i.e., owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly) with someone already subject to sanctions, OFAC may choose to designate those additional persons to be subject to sanctions. In addition to persons explicitly identified on OFAC's Specially Designated Nationals (SDN) or Sectoral Sanctions Identification (SSI) lists, sanctions also apply to nonlisted entities that are owned, in part, by blocked persons. Current guidance states that sanctions also extend to entities that are at least 50% owned by sanctioned persons. Compliance with this so-called "50% Rule" requires financial institutions and others potentially doing business with designated persons or identified sectoral entities to understand an entity's ownership structure, including its beneficial owners. <3.2.5. Disclosure of "Substantial" U.S. Ownership for Tax Purposes> The Foreign Account Tax Compliance Act (FATCA; Subtitle A of Title V of the Hiring Incentives to Restore Employment Act; P.L. 111-147 , as amended) is a key U.S. policy tool to combat tax evasion. Pursuant to FATCA, U.S. taxpayers are required to disclose to the Internal Revenue Service (IRS) financial assets held overseas. In addition, FATCA requires certain foreign financial institutions to disclose information directly to the IRS when its customers are U.S. persons or when U.S. persons hold a "substantial" ownership interest defined to mean ownership, directly or indirectly, of more than 10% of the stock (by vote or value) of a foreign corporation or of the interests (in terms of profits or capital) of a foreign partnership; or, in the case of a trust, the owner of any portion of it or the holder, directly or indirectly, of more than 10% of its beneficial interest. Foreign financial institutions that do not comply with reporting requirements are subject to a 30% withholding tax rate on U.S.-sourced payments. According to FinCEN, some intergovernmental agreements that the United States negotiated with other governments to facilitate the implementation of FATCA "allow foreign financial institutions to rely on existing AML practices for the purposes of determining whether certain legal entity customers are controlled by U.S. persons." The U.S. government committed in many of these agreements to pursue "equivalent levels of reciprocal automatic information exchange" on the U.S. financial accounts held by taxpayers of that foreign jurisdiction; there is, however, no reciprocity in FATCA. Various observers have debated whether legal entity ownership disclosure information provided to the IRS could be used by other federal entities for AML purposes. <3.2.6. Disclosure of Beneficial Ownership of Office Space Leased by the Federal Government> Section 2876 of the National Defense Authorization Act for Fiscal Year 2018 (NDAA; 10 U.S.C. 2661 note) requires the Defense Department to identify each beneficial owner of a covered entity proposing to lease accommodation in a building or other improvement that is intended to be used for high-security office space for a military department or defense agency. Prior to the enactment of Section 2876, in January 2017, the GAO reported that the General Services Administration (GSA) did not keep track of beneficial owners, including foreign owners, of high-security office space it leased for tenants that included the Federal Bureau of Investigation (FBI) and the Drug Enforcement Administration (DEA). According to GAO, GSA began in April 2018 to implement a new lease requirement for prospective lease projects that requires offerors to identify and disclose whether the owner of the leased space, including an entity involved in the financing of the property, is a foreign person or a foreign-owned entity. In the 116 th Congress, H.R. 392 , the Secure Government Buildings from Espionage Act of 2019, seeks to expand the scope of the FY2018 NDAA's provisions. <4. Selected Policy Issues> The current policy debate surrounding beneficial ownership disclosure is focused on addressing gaps in the U.S. AML regime and tracking changes made by the international community in its approach to addressing the problem. A key area of congressional activity involves evaluating the risks associated with lack of beneficial ownership information in the corporate formation and real estate sectors. The Treasury's current CDD rule mandates that financial institutions must collect information for beneficial owners who hold more than 25% of an entity upon opening an account for the entity. Some legislative proposals would mandate that this type of information be collected when such legal entities are formed, and that the information be reported to FinCEN or another central repository that authorities can access. International developments in beneficial ownership disclosure practices, including trends in the adoption of a program known as the Global Legal Entity Identifier System (LEI), also raise issues for U.S. policy consideration. <4.1. Sectors Not Covered by Treasury's CDD Rule> Even following the CDD rule's implementation, some critics argue that gaps remain in U.S. financial transparency requirements The CDD rule, for example, applies only to individuals who own 25% or more of a legal entity. Critics note that the 25% ownership threshold means that if five or more people share ownership, a legal entity may not name or identify any of them (only one management official). Also, the rule applies to new, but not existing, accounts. FATF, for example, has criticized the United States for lacking beneficial ownership requirements for corporate formation agents and real estate transactions. Neither sector is directly affected by the FinCEN rule, but recent legislation has been introduced to address both areas (see section below titled " Selected Legislative Proposals in the 116th Congress "). The following sections discuss potential gaps remaining in U.S. financial transparency requirements after implementation of the CDD rule. <4.1.1. Company Formation Agent Transparency> Third-party service providers known as "company formation agents" often "play a central role in the creation and ongoing maintenance and support of shell companies." While these services are not inherently illegitimate, they can help shield the identities of a company's beneficial owners from law enforcement. According to a 2016 FATF report, formation agents handle approximately half of the roughly 2 million new company formations undertaken annually in the United States. As discussed, the regulation of company formation agents is primarily a matter of state law. Formation agents are not subject to the BSA or federal AML regulations. However, observers have argued that states have not served as effective regulators of the company formation industry. These perceived inadequacies with current oversight of the company formation industry have prompted a number of legislative proposals discussed below. <4.1.2. Status of the GTO Program> A number of policymakers have expressed interest in making FinCEN's GTOs targeting money laundering in high-end real estate permanent or otherwise expanding the scope of the current real estate GTO program. Section 702 of the Defending American Security from Kremlin Aggression Act of 2019 ( S. 482 ) would require the Secretary of the Treasury to prescribe regulations mandating that title insurance companies report on the beneficial owners of entities that engage in certain transactions involving residential real estate. Section 214 of the COUNTER Act of 2019 ( H.R. 2514 ), as amended in a mark-up session of the House Financial Services Committee on May 8, 2019, would require the Secretary of the Treasury to apply the real estate GTOs, which currently cover only residential real estate, to commercial real estate transactions. Section 129 of the Department of the Treasury Appropriations Act, 2019 (Title I of H.R. 264 ) would have required FinCEN to submit a report to Congress on GTOs issued since 2016, but it was not enacted. <4.1.3. Establishing AML Requirements for Persons Involved in Real Estate Closings and Settlements> Section 352 of the USA PATRIOT Act ( P.L. 107-56 ) requires all financial institutions to establish AML programs. In 2002, however, FinCEN exempted from Section 352 certain financial institutions, including persons involved in real estate closings and settlements, in order to study the impact of AML requirements on the industry. In 2003, FinCEN published an advanced notice of proposed rulemaking (ANPRM) to solicit public comments on how to incorporate persons involved in real estate closings and settlements into the U.S. AML regulatory regime. Although no final rule has been issued, other developments have occurred. In 2017, FinCEN released a public advisory on the money laundering risks in the real estate sector. And in November 2018 a notice in the Federal Register on anticipated regulatory actions contained reference to renewed FinCEN plans to issue an ANPRM to initiate rulemaking that would establish BSA requirements for persons involved in real estate closings and settlements. <4.1.4. Disclosure of Beneficial Ownership of U.S.-Registered Aircraft> To register an aircraft in the United States with the Federal Aviation Administration (FAA), applicants must certify their U.S. citizenship. Non-U.S. citizens may register aircraft under a trust agreement in which the aircraft's title is transferred to an American trustee (e.g., a U.S. bank). Investigations into the FAA's Civil Aviation Registry have revealed a lack of beneficial ownership transparency among aircraft registered through noncitizen trusts. Reports further indicate that drug traffickers, kleptocrats, and sanctions evaders have been among the operators of aircraft registered with the FAA through noncitizen trusts. Some Members of Congress have sought to address beneficial ownership transparency in the FAA's Civil Aviation Registry through legislation. If enacted, H.R. 393 , the Aircraft Ownership Transparency Act of 2019, would require the FAA to collect identifying information, including nationality, of the beneficial owners of certain entities, including trusts, applying to register aircraft in the United States. <4.2. Status of International Efforts to Address Beneficial Ownership> U.S. policymakers' interest in addressing beneficial ownership transparency has been elevated by a series of leaks to the media regarding the abuse of shell companies by money launderers, corrupt politicians, and other criminals, as well as sustained multilateral attention to the issue. In late 2018, information from such leaks reportedly contributed to a raid by German authorities on Deutsche Bank, one of the world's largest banks. Other major banks have become enmeshed in money laundering scandals involving the abuse of accounts associated with shell companies, including Danske Bank, Denmark's largest bank. The international community has taken steps to acknowledge and address the issue of a lack of beneficial ownership transparency in the context of anti-money laundering efforts. Some countries, including the United Kingdom, have created a public register that provides the beneficial owners of companies and more countries have committed or are planning to do so. In April 2018, the European Parliament voted to adopt the European Commission's proposed Fifth Anti-Money Laundering (AML) Directive, which among other measures would require European Union member states to maintain public national-level registers of beneficial ownership information for certain types of legal entities. The European Commission has also sought to identify third-country jurisdictions with "strategic deficiencies" in their national AML/CFT regimes, which pose "significant threats" to the EU's financial system. To this end, the Commission has identified eight criteria or "building blocks" for assessing third countries one of which is the "availability of accurate and timely information of the beneficial ownership of legal persons and arrangements to competent authorities." In February 2019, the Commission released a proposed list of third countries with strategic AML/CFT deficiencies that included four U.S. territories: American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands. A key criticism of the U.S. territories' AML/CFT regime was the lack of beneficial ownership disclosure requirements. <4.3. Evolution of the Global Legal Entity Identifier (LEI) Program> The origins of the LEI system lay in some of the problems highlighted in the 2008 financial crisis. These included excessive opacity as to credit risks, and to potential losses accrued across various affiliates of large financial conglomerates. For example, when Lehman Brothers failed in 2008, financial regulators and market participants found it difficult to gauge their financial trading counterparties' exposure to Lehman's large number of subsidiaries and legal entities, domestically and overseas. Partly to better track such exposures, the Financial Stability Board (FSB) and G-20 helped to design and create the concept of the LEI system, starting in 2009. LEI is a voluntary international program that assigns each separate "legal entity" participating in the program a unique 20-digit identifying number. This number can be used across jurisdictions to identify a legally distinct entity engaged in a financial transaction, including a cross-border financial transaction, making it especially useful in today's globally interconnected financial system. The unique identifying number acts as a reference code much like a bar code, which can be used globally, across different types of markets and for a wide range of financial purposes. These would include, for example, capital markets and derivatives transactions, commercial lending, and customer ownership, due diligence, and financial transparency purposes; as well as risk management purposes for large conglomerates that may have hundreds or thousands of subsidiaries and affiliates to track. A large international bank, for example, may have an LEI identifying the parent entity plus an LEI for each of its legal entities that buy or sell stocks, bonds, swaps, or engage in other financial market transactions. The LEI was designed to enable risk managers and regulators to identify parties to financial transactions instantly and precisely. Although the origins of the LEI stemmed from concerns over credit risk and safety and soundness that surfaced during the 2008 financial crisis, the LEI may also have benefits for financial transparency. A May 2018 study from the Global Legal Entity Foundation found, based on multiple interviews with financial market companies, that the lack of consistent, reliable automated identifiers was creating a great burden on the financial industry; that most in the industry believed the "Know Your Customer" process of onboarding new clients would likely become more automated; and that "there is clearly an opportunity to align on one identifier to generate efficiencies." Similar conclusions were reached in a 2017 study by McKinsey & Co. The current LEI system is aimed more at tracking financial transactions of various affiliates, but creating a unified global identifier could be considered a natural first step toward more easily tracking ownership of affiliates as well. Worldwide, more than 700,000 LEIs have been issued to entities in over 180 countries as of November 2017; however, use of the LEI remains largely voluntary as opposed to legally mandatory. In the United States and abroad, some aspects of financial reporting require use of the LEI and these, in substantial part, rely on voluntary implementation. Some have called the lack of broader adoption of a common legal identifier a collective action problem. In a collective action problem, all participants in a system benefit if everyone participates; if only a few participate, those few bear high costs, as early adopters, with little benefit. Collective action problems are classic examples of situations where a government-organized solution may improve outcomes. Similarly, some argue that all parties would benefit if such LEIs were uniformly assigned, but there is no incentive to be a sole or early adopter. Academics have urged regulators to mandate the use of the LEI in regulatory reporting as a means of solving this collective action problem. Treasury's Office of Financial Research noted, "Universal adoption is necessary to bring efficiencies to reporting entities and useful information to the Financial Stability Oversight Council, its member agencies, and other policymakers." <5. Selected Legislative Proposals in the 116th Congress112> In response to some of the issues discussed above, a number of lawmakers have introduced legislation that would require the collection of beneficial ownership information for both newly formed and existing legal entities. The subsections below discuss two of these proposals in the 116 th Congress. <5.1. H.R. 2513, Corporate Transparency Act of 2019> In June 2019, the House Committee on Financial Services approved legislation that would require many small corporations and LLCs to report their beneficial owners to the federal government. Under H.R. 2513 , the Corporate Transparency Act of 2019, newly formed corporations and LLCs would be required to report certain identifying information concerning their beneficial owners to FinCEN and annually update that information. The bill would also impose these reporting requirements on existing corporations and LLCs two years after FinCEN adopts final regulations to implement the legislation. Subject to certain exceptions, the bill defines the term beneficial owner to mean natural persons who "directly or indirectly" exercise "substantial control" over a corporation or LLC; own 25% or more of the equity of a corporation or LLC; or receive "substantial economic benefits" from a corporation or LLC. H.R. 2513 's reporting requirements are limited to small corporations and LLCs. Specifically, the bill exempts a variety of regulated entities from its reporting requirements, in addition to any company that (1) employs more than 20 full-time employees, (2) files income tax returns reflecting more than $5 million in gross receipts, and (3) has an operating presence at a physical office within the United States. The bill would also authorize FinCEN to promulgate a number of rules. First, H.R. 2513 would allow FinCEN to adopt a rule requiring covered corporations and LLCs to report changes in their beneficial ownership sooner than the annual update required by the legislation itself. Second, the bill would direct the Treasury Secretary to promulgate a rule clarifying the circumstances in which an individual receives "substantial economic benefits" from a corporation or LLC for purposes of its definition of beneficial owner . Third, the legislation would require FinCEN to revise the CDD Rule within one year of the bill's enactment in order to bring the rule "into conformance" with the bill's requirements and reduce any "unnecessary" burdens on financial institutions. Finally, H.R. 2513 would impose civil and criminal penalties on persons who knowingly provide FinCEN with false beneficial ownership information or willfully fail to provide complete or updated information. <5.2. S. 1889, True Incorporation Transparency for Law Enforcement (TITLE) Act> In June 2019, Senator Sheldon Whitehouse introduced legislation that would require states receiving funds under the Omnibus Crime Control and Safe Streets Act of 1968 to adopt transparent incorporation systems within three years of the bill's enactment. Specifically, S. 1889 , the True Incorporation Transparency for Law Enforcement (TITLE) Act, would mandate that transparent incorporation systems require newly formed corporations and LLCs to report certain identifying information concerning their beneficial owners to their states of incorporation. Under the bill, a compliant formation system would also require corporations and LLCs to report changes in their beneficial ownership within 60 days. These requirements would apply to existing corporations and LLCs two years after a state's adoption of a compliant formation system. Subject to certain exceptions, S. 1889 defines the term beneficial owner to mean natural persons who "directly or indirectly" (1) exercise "substantial control" over a corporation or LLC, or (2) have a "substantial interest" in or receive "substantial economic benefits" from a corporation or LLC. Like H.R. 2513 , S. 1889 's requirements would be limited to small corporations and LLCs. Specifically, S. 1889 would allow states to exempt various regulated entities, in addition to any company that (1) employs more than 20 full-time employees, (2) files income tax returns reflecting more than $5 million in gross receipts, (3) has an operating presence at a physical office within the United States, and (4) has more than 100 shareholders. The bill would also impose civil and criminal penalties on persons who knowingly provide states with false beneficial ownership information or willfully fail to provide complete or updated information. Finally, S. 1889 would amend the BSA to include "any person engaged in the business of forming corporations or [LLCs]" in its definition of a regulated "financial institution," and would direct FinCEN to issue a proposed rule requiring such persons to establish AML programs. <5.2.1. Appendix. Hypothetical Example of Shell Companies Obscuring U.S. Property Sale> Figure A-1 demonstrates hypothetically how hidden foreign or U.S. buyers might purchase real estate in the United States with minimal disclosure of their identities as hidden beneficial owners. First, foreign or U.S. individuals might establish a foreign-incorporated LLC, subject to that foreign jurisdiction's laws, which could present particular challenges to a U.S. law enforcement agency seeking to investigate the purchase. Alternately, foreign or U.S. individuals could create a U.S. LLC incorporated in a U.S. state with only a "registered agent" required to be disclosed under various states' laws. A foreign LLC might pay for the property through a wire transfer from a foreign bank account. If the foreign LLC or the U.S. LLC were to open a U.S. bank account to pay for the purchase, then, if this were a new account opened since May 2018, the U.S.-regulated bank would look for beneficial owners owning more than 25% of the LLC, and keep records of that information. Currently, however, that information would not be reported to FinCEN automatically, and law enforcement would most likely require a subpoena to procure that information from the bank's records. To create additional layers that could obscure the actual buyers of the property, the LLC, whether U.S. or foreign, could route the payment to the title company, which handles the real estate closing, through a law firm. Payments and wire transfers routed through law firms present an extra layer of information a prosecutor or law enforcement agent must go through to try to obtain details of individuals who own the LLC and are purchasing a property. Often the U.S. attorney-client privilege can make it more difficult to exercise this subpoena authority, without at least the possibility that a legal challenge may arise. Finally, the payment is routed to the title company, which processes the property sale and distributes payment, normally to the seller's account. If the seller obscures his or her identity through an LLC as well, natural persons involved on both sides of the transfer may be hidden.

Beneficial ownership refers to the natural person or persons who invest in, control, or otherwise reap gains from an asset, such as a bank account, real estate property, company, or trust. In some cases, an asset's beneficial owner may not be listed in public records or disclosed to federal authorities as the legal owner. For some years, the United States has been criticized by international bodies for gaps in the U.S. anti-money laundering system related to a lack of systematic beneficial ownership disclosure. While beneficial ownership information is relevant to several types of assets, attention has focused on the beneficial ownership of companies, and in particular, the use of so-called "shell companies" to purchase assets, such as real property, and to store and move money, including through bank accounts and wire transfers. While such companies may be created for a legitimate purpose, there are also concerns that the use of some of these companies can facilitate crimes, such as money laundering. In the United States, corporations and other legal entities such as limited liability companies (LLCs) and partnerships are formed at the state level, not the federal level. Corporation laws vary from state to state, and most or all states do not collect, verify, and update identifying information on beneficial owners. The U.S. government has long recognized the ability to create legal entities without accurate beneficial ownership information as a key vulnerability of the U.S. financial system. In 2006, the U.S. Government Accountability Office (GAO) published a report entitled Company Formations: Minimal Ownership Information I s Collected and Available , which described the challenges of collecting beneficial owner data at the state level. The U.S. Department of the Treasury's 2015 National Money Laundering Risk Assessment and its 2018 update identify the misuse of legal entities as a key vulnerability in the banking and securities sectors. The 2018 risk assessment additionally clarified that such vulnerability is further compounded by shell companies' ability to transfer funds to other overseas entities. Such ongoing vulnerabilities have placed the United States under domestic and international pressure, including from the international Financial Action Task Force (FATF), to tighten its anti-money laundering and countering the financing of terrorism (AML/CFT) regime with respect to beneficial ownership disclosure requirements. In its 2016 review of the U.S. government's AML/CFT regime, FATF noted that the "lack of timely access to … beneficial ownership information remains one of the most fundamental gaps in the U.S. context." According to FATF, this gap exacerbates U.S. vulnerability to money laundering by preventing law enforcement from efficiently obtaining such information during the course of investigations. Recent U.S. regulatory efforts and legislation have focused in particular on beneficial ownership disclosure related to the use of shell companies with hidden owners in the banking and real estate sectors. Recent federal regulatory tools include Treasury's Customer Due Diligence (CDD) rule and use of Geographic Targeting Orders (GTOs). Under the CDD Rule, effective since May 2018, certain U.S. financial institutions must establish and maintain procedures to identify and verify the beneficial owners of legal entities that open new accounts. The regulation covers financial institutions that are required to develop AML programs, including, banks, securities brokers and dealers, mutual funds, futures commission merchants, and commodities brokers. Covered financial institutions must collect identifying information on individuals who own 25% or more of legal entities. Since January 2016, Treasury's Financial Crimes Enforcement Network (FinCEN) has issued GTOs to require certain title insurance companies to collect and report identifying information about the beneficial owners of legal entities that conduct certain types of high-end residential real estate purchases. A number of legislative proposals have been introduced related to beneficial ownership disclosure in the 116 th Congress. Some of these legislative proposals, such as H.R. 2513 and S. 1889 , seek in various ways to impose certain duties on those who form corporations, LLCs, partnerships, or other legal entities to disclose their beneficial owners. These proposals would also mandate that such information be more readily available to authorities (such as federal and state law enforcement and regulatory agencies).

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<1. Introduction> Many Members of the 116 th Congress have demonstrated an ongoing interest in Trump Administration efforts to reform the U.S. Agency for International Development (USAID). The reforms, branded Transformation at USAID , target a broad range of programs, structures, and processes in an effort to improve the agency's efficiency and effectiveness. The reform process was initiated by an executive order and an Office of Management and Budget (OMB) memorandum, both issued in 2017. The OMB memorandum called on U.S. government agencies to submit reform plans focused on making the government "lean, accountable, and more efficient." USAID provided several preliminary plans to the State Department (to which USAID reports) and OMB in the summer of 2017, but the internal restructuring initiative began in earnest after Mark Green was confirmed as USAID Administrator in August 2017. USAID submitted its own reform plan to OMB, separate from State, though USAID cooperated with the State Department's "redesign" initiative as well. OMB's government-wide reform plan, "Delivering Government Solutions in the 21 st Century," released in June 2018, prescribed 32 government-wide reforms, several of which directly related to USAID. These included restructuring U.S. humanitarian assistance programs, establishing a new Development Finance Institution to incorporate USAID credit programs, and changing USAID's Washington, DC-based bureau structure. Soon after the release of the OMB report, USAID finalized and began implementing its reforms, newly branded as Transformation . No single public report or other document comprehensively details the Transformation effort or what it encompasses. This CRS report relies on various publications on the USAID website focused on specific reforms or priorities described as being part of the Transformation , the testimony of USAID Administrator Mark Green before Congress on multiple occasions, implementation documents such as the Country Roadmaps and the Private Sector Engagement Strategy, and the new USAID Policy Framework. Each of these sources differs in what they include, and in the emphasis given to different reform components, making it difficult to ascertain the full picture and the prioritization USAID ascribes to the various elements. Role of Congress . Most of the reforms proposed under Transformation do not require congressional approval, but some require advance notification to Congress. Notification does not require congressional action, but it gives Congress the opportunity to weigh in on the action being notified and to apply "holds" (nonbinding but generally respected requests that action be deferred until a related Member concern is resolved). Nevertheless, Administrator Green appears to have actively involved Congress in the shaping and implementation of Transformation and has suggested that he does not intend to move forward without congressional support. Congress has the power to shape USAID reforms through both oversight activities and funding requirements and restrictions. This report analyzes key elements of current USAID reform efforts under the Transformation umbrella. Although the report highlights key reforms and changes in USAID policy and practice, it is not a comprehensive overview of this broad initiative. The report first discusses key objectives of Transformation , then describes several process, structure, and workforce reforms intended to support these objectives, with an emphasis on reforms that are distinct from prior USAID reform efforts. The report concludes with a discussion of broader issues that may be relevant to congressional perspectives on USAID reforms . <2. Transformation Objectives and Historic Context> Transformation at USAID is an implementation framework for reforms that are multifaceted and still evolving. Administrator Green's testimony at April 2018 budget hearings described Transformation as "experience-informed, innovation-driven reforms to optimize our structures and procedures and maximize our effectiveness." In these broad terms, many of the reforms are similar to general government or organization reform efforts in their focus on efficiency and effectiveness. While much of Transformation reflects incremental policy adjustments, several components signal a distinct vision for USAID's role in foreign affairs. As noted, no single public document comprehensively details the components and objectives of Transformation . However, various USAID fact sheets, videos, and statements by Administrator Green since 2018 suggest some of the initiative's key objectives: supporting country transitions toward self-reliant, locally led development; increasing USAID-private sector collaboration in development; supporting U.S. national security strategy; enhancing USAID's core capabilities and strengthening leadership; and using taxpayer dollars more efficiently and effectively. A consistent emphasis across USAID policy documents, including those describing Transformation , is the core objective of "ending the need for foreign assistance" by supporting partner countries' "Journey to Self-Reliance." As Transformation has evolved, moving partner countries toward economic self-sufficiency has become the primary reform objective cited by USAID the one that all the specific reform proposals are designed to support. Other stated objectives, such as advancing national security goals, are deemphasized in later Transformation materials. Many of the proposed Transformation reforms are consistent with efforts by past USAID Administrators. For example, successive Administrations have sought to refine the deployment of foreign assistance to advance U.S. national security, asserting that it should be a major component of U.S. foreign policy strategy. The Obama Administration's USAID Forward initiative focused on bringing new partnerships, innovation, and a renewed focus on results to USAID's work. Under the George W. Bush Administration and Administrator Henrietta Fore, USAID's Development Leadership Initiative focused on building USAID's workforce capacity and leadership. The self-reliance objective at the center of Transformation has been cited as a goal in various USAID document for decades. Nearly every Administration and USAID Administrator has proposed reforms intended to improve USAID's efficiency and effectiveness, and Transformation may be viewed as the latest step in the agency's evolution. <3. Process and Policy Reforms> To implement the objectives and strategic priorities of Transformation , the agency is making several changes to its programs and work processes intended to establish a more flexible and field-responsive approach to programming. Much like the strategic objectives described above, these adjustments build on efforts by previous Administrations, aiming to align USAID's approach to development with the current global landscape. <3.1. The "Journey to Self-Reliance"> The organizing principle for USAID policy reforms under Transformation is the "Journey to Self-Reliance." Self-reliance is Transformation's term for a country's ability to plan, finance, and implement solutions to address their own development challenges absent foreign assistance. To operationalize the concept, USAID produced a matrix comprising 17 existing indicators to quantify countries' progress toward ending their need for foreign assistance. These indicators are maintained by third-party sources, including multilateral institutions, think tanks, and nongovernmental organizations (NGOs). USAID selected these indicators based on their perceived alignment with the self-reliance concept, the reputation of reporting institutions, public availability of the underlying data and methodology, comparability across countries, and comprehensiveness of reporting across countries. This matrix, on which all less-developed countries have been plotted (including nonrecipients of U.S. foreign assistance), divides the indicators into two quantitative measures (see Figure 2 ): Commitment is meant to indicate whether a country's government and its people demonstrate a desire to rise beyond their current condition. Capacity is meant to illustrate whether a country has sufficient resources to assist itself in moving beyond poverty. Taken together, these two indices are meant to provide a comprehensive portrait of a country's development status to inform country-level planning. Under this new approach, USAID's five-year country plans, called Country Development Cooperation Strategies, are to prioritize approaches centered on advancing a country's commitment to self-reliance and augmenting its capacity to achieve it. While USAID has long supported efforts to build partner countries' capacity and emphasized their "ownership" of development programs, the "Journey to Self-Reliance" may be unique in making self-sufficiency the primary goal shaping USAID country strategies. This matrix approach reflects a sweeping theory of development that policymakers and observers have long debated. USAID asserts that the "Journey to Self-Reliance" allows for greater tailoring of country-level programming to the unique challenges facing a given country, while also establishing a common metric applicable across all countries. Although the self-reliance indicators are ostensibly a succinct but holistic portrait of a country's development along 17 indicators, they in fact comprise a wide array of issues. USAID argues that this inclusivity strives for an "absence of judgment" about the relative importance of each metric, which may be interpreted as an effort to integrate many theories of development into the framework. In fact, the indicators selected are especially oriented toward theories that connect economic growth to a country's democratic institutions and its markets. The indicators USAID has selected reflect theories of development that continue to generate debate among researchers and practitioners. For example, the theory that a country must lower its trade barriers (measured by the "Trade Freedom" indicator) to achieve prosperity remains heavily contested in academic circles, particularly for developing countries. In addition, the choice to aggregate these indicators into the two composites of "commitment" and "capacity," rather than a single indicator, reflects some weighting: each of the seven "commitment" indicators contributes relatively more to a country's score than each of the 10 "capacity" indicators. To address such concerns, USAID argues that missions should examine these indicators in their local context and evaluate them based on each country's unique condition and that these indicators do not reflect a comprehensive diagnosis of the causes of development. The Administration's attention to country-level indicators suggests a reorientation from recent approaches. Recent Administrations have focused on broad, global development challenges, such as climate change and the HIV/AIDS crisis, while implementing such initiatives in targeted subnational regions and municipalities. Together, these global challenges and targeted interventions refocused strategic planning away from the country level. USAID describes the "Journey to Self-Reliance" as a high-level profile of a country's national policy and its institutions, in contrast to past initiatives focused on subnational regions. While USAID notes that progress emerges locally, these indicators track progress only at the national level. It is unclear if this approach will affect USAID's relationship with municipal and regional governments. In the past, commentators have expressed concern that such metrics could be used to cut aid to poor performers, punishing people in need for the actions of their national leaders. USAID asserts that these matrices are not scorecards to determine which countries are "deserving" of aid, but instead are a quantitative tool to inform programmatic allocations. Thus, for example, a poor score on open government may cause a mission to direct farmer-support programs through independent NGOs rather than the national government, as the central government may not be trusted to administer its services effectively. While USAID states that it is definitively not grading countries' performance, it is unclear whether the agency will be plotting countries' advancement over time along the self-reliance matrices, as "journey" implies. Considering the significant lag time in many indicators' reporting, as well as variance in reporting periods across indicators, it may be difficult to draw straightforward conclusions about the effect of any program or policy (whether the partner government's or USAID's) upon a country's self-reliance. <3.1.1. Additional Tools: Financing Self-Reliance and Private Sector Engagement> Within the "Journey to Self-Reliance" framework, Transformation emphasizes two primary tools for ending the need for foreign assistance: financing self-reliance and private sector engagement. While many of the self-reliance indicators seek to describe the landscape against which USAID is to deploy its programs, these two components of Transformation seek to provide the tools with which to implement those programs. Financing self-reliance focuses on a country's ability to generate sufficient capital to invest in self-reliance, and private sector engagement seeks to create and partner with a private sector entity through which capital can be invested. <3.1.1.1. Financing Self-Reliance> A key component of USAID's self-reliance approach is facilitating access to capital for countries to reinvest in their own progress, in line with broader recent trends in development finance. This investment approach occupies a central place in several global development frameworks, including the U.N. Sustainable Development Goals (SDG) agenda and multilateral development banks' "billions to trillions" agenda, which seeks to leverage "billions" of Official Development Assistance (ODA) dollars to mobilize "trillions" of private sector investments in developing countries. Similarly, the 2015 Addis Ababa Action Agenda on financing for development affirmed the importance of strong local enabling environments and responsible fiscal policy to encourage country-owned growth strategies. Transformation 's focus on financing self-reliance builds upon existing U.S. approaches and commitments toward achieving the SDGs. It combines efforts to advance domestic resource mobilization (e.g., tax collection) with strong management of public finances and fiscal transparency to enable effective and accountable administration of the public sector. This approach is designed to create a strong market-based "enabling environment" for private investment, that is, one in which private investors are able to operate with reasonable confidence in the rule of law and protection for their investments. The initiative also prioritizes effective financial markets to enable capital access for economic development investments. <3.1.1.2. Private Sector Engagement> Private sector engagement is a central conduit through which Transformation envisions repositioning USAID's role in development and supporting partner country self-sufficiency. USAID released a new Private Sector Engagement Policy (PSE Policy) in April 2019. The approach it outlines is not new, but rather builds on longstanding efforts to leverage the resources of nongovernmental actors, including businesses and charitable foundations, to advance international development. The Global Development Alliance (GDA) program, launched in 2001, has long been USAID's flagship mechanism for incubating and executing public-private partnerships for development assistance. The Obama Administration elevated several such programs when launching the U.S. Global Development Lab (the Lab), an innovation-oriented bureau intended to source breakthrough innovations to address development challenges. The Lab's Development Innovation Ventures (DIV) program, for example, seeks to integrate venture capital approaches into USAID's programs. The Transformation focus on private sector engagement tweaks the existing approach and includes several components not seen in previous Administrations. The Obama Administration generally viewed private sector partnerships as one component of a broader Science, Technology, Innovation, and Partnerships (STIP) agenda. This PSE Policy emphasizes business partnerships as a mechanism to attract solutions from scientists and technology innovators. The "enterprise-driven development" approach articulated in the PSE Policy may be a shift from economic development programs' focus on the market system to a focus on individual enterprises as their programmatic target. While past efforts, such as the GDA program, created partnerships with the private sector to address individual development challenges, the new PSE Policy seeks to infuse a private sector engagement orientation across all programming. The PSE Policy does not clarify the types of private sector partners to be favored. Micro, small, and medium enterprises (MSMEs), for example, a historical focus of USAID programming, are not specifically highlighted, suggesting that this policy may seek to support USAID collaboration with enterprises ranging from multinational corporations to smallholder farmers. Private sector engagement, then, is expected to broaden USAID's partner makeup, integrating nontraditional partners, both in the United States and overseas, by changing the way USAID engages its partners in program design. The PSE Policy is still in early stages of implementation. Many of the tools cited in the strategy have been in place at USAID for several years. The scope and depth of changes in USAID's implementation approach may emerge in the coming months. <3.2. Procurement and Partnering> The USAID Acquisition and Assistance Strategy (A&A Strategy), released in February 2019, gives some indication of the shift in private sector engagement envisioned by Transformation . Restructuring USAID's engagement methodology and sourcing mechanisms is another means by which Transformation aims to build partnerships and promote partner self-sufficiency. Noting that more than 80% of USAID program funds are issued in award and assistance mechanisms to NGOs, the A&A Strategy lays out several shifts to its partnering approach: diversifying USAID's partner base, which has steadily shrunk since 2011; supporting the self-reliance of local partners through capacity building; and establishing a more flexible partnering approach through more collaborative and adaptive award management principles. Reforms from this initiative are still in progress, including the recent launch of a New Partnerships Initiative and expected revisions to USAID's internal series of operational policies, the Automated Directive System. Past experience may inform A&A Strategy implementation. USAID has attempted to expand its partner base in the past, notably under the Obama Administration's USAID Forward initiative. USAID Forward sought to shift funding away from longtime international development firms and NGOs in the U.S. toward organizations based in developing countries, as a means of promoting recipient country "ownership" of their development. The Lab also contributed to new partnering modalities and frameworks such as "co-creation," a model for collaborative program design that is increasingly referenced in USAID's public solicitations. Transformation aims to build on these efforts by highlighting tools that encourage greater collaboration with partners and more adaptive management, consistent with revisions to USAID's process for developing and implementing programs (the "Program Cycle"). <4. Organizational Structure> The structural component of Transformation is meant to align the agency's organization with the Administration's stated goals for U.S. international development and humanitarian assistance. This part of Transformations has been subject to the most direct congressional oversight. USAID submitted nine Congressional Notifications (CN) to the appropriate committees in July and August 2018 detailing the proposed structural changes. Upon receipt, each CN was put on "hold," signaling that committee members wanted to look into the proposed changes further. The Administrator has signaled that he will not make changes without the approval of all four congressional oversight committees. Organizationally, USAID is split into two sections field missions, and headquarters' bureaus and independent offices each with its own key functions and personnel. The headquarters' bureaus and offices are divided among four categories: (1) geographic bureaus, (2) functional bureaus, (3) central bureaus, and (4) independent offices (see Figure 3 ). The geographic bureaus directly correspond with country field missions, while the functional bureaus manage cross-cutting sectoral issues, including education, global health, and humanitarian assistance, among others. The central bureaus and independent offices manage day-to-day agency operations, including human resources, security, legislative affairs, and financial management. <4.1. Leadership Structure Reforms> Under Transformation , USAID is seeking to amend the chain of command to include two new Administration-appointed Associate Administrators. Currently, all bureaus report directly to the Administrator and Deputy Administrator. In the reorganization proposal, the Associate Administrators would each be responsible for three bureaus: The Associate Administrator for Relief, Response and Resilience (R3) would manage the Bureaus for Humanitarian Assistance (HA), Conflict Prevention and Stabilization (CPS), and Resilience and Food Security (RFS). The Associate Administrator for Strategy and Operations would oversee the Bureaus for Legislative and Public Affairs (LPA), Policy, Resources and Performance (PRP), and Management (M). By adding the two Associate Administrators, the Deputy Administrator would be responsible only for overseeing the remaining functional bureaus (Global Health and Development, Democracy and Innovation) and geographic bureaus. In establishing this three-pronged oversight structure, USAID aims to relieve the Administrator of some day-to-day oversight responsibilities, allowing the Administrator greater ability to focus on agency-wide management priorities, and to enable additional, functionally specialized leadership voices to represent the agency on the global stage. Some observers and policymakers have expressed concern with these changes; they worry that adding two political appointees might increase politicization of the agency's development decisions. Beyond the proposed leadership additions, reorganization proposals under Transformation are primarily focused on the headquarters' functional and central bureaus and their respective offices. In broad strokes, the agency is moving from four functional bureaus, six central bureaus/offices, and six independent offices to five functional bureaus, three central bureaus, and four independent offices. (For a detailed chart of the proposed structural changes, see the Appendix . ) Two of the proposed changes are presented in greater detail below. <4.1.1. Bureau for Humanitarian Assistance> Perhaps the most publicized reorganization proposal is the creation of a Bureau for Humanitarian Assistance (HA). This proposal would take the Offices of Food for Peace (FFP) and U.S. Foreign Disaster Assistance (OFDA) out of the Bureau for Democracy, Conflict, and Humanitarian Assistance (DCHA) and combine them into HA. FFP and OFDA would no longer remain separate offices with independent functions; instead, they would be consolidated into one bureau made up of eight offices three geographically focused and five technical. USAID cites two primary reasons for the creation of HA: Elevating U.S. humanitarian assistance on the global stage. The Trump Administration maintains that it has placed a greater emphasis on humanitarian assistance than previous Administrations although such claims are open to debate but that having two separate offices within USAID leads to confusion when articulating U.S. humanitarian efforts to the international community. In merging FFP and OFDA and creating HA, USAID contends that it will have one unified, and more prominent, voice on humanitarian assistance on the global stage. Removing duplication of efforts. FFP and OFDA currently share some of the funding appropriated under the international disaster assistance (IDA) account. In combining the two offices, USAID asserts that it can better manage IDA funds by removing the distinction between food and nonfood assistance. In doing so, USAID states that it will be able to respond more quickly and effectively to today's increasingly complex humanitarian emergencies. Housing the humanitarian offices in a stand-alone bureau is not new to USAID. In the 1990s, the agency had a Bureau for Humanitarian Response, which included both FFP and OFDA as distinct offices. It was not until 2001, after a reorganization, that the humanitarian offices were combined with other functions to become the current DCHA Bureau. The HA structural proposal differs from the Bureau for Humanitarian Response in that it dissolves the FFP and OFDA offices as they currently exist. For a number of years, the humanitarian community has engaged with the U.S. government on issues of efficiency, effectiveness, and coordination of humanitarian assistance. Consultations within the U.S. government, Congress, and the broader humanitarian community continue on HA. Specifically, some say the proposed HA elevates USAID's humanitarian functions and is a positive step forward on reform, while others are more skeptical about its broader impact on interagency cooperation, levels of global humanitarian funding, and U.S. leadership and priorities. Food assistance stakeholders, for example, have raised concerns about the dissolution of FFP. Because FFP receives approximately half of its funding through Title II of the Food for Peace Act, most of which must be used to buy U.S. agricultural commodities, some have expressed concern that without the designation of FFP as an independent office, the provision of U.S. in-kind commodities will decline as a percentage of U.S. emergency food assistance. Further, while the proposal notes that FFP's mandated nonemergency programs would remain in HA, some are concerned that the nonemergency programs will be deemphasized in the new bureau context. These FFP-related concerns have been exacerbated by the Administration's repeated requests to eliminate Title II funding in its annual budget requests. <4.1.2. Bureau for Democracy, Development, and Innovation> The prospective creation of the Bureau for Democracy, Development, and Innovation (DDI) is the largest structural change proposed. It seeks to consolidate the agency's "cross-cutting and sector-specific learning and knowledge management, and other technical assistance," noting that the current structure has left these functions "scattered inconsistent and uncoordinated." The proposal pulls technical staff from regional bureaus and moves offices from three different bureaus into one. The new bureau would include 10 offices from the Bureau for Economic Growth, Education, and Environment (E3), two offices from DCHA, and four centers currently housed in the Global Development Lab. In addition, the bureau would include technical experts previously embedded in regional bureaus. These changes are intended to make DDI the technical "one-stop-shop" for missions in the field. The new DDI would comprise "centers" and "hubs" to provide "missions with coordinated consultancy services," from education and environment to private sector engagement, youth, and gender equality. DDI has emerged as a controversial component of the structural proposal for Transformation . Supporters believe that in creating one place for "centers" and "hubs," field offices will be able to garner more cohesive technical support for their respective programs. Detractors worry that DDI is an amalgamation of offices with unrelated functions, and that its various components will be unwieldy to manage. The Global Development Lab's absorption into a larger bureau, in particular, may cause concern among supporters that innovation in development is set for a demotion among agency priorities. <5. Workforce Management42> Through Transformation , USAID seeks to modify its workforce management structures and processes to strengthen "the ability of its entire workforce to thrive in, and adapt to, increasingly complex and challenging situations and opportunities." These changes include developing and piloting a new noncareer hiring mechanism, developing and operationalizing a leadership philosophy, and establishing and implementing a knowledge management framework. Much like the rest of Transformation , these pieces are described by the agency as being "employee-led," developed by working groups comprising employees from across the agency. <5.1. Hiring Mechanisms: The Adaptive Personnel Project> USAID staff are hired under more than 20 different hiring mechanisms. These include direct-hire (DH) positions, like Civil and Foreign Service, and non-DH positions, including U.S. personal services contractors (USPSCs), fellows, and institutional support contractors (ISCs), among others. DH positions are generally funded using USAID's Operating Expenses (OE) account and come with the full suite of U.S. government benefits. The non-DH positions are primarily funded using program funds, and benefits vary depending on the mechanism. For example, USPSCs have time-limited contracts and receive a subsidy to arrange for their own health care and life insurance on the open market. ISCs are hired through a parent firm and receive their paychecks, health care, and other benefits through that entity. A key element of the Transformation workforce reforms is a new hiring mechanism designed to address staffing concerns raised in the aftermath of USAID's 2014-2016 West Africa Ebola response. At the peak of that outbreak, the agency deployed 94% of its crisis roster, leaving the agency with little capacity to respond to other crises. Recognizing that this staffing challenge could easily arise again, the agency convened a working group in late 2016 to start developing a new hiring mechanism for crisis response. By 2018, the working group comprised approximately 80 USAID employees from different bureaus and under different employment mechanisms (e.g., DHs, USPSCs) and was supported by experts from the National Academy of Public Administration (NAPA). Since its creation, the working group and consequent plans have been folded into the larger context of Transformation . The new proposed mechanism is the Adaptive Personnel Project (APP), a noncareer, excepted service (potentially Schedule B) mechanism. (Excepted service positions are those not in the Senior Executive or competitive services.) USAID contends that the APP would provide the agency with more workforce flexibility, allowing it to more easily surge and contract with the agency's needs and resources. A few USAID-identified features of the APP include the following: Flexible tenure . Positions could be time-limited, much like current USPSC or Foreign Service Limited (FSL) positions (limited to five years and nine years, respectively), but the time limitations would be determined by the relevant hiring managers. This means that the APP could accommodate a 1-year position for a discrete project or a 10-year tenure with an office if the need for the role continues. "Talent-based . " Nonexcepted federal positions are required to be classified, with each role assigned to a group, series, title, and pay band. Once in a group and series, an employee is effectively locked in; in order to move into a different group and series, the employee would need to apply for the new position. USAID is working with the Office of Personnel Management (OPM) to structure the APP to either use a multidisciplinary approach to the classification system or not adhere to the classification system, allowing APP employees to move across different functional areas with relative ease. Equity in benefits . Even though APP would be noncareer, APP employees would receive government benefits like their career counterparts. This is a departure from the USPSC structure. Streamlined processes . USAID would create a common performance management system for all APP hires. The APP pilot would establish 300 positions for the crisis response offices, including FFP and OFDA (the proposed HA Bureau), OTI, and the Bureau for Global Health. USAID anticipates that many current USPSCs, ISCs, and Participating Agency Service Agreement employees (PASAs) would move into these APP positions, ultimately changing the agency's balance of hiring mechanisms. USAID has determined that it requires congressional approval to use program funds for the APP pilot. It notes that it does not have funds from the Operating Expenses account available to fund the pilot and meet the agency's other personnel needs (i.e., funding DH positions). If it receives approvals from Congress and OPM, USAID states that it will move forward with drafting internal policies and procedures to guide the new personnel system. The agency seeks to have the 300 APP positions filled in 2020. If those positions are filled and the onboarding of APP personnel provides the intended flexibilities, USAID is to expand the project to include an additional 1,200 positions in the following two years. <6. Outlook and Potential Issues for Congress> Congress may have several ongoing areas of interest related to U.S. foreign assistance policy and USAID operations and budget. As Members of Congress consider proposed and ongoing USAID reform activities, several cross-cutting issues may emerge, including the following: Role of foreign assistance in broader U.S. foreign policy. At a time when many in Congress have expressed significant concern about the influence of rival powers such as China and Russia in regions in which USAID is active, Members may consider whether the overarching Transformation goal of ending the need for foreign assistance is consistent with U.S. foreign policy and national security interests. U.S. foreign assistance programs are driven by multiple rationales, including supporting U.S. security and diplomatic and commercial interests. Foreign assistance also is widely recognized as a tool of foreign policy, which promotes social and economic development in partner countries, while also enhancing U.S. influence and leverage in those countries. If USAID is successful in ending the need for foreign assistance, Congress and the Administration may consider alternative forms of engagement with current aid partners to maintain U.S. influence and presence. For example, a reorientation to cultural exchange programs like the Fulbright program, as well as increased business ties and investment agreements, may help maintain strong relationships and U.S. influence in countries transitioning away from U.S. aid. USAID f unding . USAID is carrying out Transformation at the same time that the Administration, for a third straight year, has proposed cuts of over 20% to the agency's annual budget. While some of the proposed reforms could reduce agency costs over time, Transformation documents do not appear to specify how the proposed budget cuts, if enacted, would be reflected in program allocation. To date, Congress has not supported the proposed cuts, and appropriations for USAID have remained fairly level in recent years. New positions from r estructuring . The Transformation proposal to add two new Associate Administrator positions at USAID would increase the number of political appointees at the agency, potentially raising concerns about the politicization of USAID's development decisions. Given the challenges some Administrations have faced in filling existing high-level positions, some observers are concerned that the new positions could sit vacant for months or even years possibly further hamstringing future Administrations' policy crafting and implementation. Impact on existing USAID activities. Overall, Transformation focuses on the new new strategies, new indicators, and new hiring mechanisms. There is less discussion of what, if anything, may fall away. For example, in staffing, the agency is creating a hiring mechanism to "streamline" the workforce it discusses plans to eventually phase out one hiring mechanism. This means that as the new hiring mechanism is getting off the ground, the agency would still be managing more than 20 others. Congress may consider asking the agency what other strategies, structures, and processes the agency may plan to phase out or integrate as a result of Transformation . Self- r eliance goals versus c ongressional p riorities. Administrator Green has argued that the self-reliance roadmaps are not just to be used after taking into account congressional directives and country/technical allocations, but as a guide for congressional allocation decisions as well. Congress typically appropriates funds to support priority accounts and sectors (such as global health, basic education, agricultural development, democracy promotion, and women's empowerment) rather than countries. The seeming shift under Transformation to a country-specific aid agenda may conflict with congressional funding of transnational programming, such as countering trafficking and regional trade hubs. Furthermore, the self-reliance indicators themselves may warrant attention. Advising countries that lowering their tariff barriers will signal their commitment to economic prosperity may be difficult to sustain, some may argue, in light of other actions of the Trump Administration, for example. Congress may consult with USAID to ensure its indicator configuration is consistent with its priorities. Other initiatives in Transformation . Transformation was initially launched with several other priorities that do not feature prominently in recent media on the initiative. For example, USAID operational flexibility in nonpermissive environments and programmatic effectiveness in countering violent extremism were core features of Transformation at launch. It is unclear whether these and other priorities have fallen in prominence because they require more interagency coordination, because solutions have been fairly straightforward, because the challenges in those sectors are too intractable to address, or because of other reasons. Congress may also consider seeking additional information on how Transformation would align with the Administration's planned Prosper Africa trade and investment initiative, which is expected to focus, in part, on USAID's three trade hubs in Africa and elements of its trade capacity-building programs. Alignment with State Department . The State Department's Office of Foreign Assistance Resources (F) has maintained a comprehensive database of indicators to quantify the results of U.S. foreign assistance programs since 2006. It is unclear how these indicators, or those used by the Millennium Challenge Corporation, will be used in conjunction with USAID's new self-reliance indicators, if at all. Also unclear is the extent to which the State Department has been engaged with Transformation at USAID, and whether these reforms are aligned with Secretary Pompeo's vision for the future of U.S. diplomatic engagement. Congress may consider whether certain reforms should be broadened to include State Department policies and structure, or elsewhere in government. Impact on Food for Peace programming . The proposed merger of the Offices of U.S. Foreign Disaster Assistance and Food for Peace into the Bureau of Humanitarian Assistance has raised questions about the future of Food for Peace Act Title II programming. The Office of Food for Peace is currently dual-funded, receiving approximately half of its funding through the agriculture appropriations bill and its authorization from regular farm bills. In the proposed HA Bureau, the Office of Food for Peace would cease to exist in name and program officers would be programming food and nonfood assistance side-by-side. Congress has not adopted proposals by multiple Administrations to eliminate Title II programs, and it may seek to further understand how the HA Bureau would be structured to ensure it meets its mandates outlined in the farm bill, including the minimum level of nonemergency programming. <6.1. Appendix. USAID Structural Transformation>

The U.S. Agency for International Development (USAID) has initiated a series of major internal reforms, branded as Transformation at USAID . The reforms are largely in response to Trump Administration directives aimed at making federal agencies more efficient, effective, and accountable. Most of the reforms proposed under this initiative do not involve statutory reorganization, but USAID Administrator Mark Green has sought congressional input as the reform process is developed and launched, especially in the area of changes to USAID organizational structure. Congress has the power to shape USAID reforms through oversight activities, and through funding requirements and restrictions. Some of these proposed reforms are consistent with efforts by past USAID Administrators and do not represent major changes of course for USAID. At the same time, USAID policy documents signal a consistent emphasis on "ending the need for foreign assistance" by supporting partner countries' "journey to self-reliance." This report highlights reforms that represent new or enhanced approaches to achieving longstanding objectives, including the following: Process and p olicy reforms focused on promoting and measuring partner country progress toward economic self-reliance, engaging the private sector in international development, and reforming procurement practices to better support these broader goals. Organizational s tructure reforms intended to enhance the agency's leadership structure, improve the efficiency of humanitarian assistance programming, and consolidate technically specialized offices within the agency. Workforce management reforms, including the creation of a new noncareer hiring mechanism. The figure below depicts the timing of key events of Transformation implementation to date. Congress may view USAID's reform initiatives through longstanding areas of interest and policy questions, including the relationship between the "journey to self-reliance" and broader U.S. foreign policy concerns, including great power competition; the consistency of the "self-reliance" goal with foreign assistance priorities identified by Congress in annual appropriations legislation; potential impacts of significant USAID funding cuts repeatedly proposed by the Trump Administration; potential impacts of proposed new Senate-confirmed management positions on agency operations; implications of replacing existing strategies, indicators, and mechanisms with new strategies, indicators, and mechanisms proposed in the Transformation initiative; the means for prioritizing goals identified in the new USAID Policy Framework and initiatives such as Prosper Africa, which do not seem appear to fall under the Trans formation umbrella; alignment of USAID policies and foreign assistance indicators with those of other U.S. agencies funding and implementing assistance, including the State Department and the Millennium Challenge Corporation; and the effect on food assistance funded by Congress through multiple channels, including the Food for Peace account, of the proposed bureau restructuring and consolidation of the Offices of U.S. Foreign Disaster Assistance and Food for Peace.

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<1. Introduction> Article III, Section I of the Constitution provides that the "judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish." Consequently, Congress determines through legislative action both the size and structure of the federal judiciary. For example, the size of the federal judiciary is determined, in part, by the number of U.S. circuit and district court judgeships authorized by Congress. Congress has, at numerous times over the years, authorized an increase in the number of such judgeships in order to meet the workload-based needs of the federal court system. The Judicial Conference of the United States, the national policymaking body of the federal courts, makes biennial recommendations to Congress to assist it in identifying any U.S. circuit and district courts that may be in need of additional judgeships. The most recent recommendations for new U.S. circuit and district court judgeships were released by the Judicial Conference in March 2019. <1.1. U.S. Circuit Courts> U.S. courts of appeals, or circuit courts, take appeals from U.S. district court decisions and are also empowered to review the decisions of many administrative agencies. When hearing a challenge to a district court decision from a court located within its geographic circuit, the task of a court of appeals is to determine whether or not the law was applied correctly by the district court. Cases presented to U.S. circuit courts are generally considered by judges sitting in three-member panels (circuit courts do not use juries). The nation is divided into 12 geographic circuits, each with a U.S. court of appeals. There is also one nationwide circuit, the U.S. Court of Appeals for the Federal Circuit, which has specialized subject matter jurisdiction. Altogether, 179 judgeships for these 13 circuit courts are currently authorized by law (167 for the 12 regional circuits and 12 for the Federal Circuit). The First Circuit (comprising Maine, Massachusetts, New Hampshire, Rhode Island, and Puerto Rico) has the fewest number of authorized judgeships, 6, while the Ninth Circuit (comprising Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington) has the most, 29. <1.2. U.S. District Courts> U.S. district courts are the federal trial courts of general jurisdiction. These trial courts determine facts and apply legal principles to resolve disputes. Trials are conducted by a district court judge (although a U.S. magistrate judge may also conduct a trial involving a misdemeanor). Each state has at least one district court (there is also one district court in each of the District of Columbia and Puerto Rico). States with more than one district court are divided into judicial districts, with each district having one district court. For example, California is divided into four judicial districts each with its own district court. Altogether there are 91 U.S. district courts. There are 673 Article III U.S. district court judgeships currently authorized by law. Congress has authorized between 1 and 28 judgeships for each U.S. district court. Specifically, the district court for the Eastern District of Oklahoma (Muskogee) has 1 authorized judgeship, the smallest number among U.S. district courts. The district courts located in the Southern District of New York (Manhattan) and the Central District of California (Los Angeles) each have 28 authorized judgeships, the most among U.S. district courts. <2. The Role of Congress in Creating New Judgeships> Congress first exercised its constitutional power to determine the size and structure of the federal judiciary with passage of the Judiciary Act of 1789. The act authorized 19 judgeships, 13 for district courts and 6 for the Supreme Court. Congress, however, began expanding the size of the judiciary almost immediately adding two additional district court judgeships in 1790 and another in 1791. <2.1. Changes in the Number of U.S. Circuit and District Court Judgeships from 1891 through 2018> As the population of the country increased, its geographic boundaries expanded, and federal case law became more complex, the number of judgeships authorized by Congress continued to increase during the 19 th and 20 th centuries. By the end of 1900 Congress had, under Article III, authorized a total of 28 U.S. circuit court judgeships and 67 district court judgeships. By the end of 1950, there were an additional 37 circuit court judgeships authorized (for a total of 65) and 145 additional district court judgeships (for a total of 212). By the end of 2000, there were a total of 179 circuit court judgeships and 661 district court judgeships. At present, there remain 179 circuit court judgeships, while the number of district court judgeships has increased to 673. Figure 1 shows the change, over time, in the number of U.S. circuit and district court judgeships authorized by Congress from 1891 through 2018. <2.1.1. U.S. Circuit Court Judgeships> The largest increase in the number of circuit court judgeships occurred in 1978 during the 95 th Congress when the number of judgeships increased by 35, from 97 to 132. The second-largest increase occurred in 1984 during the 98 th Congress when the number of judgeships increased by 24, from 144 to 168. The next-largest increase in circuit court judgeships also occurred during the 97 th Congress in 1982 the number of circuit court judgeships increased by 12, from 132 to 144. The 12 judgeships authorized by Congress in 1982 were for the newly established U.S. Court of Appeals for the Federal Circuit. The number of circuit court judgeships increased to 179 in 1990 during the 101 st Congress and has remained at that number to the present day. This represents the longest period of time since the creation of the U.S. courts of appeals in 1891 that Congress has not authorized any new circuit court judgeships. <2.1.2. U.S. District Court Judgeships> The largest increase in the number of district court judgeships occurred in 1978 during the 95 th Congress when the number of judgeships increased by 117, from 394 to 511. The next-largest increase in district court judgeships occurred in 1990 during the 101 st Congress when the number of judgeships increased by 74, from 571 to 645. The third-largest increase in the number of district court judgeships occurred in 1961 during the 87 th Congress when the number of judgeships increased by 62, from 241 to 303. The number of permanent district court judgeships increased to 663 in 2003 during the 108 th Congress and has remained at that number to the present day. This represents the longest period of time since district courts were established in 1789 that Congress has not authorized any new permanent district court judgeships. <2.1.3. Ratio of District Court Judgeships to Circuit Court Judgeships> The ratio of the number of authorized district court judgeships to circuit court judgeships has also varied during this period. In 1899 there were 2.3 district court judgeships authorized for every circuit court judgeship (this was the lowest value in the ratio of district to circuit court judgeships). In contrast, in 1970 there were 4.1 district court judgeships authorized for every circuit court judgeship (this was the highest value in the ratio of district to circuit court judgeships). The median ratio of district court judgeships to circuit court judgeships during the entire period (from 1891 through 2018) was 3.5. Most recently, for each year from 2010 through 2018, there were 3.8 district court judgeships for every circuit court judgeship authorized by Congress. <2.2. Temporary Judgeships> In some instances, Congress has authorized the creation of temporary judgeships rather than permanent judgeships. A permanent judgeship , as the term suggests, permanently increases the number of judgeships in a district or circuit, while a temporary judgeship increases the number of judgeships in a district or circuit for a limited period of time. Temporary judgeships are sometimes considered preferable by Congress if a court is dealing with an increased workload deemed to be temporary in nature (e.g., when workload increases as a result of new federal legislation or a recent Supreme Court ruling) or if Congress is uncertain about whether a recent workload increase is temporary or permanent in nature. Once a temporary judgeship is created, Congress may later choose to extend the existence of a temporary judgeship beyond the date it was initially set to lapse or expire. When extending a temporary judgeship, Congress specifies the number of years the judgeship will continue to exist. Congress can also convert a temporary judgeship to a permanent one. If Congress does not extend a temporary judgeship or change it to a permanent one, the temporary judgeship eventually lapses. If a judgeship lapses it means that, for the court with the temporary judgeship, the first vacancy on or after a specified date is not filled. By not filling the first vacancy that arises after a temporary judgeship lapses, the number of judgeships for a court returns to the number authorized by Congress prior to the authorization of the temporary judgeship. At present, there are 179 permanent U.S. circuit court judgeships and no temporary circuit court judgeships. Additionally, there are 663 permanent U.S. district court judgeships and 10 temporary district court judgeships. These temporary judgeships are listed alphabetically by state in Table 1 . <2.3. Legislation Creating New Judgeships Since 1977> Congress has a variety of legislative vehicles at its disposal to establish new U.S. circuit and district court judgeships. Legislation that authorizes new judgeships must pass both the House and Senate (and is also subject to a presidential veto). Such legislation does not always involve either or both of the House and Senate Judiciary Committees. As discussed further below, Congress has sometimes used the appropriations process to provide the judiciary with additional district court judgeships. <2.3.1. Omnibus Judgeship Bills> If it desires to create a relatively large number of judgeships at one time, Congress may choose to use an "omnibus judgeships bill." An omnibus judgeships bill, for the purposes of this report, is either a stand-alone bill or a title of a larger bill concerned exclusively or mostly with the creation of federal judgeships. Since 1977 Congress has enacted three omnibus judgeship bills, with the most recent omnibus bill enacted in 1990. Information related to these three pieces of legislation is presented in Table 2 . Each of the three omnibus bills was first introduced in the House and referred to the House Committee on the Judiciary. The Omnibus Judgeship Act of 1978 passed the House in its final form by a vote of 292-112 and the Senate by a vote of 67-15. The Bankruptcy Amendments and Federal Judgeship Act of 1984 passed the House in its final form by a vote of 394-0 and the Senate by voice vote. Most recently, the Federal Judgeship Act of 1990 passed both the House and Senate in its final form by voice vote. Each of the three bills was passed in a different political context (in terms of whether there was unified or divided party control of the presidency and Congress). In 1978, there was unified Democratic control of the presidency, the Senate, and the House. In 1984, there was divided party control with Republicans controlling the presidency and Senate while Democrats were the majority party in the House. Finally, in 1990, there was also divided party control with Republicans controlling the presidency and Democrats holding majorities in both the Senate and House. Since the last omnibus judgeships bill passed Congress in 1990, the overall workload of U.S. circuit and district courts has increased. From 1990 through the end of FY2018, filings in the U.S. courts of appeals increased by 15%, while filings in U.S. district courts increased by 39%. In terms of specific types of cases, civil cases increased by 34% during the same period, and cases involving criminal felony defendants increased by 60%. For civil cases, the greatest growth occurred in cases related to personal injury liability; many of these filings are part of multidistrict litigation actions involving pharmaceutical cases. <2.3.2. Appropriations and Authorization Bills> In the past, Congress has at times created a relatively smaller number of judgeships through other legislative vehicles. In recent years this has been the most common method of creating new judgeships, with Congress authorizing a relatively small number of new judgeships using appropriations and authorization bills. This has occurred on three occasions in the past 19 years and has involved only the creation of new district court judgeships (not circuit court judgeships). Overall, 34 new district court judgeships were created between 1999 and 2003 using appropriations and authorization bills. Information related to these three pieces of legislation is presented in Table 3 . The Consolidated Appropriations Act of 2000 received final approval in the House by a vote of 296-135 and in the Senate by a vote of 74-24. The District of Columbia Appropriations Act of 2001 passed in its final form in the House by a vote of 206-198 and in the Senate by a vote of 48-43. The 21 st Century Department of Justice Appropriations Authorization Act passed in its final form in the House by a vote of 400-4 and in the Senate by a vote of 93-5. Each of the three bills was passed during periods of divided party control. In 1999 and 2000, Democrats held the presidency while Republicans held both the House and Senate. In 2002, Republicans held the presidency and were the majority party in the House while Democrats were the majority party in the Senate. Congress has also routinely used appropriations bills to extend temporary district court judgeships that were initially authorized in prior years. Additionally, Congress has used an authorization bill to convert several temporary district court judgeships to permanent ones. <2.3.3. Bills That Restructure the Judiciary> Finally, Congress may choose to establish new judgeships when passing an act that would, at least in part, restructure the federal judiciary. This occurred, for example, in 1982 when Congress created the U.S. Court of Appeals for the Federal Circuit. The creation of the Federal Circuit was a partial restructuring of the judiciary by Congress, as it led to merging the U.S. Court of Customs and Patent Appeals with the appellate jurisdiction of the U.S. Court of Claims to create the new Federal Circuit. In creating the new court, Congress authorized 12 permanent circuit court judgeships. <3. Biennial Recommendations by the Judicial Conference for New Judgeships> While Congress is constitutionally responsible for determining the size and structure of the federal judiciary, the judiciary itself can recommend legislation that alters or affects the size and structure of the federal court system. This includes legislation to increase the number of U.S. circuit and district court judgeships (and to identify which judicial circuits and districts are most in need of new judgeships). The Judicial Conference of the United States, the national policymaking body for the federal courts, is the institutional entity within the judiciary that is responsible for making the judiciary's recommendations for new judgeships. The Judicial Conference may recommend to Congress that new judgeships be either permanent or temporary. Additionally, the Judicial Conference may recommend that a temporary judgeship be extended or converted into a permanent one, or that a judgeship serving multiple districts be assigned to a single judicial district or dual districts. The Judicial Conference makes its judgeship recommendations biennially, typically in March or April at the beginning of a new Congress. <3.1. Process Used to Evaluate Need for New Judgeships> In long-standing practice, the Judicial Conference, through its committee structure, periodically reviews and evaluates the judgeship needs of all U.S. circuit and district courts. Specifically, the Conference uses a formal survey process to determine if any courts require additional judges in order to appropriately administer civil and criminal justice in the federal court system. The multistep survey process is conducted biennially by the Conference's Subcommittee on Judicial Statistics and takes into account current workload factors and the local circumstances of each court. The process is very similar for both the courts of appeals and the district courts. First, a court submits a detailed justification for additional judgeships to the Subcommittee on Judicial Statistics. The subcommittee then reviews and evaluates the court's request and prepares an initial recommendation that is given to both the court and the judicial council for the circuit where the requesting court is located. The circuit judicial council itself then reviews the new judgeship request and makes its recommendation to the subcommittee (which subsequently does a second analysis using the most recent caseload data). The subcommittee prepares its final judgeship recommendation for approval by the Committee on Judicial Resources. The committee's recommendation is then provided to the Judicial Conference for final approval (prior to being transmitted to Congress). This multistep evaluation and recommendation process is used for each court that submitted a new judgeship request to the subcommittee. <3.2. Factors Used to Evaluate the Need for New Judgeships> In evaluating a court's judgeship request the Judicial Conference examines whether certain caseload levels have been met, as well as court-specific information that might uniquely affect the court making the request. <3.2.1. Filings per Authorized Judgeship> The caseload levels of the courts determine the standards by which the Judicial Conference begins to consider any requests for additional judgeships. The caseload level of a court is expressed as filings per authorized judgeship, assuming all vacancies on the court are filled. The specific measure or statistic related to case filings that the Judicial Conference examines for U.S. circuit courts is called adjusted filings per panel . The standard used by the Judicial Conference as its starting point for evaluating any judgeship request by a circuit court is 500 adjusted filings per panel (based on authorized judgeships). The specific measure related to case filings that the Judicial Conference examines for U.S. district courts is called weighted filings per authorized judgeship . The standard used by the Judicial Conference as its starting point for evaluating any judgeship request by a district court is 430 weighted filings per authorized judgeship after accounting for any additional judgeships that would be recommended by the Conference. For smaller district courts, however, with fewer than 5 authorized judgeships, the standard used is current weighted filings above 500 per judgeship (since accounting for any new judgeships in the calculation would often reduce, for these smaller courts, the weighted filings per authorized judgeship below the 430 level). <3.2.2. Other Considerations> While caseload statistics are important in evaluating a court's request for additional judgeships, the Judicial Conference also considers court-specific information that might affect the judgeship needs of a particular court. According to the Administrative Office of U.S. Courts, "other factors are also considered that would make a court's situation unique and provide support either for or against a recommendation for additional judgeships." These factors include the availability of senior, visiting, and magistrate judges to provide assistance; geographic factors; unusual caseload activity; temporary increases or decreases in a court's workload; and any other factors that an individual court highlights as important in the evaluation of its judgeship needs. <4. Most Recent Recommendations for New Judgeships (116th Congress)> The Judicial Conference's most recent recommendations to Congress for new circuit and district court judgeships were made in March 2019. The Conference recommended that Congress authorize 5 new circuit court judgeships and 65 new permanent district court judgeships (as well as convert 8 existing temporary district court judgeships to permanent status). <4.1. Judicial Circuits Recommended for New Judgeships> The Judicial Conference recommended that Congress establish five new judgeships for the U.S. Court of Appeals for the Ninth Circuit given its "consistently high level of adjusted filings [per three-judge panel]" and the court's "heavy pending caseload." In June 2018, the Ninth Circuit had 740 adjusted filings per panel (the third highest among the 11 regional circuits). Congressional authorization of 5 additional judgeships for the Ninth Circuit would increase the number of authorized judgeships for the circuit from 29 to 34 and increase the total number of circuit court judgeships, nationally, from 179 to 184. <4.2. Judicial Districts Recommended for New Judgeships> The Judicial Conference recommended that Congress establish 65 new judgeships for 27 judicial districts (with more than one judgeship recommended for some districts) and convert 8 temporary district court judgeships to permanent positions. Figure 2 shows the 27 judicial districts for which the Conference has recommended new judgeships. Of the 27 districts, the Conference recommended the creation of more than one new judgeship in 15 (or 56% of districts). The greatest number of new judgeships, 10, was recommended for the Central District of California (composed of Los Angeles County and six other counties). The Central District of California is the most populous judicial district in the country, with a population of nearly 19.5 million. Of the 73 new district court judgeships recommended by the Judicial Conference (which includes converting 8 temporary judgeships to permanent positions), 45 (or 62%) are recommended for district courts located in the country's three most populous states California, Texas, and Florida. Of the 45 judgeships, 23 are recommended for district courts in California, 11 for courts in Texas, and 11 for courts in Florida. Altogether, there are 10 new judgeships recommended for district courts located in four southwestern states (Arizona, Colorado, Nevada, and New Mexico). There are also nine new judgeships recommended for district courts located in three northeastern states (Delaware, New Jersey, and New York). The remaining nine judgeships are recommended for courts located in other states. Many of the U.S. district courts recommended to receive new judgeships hold court in some of the nation's most populous cities including, but not limited to, Dallas (Northern District of Texas); Houston (Southern District of Texas); Jacksonville (Middle District of Florida); Los Angeles (Central District of California); New York City (Southern District of New York); Phoenix (District of Arizona); San Antonio (Western District of Texas); San Diego (Southern District of California); San Francisco (Northern District of California); and San Jose (Northern District of California). <4.2.1. U.S. District Courts Identified as Having Urgent Need for New Judgeships> During the Judicial Conference's March 2011 proceedings, the Conference authorized the Director of the Administrative Office of U.S. Courts to pursue separate congressional legislation for Conference-approved additional judgeships for certain district courts meeting a designated threshold of weighted filings. The purpose of such a policy change was to enable the Director "to focus Congress' attention on those courts determined to have the greatest need based on specific parameters." The Conference's most recent recommendations identified six district courts with an urgent need for new judgeships, stating that these particular courts "continue to struggle with extraordinarily high and sustained workloads." These district courts include the Western District of Texas, Eastern District of California, Southern District of Florida, Southern District of Indiana, and the Districts of New Jersey and Delaware. The "severity of conditions" in these districts, according to the Conference, "require immediate action." Consequently, the Conference urged Congress "to establish, as soon as possible, new judgeships in those districts." The Conference's final judgeship recommendations describe select caseload statistics for each of these six district courts. These descriptions, provided in part below, are based upon the biennial survey process conducted by the Conference's Subcommittee on Judicial Statistics. The Conference's recommendations, quoted at length below, note the change in different types of filings that occurred between September 2017 and June 2018. The September 2017 date was used as the "cut-off date" by the subcommittee to make its initial judgeship recommendations (it was the most recent date for which the subcommittee had caseload data prior to the start of the survey process). The June 2018 reporting date was used by the subcommittee to make its final judgeship recommendations (it was the most recent date for which the Conference had caseload data available prior to submitting its recommendations to Congress). Western District of Texas . From September 2017 to June 2018, overall filings in the court increased by 13% "due to an increase in criminal felony filings. Criminal filings rose 28 percent due to a 48 percent increase in immigration filings. The increase was partially offset by moderate declines in drug and fraud prosecutions. Criminal filings are now the highest in the nation at 644 per judgeship. The number of civil cases filed fell three percent as declines in prisoner petitions and private contract litigation more than offset increases in tort actions, copyright litigation, and patent filings." The Conference also notes that the number of supervised release hearings declined 11% but is currently more than twice the national average at 109 per judgeship. Eastern District of California . The "number of civil cases filed [excluding contract actions related to a multidistrict litigation action] rose four percent as cases related to the Fair Debt Collection Practices Act more than doubled and prisoner petitions rose substantially, more than offsetting a decline in real property litigation. Civil filings continue to exceed 700 per judgeship, among the highest in the nation [even if the multidistrict litigation action is excluded]. The number of criminal felony filings rose 12 percent as a result of increases in most types of offenses, the largest of which occurred in firearms prosecutions." The Conference also notes that criminal filings in the Eastern District of California, at 99 per judgeship, remain below the national average. Southern District of Florida . The overall filings in the district "rose two percent due to moderate increases in both civil and criminal filings. The number of civil cases filed rose three percent as increases in insurance contract cases, torts filings, and civil rights litigations were partially offset by declines in Fair Labor Standards Act cases, prisoner petitions, cases related to the Fair Debt Collection Practices Act, and social security appeals....The number of criminal felony filings increased two percent as increases in most offense types, the largest of which occurred in fraud prosecutions, more than offset" a decline in drug, burglary, larceny, and theft filings. The Conference also notes that the district court's pending caseload "remains substantially below the national average." Southern District of Indiana . Since September 2017, "the court experienced an influx of over 2,200 personal injury product liability filings related to a multidistrict litigation (MDL) action in which the district serves as the transferee court. Apart from these cases, overall filings fell two percent as a decline in civil filings was partially offset by an increase in criminal filings. The number of civil cases filed decreased four percent as declines in social security appeals, civil rights cases, and federal prisoner petitions were partially offset by an increase in state prisoner petitions. The number of criminal felony filings rose 16 percent due almost entirely to a 63 percent rise in firearms prosecutions." The Conference also notes, however, that criminal filings in the Southern District of Indiana, at 108 per judgeship, remain "slightly below" the national average. District of New Jersey . Excluding certain types of cases, "overall filings rose 10 percent due to increases in both civil and criminal felony filings. The number of civil cases filed ... also rose 10 percent due primarily to increases in copyright litigation, civil rights actions, ERISA filings, land condemnation cases, and social security appeals. A 27 percent increase in criminal filings results from higher number of firearms, drug, fraud, and immigration prosecutions." Additionally, the pending caseload for the court "nearly doubled as a result of the influx of personal injury product liability cases." The Judicial Conference also notes that "despite the increase, criminal filings are among the lowest in the nation at 36 per judgeship." District of Delaware . From September 2017 to June 2018, "overall filings rose seven percent due to an increase in civil filings. The number of civil cases filed rose eight percent due almost entirely to a 20 percent increase in patent litigation. The court has the highest number of patent filings in the nation, which have risen substantially since the Supreme Court's May 2017 decision in TC Heartland LLC v. Kraft Foods Group Brands LLC , which modified the venue standards for patent infringement lawsuits.... Civil filings are now well above the national average at 518 per judgeship." In contrast, the "number of criminal felony filings declined ... as filings of all offense types remained relatively stable." Additionally, in its recommendation, the Judicial Conference states that criminal filings in the District of Delaware "are the 2 nd lowest in the nation at 21 per judgeship." <4.2.2. Weighted Case Filings of Judicial Districts Recommended for New Judgeships> As discussed above, the specific statistic used by the Judicial Conference to compare caseloads across U.S. district courts is the number of weighted filings per authorized judgeship for each court. Figure 3 shows the number of weighted filings per judgeship for each of the 27 district courts included in the Conference's most recent recommendation to Congress. The national average of 521 weighted filings per authorized judgeship is shown by the reference line in the figure. For the 27 district courts where the Judicial Conference recommends additional judgeships (including conversion of existing temporary judgeships to permanent status), weighted filings averaged 646 per authorized judgeship. Of the 27 district courts recommended to receive additional judgeships, 5 courts have caseloads that fall below 500 weighted filings per authorized judgeship; 6 have 500 to 599 weighted filings; 8 courts have 600 to 699 weighted filings; 4 courts have 700 to 799 weighted filings; 1 court has 800 weighted filings; and 3 courts have more than 1,000 weighted filings. The five districts listed in Figure 3 with the greatest number of weighted filings are among the six U.S. district courts discussed above as having the most urgent need for additional judgeships (the remaining district, the Southern District of Florida, has the seventh-highest number of weighted filings). A plurality of the U.S. district courts listed in Figure 3 last had a permanent judgeship authorized in 1990 (10 of 27, or 37%). Another 8 district courts last had a permanent judgeship authorized prior to 1990 (2 in 1984, 5 in 1978, and 1 in 1954). And 9 district courts last had a permanent judgeship authorized after 1990 (1 in 1999, 5 in 2000, and 3 in 2002). Several of the courts listed in the figure have weighted filings that fall below the national average (521 weighted filings per judgeship), including the District of Nevada, Northern District of Iowa (Cedar Rapids), District of Puerto Rico, Western District of North Carolina (Charlotte), and the District of Kansas. As noted previously, a court's caseload is not the only factor the Judicial Conference considers in evaluating a court's judgeship needs. Consequently, the Conference's recommendations can be based, in part, on additional factors. For example, in its evaluation of the judgeship needs for districts where weighted filings are below the national average, the Conference identifies various reasons why it recommends additional judgeships. Some of the reasons include a substantial decline in senior judge assistance in handling cases, the geographic challenges associated with managing workload imbalances between different courthouses in the district, a high pending caseload relative to other district courts in the nation, and a number of criminal filings that is well above the national average. <5. Options for Congress> As discussed above, Congress determines through legislative action the size of the federal judiciary. Consequently, creating additional U.S. circuit and district court judgeships requires congressional authorization of such judgeships. Such authorization can be accomplished by passing legislation devoted solely to judgeships (i.e., "omnibus judgeships bills") or by including the authorization in an appropriations bill or other legislative vehicle. Congress may decide not to authorize additional circuit and district court judgeships. If Congress were to authorize such judgeships, it has several options available to it. These include (but are not limited to) the following: Adopting all of the most recent recommendations of the Judicial Conference by creating 5 additional permanent judgeships for the Ninth Circuit and 65 additional permanent judgeships for the district courts specified by the Conference (as well as converting 8 temporary district court judgeships to permanent status). Adopting, in part, the recommendations of the Judicial Conference by creating additional permanent circuit and/or district court judgeships for some of the courts identified by the Conference's biennial review process as needing additional judgeships. Adopting, in part, the Conference's recommendations by authorizing new judgeships only for the six U.S. district courts identified by the Conference as having the most urgent need for such judgeships. It might also include only adopting the Conference's recommendations for converting eight temporary judgeships to permanent status. As presented in Table 1 , each of the current temporary judgeships is set to lapse in 2020 if not further extended or made permanent by Congress. Authorizing new judgeships for circuit and/or district courts that were not recommended for additional judgeships by the Judicial Conference (such judgeships might be permanent or temporary). Congress might conclude on the basis of its own review that there is a need for such judgeships in other courts not included in the Conference's most recent recommendations. For example, the Judicial Conference only assesses a circuit court's need for additional judgeships if at least a majority of active judges serving on the court approve of a request for additional judgeships. Congress may nonetheless decide to authorize additional judgeships for circuit courts where this threshold has not been met. Authorizing new judgeships for some of the courts recommended by the Judicial Conference as needing new judgeships, as well as authorizing new judgeships for other courts not included in the Conference's most recent recommendations.

Congress determines through legislative action both the size and structure of the federal judiciary. Consequently, the creation of any new permanent or temporary U.S. circuit and district court judgeships must be authorized by Congress. A permanent judgeship , as the term suggests, permanently increases the number of judgeships in a district or circuit, while a temporary judgeship increases the number of judgeships for a limited period of time. Congress last enacted comprehensive judgeship legislation in 1990. Since then, there have been a relatively smaller number of district court judgeships created using appropriations or authorization bills. The Judicial Conference of the United States, the policymaking body of the federal courts, makes biennial recommendations to Congress that identify any circuit and district courts that, according to the Conference, require new permanent judgeships to appropriately administer civil and criminal justice in the federal court system. In evaluating whether a court might need additional judgeships, the Judicial Conference examines whether certain caseload levels have been met, as well as court-specific information that might uniquely affect a particular court. The caseload level of a court is expressed as filings per authorized judgeship, assuming all vacancies on the court are filled. The Judicial Conference's most recent recommendation, released in March 2019, calls for the creation of five permanent judgeships for the U.S. Court of Appeals for the Ninth Circuit (composed of California, eight other western states, and two U.S. territories). The Conference also recommends creating 65 permanent U.S. district court judgeships, as well as converting 8 temporary district court judgeships to permanent status. In making its recommendations to Congress, the Judicial Conference also identifies any courts that might have the most urgent need for new judgeships. These courts are considered, by the Conference, to have extraordinarily high and sustained workloads. In its most recent recommendations, the Conference identified six U.S. district courts it considers to have the most urgent need for new judgeships to be authorized by Congress.

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<1. Introduction> When Congress considers legislation, it takes into account the proposal's potential budgetary effects . This helps Members to weigh the legislation's merits, and to consider whether it complies with the budgetary rules that Congress has created for itself. While information on the potential budgetary effects of legislation may come from numerous sources, the authority to determine whether legislation complies with congressional budgetary rules is given to the House and Senate Budget Committees. In this capacity, the budget committees generally rely on estimates provided by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT). As described in the following section, cost estimates provided by CBO and JCT are guided by certain requirements that Congress has articulated in different forms. These requirements are not completely prescriptive, however, and as a result both CBO and JCT adopt practices and conventions that guide the creation of cost estimates. Generally, CBO and JCT estimates include projections of the budgetary effects that would result from a proposed policy and incorporate anticipated individual behavioral responses to the policy. The estimates, however, do not typically include the macroeconomic effects effects on the overall size of the economy of those individual behavioral responses. Congress has sometimes required that JCT and CBO provide estimates that incorporate such macroeconomic effects. These estimates are often referred to as dynamic estimates or dynamic scores . This report provides information on the authorities and requirements under which cost estimates are prepared, as well as a summary of the debate surrounding dynamic cost estimates, and previous rules and requirements related to dynamic estimates. Currently, no congressional rules explicitly require dynamic estimates, and Congress may examine what rules changes, if any, are needed in the area of dynamic estimates. This report, therefore, includes information on options for the creation of dynamic scoring rules, and general considerations for Congress related to dynamic estimates. <2. Authorities and Requirements Under Which Cost Estimates are Prepared> Cost estimates provided by CBO and JCT are guided, in part, by certain requirements that have been articulated by Congress in different forms, as described below. <2.1. The Congressional Budget Act> The Congressional Budget Act (CBA) requires that CBO prepare cost estimates for all bills reported from committee, "to the extent practicable." The CBA also requires that (1) CBO rely on estimates provided by JCT for revenue legislation and (2) CBO include in its estimates "the costs which would be incurred" in carrying out the legislation in the fiscal year in which the legislation is to become effective, as well as the four following years, together with "the basis for such estimate." <2.2. The Baseline> When conducting cost estimates, CBO and JCT measure the budgetary effect of a legislative proposal in relation to projections of revenue and spending levels that are assumed to occur under current law, typically referred to as baseline levels. This means that the way a policy is reflected in the baseline will affect how CBO and JCT estimate a related policy. In calculating the baseline, CBO makes its own technical and economic assumptions, but the law generally requires that CBO assume that spending and revenue policies continue or expire based on what is currently slated to occur in statute. For example, CBO's baseline must assume that temporary tax cuts such as those enacted in 2017 actually do expire. The baseline, therefore, shows an increase in the level of revenue expected to be collected after the tax cut provisions expire in law. Therefore, a legislative proposal to continue those tax cut provisions would be scored as increasing the deficit. Although baseline calculations generally require that direct (mandatory) spending program levels reflect what is scheduled to occur in law, important exceptions exist for many direct spending programs. In particular, any program with estimated current year outlays greater than $50 million is assumed to continue to operate under the terms of the law at the time of its expiration. This means that some programs that are slated in law to expire are assumed to continue in the baseline. A legislative proposal that sought to merely continue those expired programs would therefore not be scored as new spending. <2.3. Scorekeeping Guidelines> When creating cost estimates, CBO adheres to scorekeeping guidelines, which are "specific rules for determining the budgetary effects of legislation." These general guidelines are used by the scorekeepers the House and Senate Budget Committees, CBO, and the Office of Management and Budget (OMB) to ensure that each group uses consistent and established practices. The 17 scorekeeping guidelines include general principles, such as a requirement that mandatory spending provisions included in appropriations bills be counted against the Appropriations Committee spending allocation, and direction on how asset sales are to be scored. The guidelines have been revised and expanded over the years, and any changes or additions to the scorekeeping guidelines are first approved by each of the scorekeepers. <2.4. Chamber Rules and the Budget Resolution> Congress sometimes directs the creation and content of cost estimates through chamber rules and provisions contained in budget resolutions. As described subsequently, House rules have sometimes explicitly required CBO and JCT to include in cost estimates information on a policy proposal's projected macroeconomic feedback effects. Similarly, Congress has also used the budget resolution to provide direction on how a policy ought to be estimated. For example, budget resolutions have included provisions requiring that transfers from the Treasury's general fund to the Highway Trust Fund be counted as new spending. Similarly, budget resolutions have stated that certain policies cannot be counted as offsets, such as Federal Reserve System surpluses transferred to the Treasury's general fund, as well as increases or extensions of Freddie Mac and Fannie Mae guarantee fees. <2.5. The Budget Committees and Tax Committees> Congressional committees may also shape the content or creation of cost estimates. The House and Senate Budget Committees have jurisdiction over CBO, and the CBA specifies that CBO's "primary duty and function" is to assist the budget committees. Oversight of CBO, as well as the creation and content of cost estimates is, therefore, under the jurisdiction of the House and Senate Budget Committees, and the budget committees provide related guidance to CBO. For the JCT, the creation and content of its estimates may be shaped by the committee itself, or by guidance or assumptions of the tax committees the House Committee on Ways and Means and the Senate Committee on Finance. <3. Overview of Dynamic Estimating> Generally, CBO and JCT estimates include projections of the budgetary effects that would result from proposed policy changes, and incorporate anticipated individual behavioral responses to the policy. The estimates, however, do not typically include the macroeconomic effects of those individual behavioral responses (such as changes in labor supply and the capital stock) that would alter GDP. For example, if an increase in the corporate tax rate caused corporations to use more debt, conventional estimates would take into account the loss of revenue since the returns from debt are taxed more lightly than the returns from equity, and this loss in revenue would offset the revenue gain calculated by multiplying the change in the tax rate by corporate income. The conventional estimate would not, however, take into account the lost revenue from a reduction in income if the rate increase caused a decline in investment, which affects production. These estimates without macroeconomic effects are sometimes imprecisely referred to as "static," but are referred to in this report as conventional estimates because they take into account many behavioral responses. In contrast, a dynamic score aims to account for legislation's macroeconomic effect, by incorporating changes to (1) aggregate demand for goods and services to increase output in an underemployed economy and/or (2) aggregate supply of goods and services ( supply - side effects ) to increase potential output. For example, dynamic scoring can include fiscal stimulus effects that increase aggregate demand. These effects occur when the economy is underemployed (for example, during and after a recession), and increased spending either by the government or from taxpayers after a tax cut can expand the economy through multiplier effects and cause output to move closer to potential output. These effects are referred to subsequently as demand - side effects . Supply-side effects occur if potential output is altered due to changes in investment or savings that increase the capital stock, labor supply, or productivity. The crowding-out (or -in) effect occurs when an increase (or decrease) in the deficit reduces (or increases) funds available for private investment and hence reduces (or increases) the capital stock. <3.1. Increased Interest in Dynamic Estimating> Congressional interest in dynamic estimating has increased in recent decades. This interest may be attributed to the increase in the number of House and Senate rules restricting budgetary legislation. Because bills and resolutions are expected to comply with these congressional rules, estimates of a measure's fiscal impact arguably become more important. Interest in dynamic scoring is also likely related to recent advancements in economic analysis and economic modeling that make estimating macroeconomic feedback effects possible. <3.2. Views on Dynamic Estimating> Both proponents and opponents of dynamic estimating point to accuracy and consistency as their primary objectives. Some have suggested that dynamic scoring is useful, but only under certain circumstances. <3.2.1. Arguments for Dynamic Estimating> Arguments in favor of dynamic scoring include the view that dynamic scoring provides a more accurate assessment of budgetary impact than conventional scoring, particularly for some types of legislative proposals, and that conventional estimating methods produce a projection that does not reflect the actual expected impact on revenues. Under this argument, dynamic scoring makes use of all available information, and excluding macroeconomic feedback effects "amounts to throwing away valuable information." It has also been argued that including macroeconomic effects can improve Congress's ability to compare competing policy proposals. Arguments in favor of dynamic scoring state that these estimates are required for the sake of consistency, especially for large legislative packages that would likely affect the economy. As stated above, a legislative proposal's budgetary impact is measured against a baseline, and that baseline takes into account macroeconomic assumptions. It is, therefore, argued that certain legislative proposals should also take into account economic assumptions. If such legislation were to be enacted into law, CBO would then build that policy into its baseline, and would have to make assumptions about the macroeconomic feedback effects that would be expected to occur under those policies. It is only consistent, the argument goes, to use macroeconomic feedback effects in the initial estimate of the legislation as well. Advocates for dynamic scoring also state that not using a dynamic approach to measure the impact of policy changes biases the legislative process against policy proposals that are designed to encourage productive economic activity. Some have argued that under conventional estimating methods, the impact of a cut in the marginal tax rates, for example, is viewed (through the lens of budgetary outcomes) less favorably than it should be. It has also been argued that, methodologically, the production of quality dynamic estimates is now possible due to technical advances in modeling and analysis, and an increase in evidence showing public responses to policy changes. Some have pointed out that both CBO and JCT are capable of producing dynamic estimates, and JCT staff have stated that, with regard to macroeconomic estimates, "we think we have been producing reasonable results for over a decade (though we welcome comments and discussion)." <3.2.2. Arguments Against Dynamic Estimating> Likewise, arguments against dynamic estimates also point to concerns about accuracy and consistency. Those who oppose the use of dynamic scoring argue that projected macroeconomic feedback effects are too uncertain to be relied upon as accurate projections of budgetary outcomes. Projecting macroeconomic feedback effects requires economic modeling, and it has been said that "because reasonable people can disagree about what model, and what parameters of that model, are best, the results from dynamic scoring will always be controversial." Previous macroeconomic analyses by CBO and JCT have yielded a range of estimates depending on what type of model is used and the underlying behavioral assumptions in each model. With assumptions about the behavioral responses that determine macroeconomic feedback being so uncertain, it has been argued that there is consistency in assuming, for all legislative proposals, that GDP remains the same, regardless of changes in tax or spending policy. Arguments against dynamic scoring often point to potential problems with cost estimating in general, but note that under dynamic scoring these vulnerabilities may be exacerbated. For example, as mentioned above, all cost estimates are inherently uncertain. Dynamic estimates are always subject to more uncertainty, even for relatively simple tax changes, because of the uncertainty of taxpayer responses (such as consumer spending and labor supply). In contrast, many conventional estimates (such as the effect of rate changes in the tax code or changes to exemptions and deductions) may be estimated quite precisely because data are readily available on income levels and family characteristics. Similarly, while cost estimates generally might always have the potential to be perceived as subject to manipulation by political forces, it has been argued that this possibility is exacerbated with dynamic scoring, which might damage the budget process's credibility. <3.2.3. Arguments for Dynamic Estimating Under Certain Circumstances> Some have argued that dynamic estimates would be useful for Congress but only in certain situations. It has been argued that dynamic estimates should be provided by CBO and JCT but only for "major proposals" such as those that have a large estimated budgetary impact or those designated as "major" by either majority or minority committee and/or chamber leadership. (Recent dynamic scoring rules [discussed below] used a similar threshold.) It has been stated that neither CBO nor JCT have sufficient time or staff to carefully estimate the macroeconomic effects of every proposal for which they must conduct an estimate. (To this end, it has also been argued that dynamic estimates should be conducted only when CBO and JCT have the time and tools necessary to conduct the analysis.) Further, it has been stated that dynamic estimates should be conducted for spending as well as revenue proposals because each have the potential to produce notable macroeconomic effects. (As stated below, in some years dynamic estimates were required only for revenue legislation.) It has also been argued that dynamic estimates should be provided for discretionary spending as well as direct/mandatory spending. As stated below, even when dynamic scoring requirements applied to spending as well as revenue, these rules excluded discretionary spending legislation (i.e., appropriations legislation). <3.3. Previous Dynamic Scoring Rules and Requirements> While committees and Members continue to have the ability to request that CBO or JCT provide dynamic estimates for certain policies or legislative proposals, for the first time in decades there are no explicit congressional rules or requirements that pertain specifically to the preparation or use of such estimates. As described below, rules related to dynamic estimates have varied over the years. <3.3.1. 1997-2002> In January 1997, the House first adopted a rule that explicitly mentioned dynamic estimates. It stated that a dynamic estimate provided by JCT could be included in the committee report accompanying "major tax legislation" (as designated by the House majority leader), but that the estimate could be used "for informational purposes only." The rule, which was in effect through 2002, defined a dynamic estimate as "a projection based in any part on assumptions concerning probable effects of macroeconomic feedback" and required that the estimate include a statement identifying all such assumptions. When the new rule was adopted in January 1997, JCT staff hosted a symposium entitled "Modeling the Macroeconomic Consequences of Tax Policy." According to JCT This symposium presented the results of a year-long modeling experiment by economists noted for their work in developing models of the U.S. economy. The purpose of this experiment was to explore the predictions of a variety of models regarding the macroeconomic feedback effects of major changes in the U.S. tax code with a focus on evaluating the feasibility of using these types of results to enhance the U.S. budgeting process. <3.3.2. 2003-2014> In January 2003, the House replaced its previous dynamic scoring rule with a more extensive rule, which remained in effect through 2014. Whereas the previous rule had permitted a dynamic estimate to be included in a committee report, the new House rule required it. Further, whereas the previous rule had applied only to bills designated as "major tax legislation," the new rule applied to any bill reported by the House Committee on Ways and Means that proposed to amend the Internal Revenue Code. The new rule also omitted the previous provision that explicitly required the estimate be "used for informational purposes only." The new rule no longer used the term "dynamic estimate" but instead used the term "macroeconomic impact analysis," which the rule defined as an estimate provided by JCT "of the changes in economic output, employment, capital stock, and tax revenues expected to result from enactment of the proposal." The estimate was required to identify critical assumptions and the source of data underlying that estimate. Around the time of the rule's adoption in 2003, the JCT released a report providing an overview of the joint committee's efforts to model macroeconomic effects of proposed tax legislation. While varying in length and detail, the macroeconomic analyses provided by JCT during this period (2003-2014) included information on the expected macroeconomic effects (if any) of the proposed legislation, provided general conclusions, and sometimes provided a range of potential budgetary effects using different models and different assumptions within models. The analyses did not include a specific dollar amount or point estimate . These analyses also reported details of the effects on different aspects of the economy (such as labor supply, output, and capital stock). In addition, the estimates often referenced the model(s) used for the analysis. During this time the JCT used four different types of models. Crucially, all of these models incorporated the impact of supply-side effects in their dynamic estimates. Only the MEG and GI model also incorporated demand-side effects (for a brief discussion of these effects, see " Overview of Dynamic Estimating "). The models are briefly described below: 1. MEG: a macroeconomic growth (MEG) model that incorporates aggregate demand effects similar to those in most economic forecasting models and includes labor and savings responses. (This model falls into a class of steady state growth models called Solow models, discussed below.) 2. OLG: an overlapping generations (OLG) life-cycle model that assumes that generations of individuals optimize choices of consumption and leisure over a lifetime and cannot include demand-side effects. 3. GI: a Global Insight (GI) private econometric forecasting model that captures demand-side effects. 4. DSGE: a domestic stochastic general equilibrium (DSGE) model that assumes that individuals optimize over infinite lifetimes and often does not, without modification, capture aggregate demand effects to decrease unemployment. In the past the JCT also had different behavioral responses within models (e.g., a high and low labor supply response in MEG). During this period, the JCT prepared five published macroeconomic estimates of legislative proposals: one (in 2003, for the Jobs and Growth Tax Relief Reconciliation Act, P.L. 108-27 ) that used MEG, GI, and OLG; two that used MEG only (the 2009 economic stimulus legislation and the 2009 Affordable Care Act) and two that used MEG and OLG (a bill extending bonus depreciation in 2014 and the Tax Reform Act of 2014). Several bills were examined but were too small for a macroeconomic analysis. The GI model was dropped after 2003, and the DSGE model was introduced in 2006. That model did not allow unemployment. None of the published analyses of legislation used the DSGE model. The JCT also provided illustrative analysis for different types of proposals on two occasions: to compare individual rate cuts, corporate rate cuts, and increases in the personal exemption in 2005 and to examine a revenue-neutral tax cut that broadened the individual income tax base and lowered the rate in 2006. The first analysis used MEG and the second used the MEG, OLG, and DSGE models. <3.3.3. 2015-2018> During this period, dynamic estimates were required to be conducted for revenue and mandatory spending legislation that met the threshold of "major legislation" under both a House rule and budget resolutions. <3.3.3.1. House Rule> In 2015, the House replaced its former rule with House Rule XIII, clause 8. The new rule, which was in effect through 2018, expanded the type of legislation for which dynamic estimates were to be conducted to include not just revenue proposals, but also mandatory spending proposals. This meant that the rule now required dynamic estimates from CBO as well as JCT, but only for "major legislation," which was defined as (1) legislation that would be projected (in a conventional cost estimate) to cause an annual gross budgetary effect of at least 0.25% of projected U.S. GDP, (2) mandatory spending legislation designated as major legislation by the chair of the House Budget Committee, or (3) revenue legislation designated as major legislation by the chair or vice chair of the JCT. Although not explicitly stated in the new rule, the rules change resulted in dynamic estimates, for the first time, including a point estimate (i.e., a specific dollar amount) as opposed to a range of potential budgetary outcomes. Under this rule, the estimates would incorporate the budgetary effects of changes in economic output, employment, capital stock, and other macroeconomic variables resulting from such legislation. The estimate was, to the extent practicable, to include a qualitative assessment of the long-term budgetary effects and macroeconomic variables of such legislation, and to identify critical assumptions and the source of data underlying the estimate. <3.3.3.2. Budget Resolutions> During this period, Congress also used the budget resolution to direct CBO and JCT to provide dynamic estimates. The budget resolutions agreed to by both the House and Senate for fiscal years 2016 and 2018 included provisions that required dynamic estimates in both houses for the 114 th and 115 th Congresses. The requirements included in these provisions were very similar to the House rule described above. The dynamic estimates were required to be conducted for revenue and mandatory spending legislation that met the threshold of "major legislation." Major legislation was again described as legislation that would be projected (in a conventional cost estimate) to cause an annual gross budgetary effect of at least 0.25% of projected U.S. GDP, but this version of the rule excluded any legislation that met this criterion as a result of a timing shift. To accommodate the Senate's constitutional authority to approve treaties, the rule expanded the definition of major legislation to include any treaty with an impact of at least $15 billion in that fiscal year. And the definition of major legislation also included any mandatory spending legislation designated as major legislation by the chair of the House or Senate Budget Committee, or revenue legislation designated as major legislation by the chair or vice chair of the JCT. As with the House rule, these estimates were required to incorporate the budgetary effects of changes in economic output, employment, capital stock, and other macroeconomic variables resulting from such legislation. The estimate was, to the extent practicable, to include a qualitative assessment of the long-term budgetary effects and macroeconomic variables of such legislation, and to identify critical assumptions and the source of data underlying the estimate. For the Senate provision applying to the 115 th Congress, the estimates were to include the distributional effects across income categories, to the extent practicable. Although not explicitly stated in the provisions, the requirements resulted in dynamic estimates, including a point estimate (i.e., a specific dollar amount) as opposed to a range of potential budgetary outcomes. Although the House and Senate Budget Committees might presumably have used such point estimates as the official estimate for the purposes of budget enforcement (under the authority granted by Section 312 of the CBA), the Senate Budget Committee communicated that the dynamic estimates would be used for informational purposes only. <3.3.3.3. Estimating Practices> Estimates during the 2015-2018 period included a point estimate that provided a conventional estimate and the macroeconomic effects for a 10-year period. The JCT currently uses the three models previously discussed: MEG, OLG, and DSGE. In the past the JCT also had different behavioral responses within models (e.g., a high and low labor supply response in MEG). In 2014 JCT had only the MEG and OLG models; the first introduction of the DSGE model in a published estimate for legislation was in 2017. Discussions of the DSGE model in 2018 suggested that it now allowed unemployment. CBO has two models that assume full employment. One is a long-term model that CBO refers to as a "Solow growth model" and the other is a life cycle model. (The Solow growth model is similar to the long-term growth aspects of MEG and the life cycle model is an OLG model. The similarities reflect the way they incorporate behavioral responses.) The Solow model has stronger and weaker labor supply responses and the OLG model has alternative assumptions about how the model was to be closed and whether local or worldwide interest rates predominated. CBO also has a separate short-term model that can capture fiscal stimulus that reduces unemployment, while JCT combines short-term and long-term effects in its MEG and DSGE models. Beginning in 2003, JCT and CBO presented results from more than one model and with different behavioral assumptions within models. Beginning in 2015, when point estimates were provided, the JCT reported a single estimate that was a weighted average of the various models' point estimates. JCT provided information on the weights used, but did not separately report the different models' point estimates when more than one model was used. Also, in contrast to past informational macroeconomic modeling, there was no reported sensitivity analysis within the models (sensitivity analysis effectively measures how macroeconomic effects may change under different behavioral assumptions, such as how much a change in tax rates affects labor supply). In the four analyses that JCT reported on, in the first two cases (in 2015) only MEG, with the high rather than the low labor response assumption, was used. In the case of the major 2017 tax revision, MEG was weighted at 40%, OLG at 40%, and DSGE at 20%. In the final case, MEG was weighted at 40% and OLG and DSGE were each weighted at 30%. CBO and JCT jointly estimated the effects of some bills associated with repeal of the Affordable Care Act or modification of that act (JCT estimated certain tax provisions and CBO estimated the other provisions). JCT used the MEG model and CBO used its Solow model along with its short-term model, each with a single set of labor supply responses. CBO had been preparing macroeconomic analyses of the President's budget since 2003, reporting the results from multiple models and assumptions. When CBO prepared its standard analysis of the President's budget in 2015 and 2016, the analysis continued to report the results from both models, along with estimates of immigration's effect on productivity, with sensitivity analysis within the models leading to 16 different estimated effects on GDP over 10 years ranging from 0.7% to 2.8%. CBO has not prepared any subsequent macroeconomic analyses of the President's budget. <4. Considerations for Congress> Currently, no House or Senate rules explicitly require the preparation or use of dynamic estimates, and Congress may choose to examine what rules changes, if any, are needed in the area of dynamic estimates. While committees and Members continue to have the ability to request that CBO or JCT provide dynamic estimates for certain policies or legislative proposals, at some point Congress may choose to reinstitute explicit rules related to such dynamic estimates. These requirements could be articulated as formal direction from the committees of jurisdiction or leadership to JCT and CBO. Alternatively, as was done previously, these requirements might be included in chamber rules or in budget resolutions, or might be included in a standing order or in statute. If Congress were to reinstitute explicit rules related to dynamic estimates, it may choose to consider many facets of such potential rules: Will there be a threshold for the creation of such estimates? Should the proposal also allow the legislation to be designated as "major" by either majority or minority committee and/or chamber leadership? Should CBO and JCT provide dynamic estimates only for "major proposals," such as those that have a large estimated budgetary impact? If so, what will be the threshold for major? Past rules have used a measure equal to 0.25% of GDP. Would the effect on GDP be measured by the entire legislation, or would it be triggered by an individual provision or group of provisions (such as revenue raisers or revenue losers in a tax bill) that met the threshold? The latter approach would capture revenue-neutral legislation that nevertheless made significant changes that could affect GDP. Should rules for dynamic estimates apply to spending as well as revenue proposals since both have the potential to cause notable macroeconomic effects? And if the rule applies to spending, will it apply to discretionary spending that varies from the baseline as well as direct/mandatory spending? What information should be included in such estimates? Practices prior to 2015 provided insight into how sensitive the results were to choice of model and parameters. The JCT has also continued to present information on the parameters of its models that lead to behavioral responses. The justification for assigning model weights might also be addressed in more detail. Should dynamic estimates be used only for informational purposes, or also for enforcement purposes? Dynamic estimates allow Congress to weigh the merits of the legislation should they also be used to determine whether the legislation complies with the budgetary rules that Congress has created for itself? Should additional resources be provided to CBO and JCT so that they might develop greater capacity for providing dynamic estimates?

When Congress considers legislation, it takes into account the proposal's potential budgetary effects. Although this information may come from numerous sources, Congress generally relies on estimates provided by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) when determining whether legislation complies with congressional budgetary rules. Generally, CBO and JCT estimates include projections of the budgetary effects that would result from proposed policy changes, and incorporate anticipated individual behavioral responses to the policy. The estimates, however, do not typically include the macroeconomic effects of those individual behavioral responses that would alter gross domestic product (GDP). In recent decades, however, Congress has sometimes required that JCT and CBO provide estimates that incorporate such macroeconomic effects (effects on overall economic output—GDP). These estimates are often referred to as dynamic estimates or dynamic scores . Proponents of dynamic estimates have argued that such estimates provide a more accurate assessment of budgetary impact than conventional scoring, and that they can improve Congress's ability to compare competing policy proposals. Proponents argue that dynamic estimates are important for the sake of consistency, and that by not including dynamic effects, the legislative process is biased against policy proposals designed to encourage productive economic activity. Opponents of dynamic estimates argue that estimates of macroeconomic feedback effects are too uncertain to be relied upon as accurate projections of budgetary outcomes. Opponents of dynamic estimates have stated that, with assumptions about the behavioral responses that determine macroeconomic feedback being so uncertain, there is consistency in assuming, for all legislative proposals, that GDP remains the same, regardless of changes in tax or spending policy. Between 1997 and 2018, congressional rules existed that required JCT or CBO to provide dynamic estimates under certain circumstances. These congressional rules and requirements varied, sometimes permitting the creation of dynamic estimates, and sometimes requiring it. During this period, some dynamic estimates provided a range of potential budgetary outcomes, while some included a point estimate . During this period, dynamic estimates were used only for informational purposes, as opposed to being used to determine whether Congress was complying with its budgetary rules. In some cases, published estimates showed wide variation in estimated results depending on the model type and assumptions. While committees and Members continue to have the ability to request that CBO or JCT provide dynamic estimates for certain policies or legislative proposals, for the first time in decades there are no explicit congressional rules or requirements that pertain specifically to the preparation or use of such estimates. If Congress were to reinstitute explicit rules related to dynamic estimates, it may choose to consider many facets of such a potential rule, such as whether a threshold should exist for the creation of such estimates (i.e., should such estimates be provided only for "major legislation"); whether dynamic estimates should be provided for spending as well as revenue proposals; what types of information should be included in such estimates; whether dynamic estimates should be used only for informational purposes, or also for enforcement purposes; and whether additional resources ought to be provided to CBO and JCT so that they might develop greater capacity for providing dynamic estimates.

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The Livestock Mandatory Reporting (LMR) Act of 1999 ( P.L. 106-78 , Title IX; 7 U.S.C. 1635 et seq. ) amended the Agricultural Marketing Act of 1946 (7 U.S.C. 1621 et seq. ) to require that meat packers report prices and other information on purchases of cattle, swine, and boxed beef (wholesale cuts of beef) to the U.S. Department of Agriculture (USDA). Lamb and lamb meat were added through initial rulemaking, and the act was amended to include wholesale pork in 2010. In September 2015, Congress reauthorized LMR until September 30, 2020, in the enacted Agriculture Reauthorizations Act of 2015 ( P.L. 114-54 ). In past reauthorizations, most livestock industry stakeholders have supported reauthorization of the act and put forward proposals amending mandatory reporting. This report provides an overview of LMR and its legislative and rulemaking history; a description of the LMR program; and issues that the cattle, swine, and lamb industries have raised with USDA that could be considered during possible reauthorization. Information on House and Senate bills that would reauthorize LMR will be added should they become available. <1. Background and History> Before Congress enacted LMR in 1999, the USDA Agricultural Marketing Service (AMS) collected livestock and meat price and related market information from meat packers on a voluntary basis under the authority of the Agricultural Marketing Act of 1946. AMS market reporters collected and reported prices from livestock auctions, feedlots, and packing plants. The information was disseminated through hundreds of daily, weekly, monthly, and annual written and electronic USDA reports on sales of live cattle, hogs, and sheep and wholesale meat products from these animals. The goal was to provide all buyers and sellers with accurate and objective market information. By the 1990s, the livestock industry had undergone many changes, including increased concentration in meat packing and animal feeding, production specialization, and vertical integration (firms controlling more than one aspect of production). Fewer animals were sold through negotiated (cash or "spot") sales, while an increasing number of purchases were made under alternative marketing arrangements (e.g., formula purchases based on a negotiated price established in the future). These formula purchases were based on prices not publicly disclosed or reported. Some livestock producers, believing that such arrangements made it difficult or impossible for them to assess "fair" market prices for livestock going to slaughter, called for mandatory price reporting for packers and others who process and market meat. USDA had estimated in 2000 that the former voluntary system was not reporting transactions of the order of 35%-40% of cattle, 75% of hogs, and 40% of lambs. During initial debate in Congress on LMR, opponents, including some meat packers and other farmers and ranchers, argued that a mandate would impose costly new burdens on the industry and could cause the release of confidential company information. Nonetheless, some of these early opponents ultimately supported an LMR law. Livestock producers had experienced low prices in the late 1990s and were looking for ways to strengthen market prices. Some meat packers also supported a national consensus bill at least partly to preempt what they viewed as an emerging "patchwork" of state price reporting laws that could alter competition among packers operating under different state laws. <2. Legislative and Rulemaking History> LMR was enacted in October 1999 as part of the FY2000 Agriculture appropriations act. (See Table 1 , "Legislative and Rulemaking History.") The law mandated price reporting for live cattle, boxed beef, and live swine and allowed USDA to establish LMR for lamb purchases and lamb meat sales. The law authorized appropriations as necessary and required USDA to implement regulations no later than 180 days after the law was enacted. LMR was authorized for five years, until September 30, 2004. USDA issued a final rule on December 1, 2000. Although reporting for lamb was optional in the LMR statute, USDA established mandatory reporting for lamb in the final rule. The rule was to be implemented on January 30, 2001, but USDA delayed implementation until April 2, 2001, to allow for additional time to test the automated LMR program to ensure program requirements were being met. The implementation of LMR did not affect the continuation of the AMS voluntary price-reporting program. AMS continues to publish prices from livestock auctions and feeder cattle and pig sales through voluntary-based market news reports. LMR authority lapsed for two months in October 2004 before Congress extended it for one year to September 30, 2005. Authority for LMR lapsed again on September 30, 2005. At that time, USDA requested that all packers who were required to report under the 1999 act continue to submit required information voluntarily. About 90% of packers voluntarily reported, which allowed USDA to continue to publish most reports. In October 2006, Congress passed legislation to reauthorize LMR through September 30, 2010. This act also amended swine reporting requirements from the original 1999 law by separating the reporting requirements for sows and boars from barrows and gilts, among other changes. Because statutory authority for the program had lapsed for a year, USDA determined that it had to reestablish regulatory authority through rulemaking in order to continue LMR operations. On May 16, 2008, USDA issued the final rule to reestablish and revise the mandatory reporting program. This rule incorporated the swine reporting changes and was intended to enhance the program's overall effectiveness and efficiency based on AMS's experience in the administration of the program. The rule became effective on July 15, 2008. Mandatory wholesale pork price reporting was not included in the original LMR act because the swine industry could not agree on reporting for pork. Section 11001 of the 2008 farm bill ( P.L. 110-246 ) directed USDA to study the effects of requiring packers to report the price and volume of wholesale pork cuts, which was a voluntary reporting activity at the time. The study was released in November 2009 and concluded that there would be benefits from a mandatory pork reporting program. On September 27, 2010, the President signed into law the Mandatory Price Reporting Act of 2010 ( P.L. 111-239 ), reauthorizing LMR through September 30, 2015. The act added a provision for LMR of wholesale pork cuts, directed USDA to engage in negotiated rulemaking to make required regulatory changes for mandatory wholesale pork reporting, and established a negotiated rulemaking committee to develop these changes. The committee was composed of representatives of pork producers, packers, processors, and retailers. The committee met three times, was open to the public, and developed recommendations for mandatory wholesale pork reporting. USDA released the final rule on August 22, 2012, and the regulation was implemented on January 7, 2013. The Agriculture Reauthorizations Act of 2015 ( P.L. 114-54 ) was enacted into law on September 30, 2015, extending LMR to September 30, 2020. P.L. 114-54 included amendments to swine and lamb reporting and addressed certain issues that livestock stakeholders had raised about LMR. (See " LMR Provisions Enacted in 2015 " below.) <2.1. LMR Provisions Enacted in 2015> The Agriculture Reauthorizations Act of 2015 ( P.L. 114-54 ) extended LMR through September 30, 2020, and established the negotiated formula purchase reporting category for swine. A negotiated formula purchase is a purchase of swine based on a formula, negotiated on a lot-by-lot basis, in which the swine are committed to packers and scheduled for delivery no later than 14 days after the formula is negotiated. The enacted legislation also amended swine LMR by requiring the reporting of the low and high range of net swine prices to include the number of barrows and the number of gilts within the ranges and the total number and weighted average price of barrows and gilts. Lastly, the act requires that next-day reports include transaction prices that were concluded after the previous day's reporting deadlines. P.L. 114-54 amended lamb reporting regulations to redefine lamb importers and lamb packers . Importer is defined as an entity that imports an average of 1,000 metric tons (MT) of lamb meat per year during the immediately preceding four years. The original threshold was 2,500 MT. If an importing entity does not meet the volume limit, the Secretary of Agriculture may still determine that an entity should be considered an importer. Lamb packer is defined as an entity having 50% or more ownership in facilities, including federally inspected facilities, that slaughtered and processed an average of 35,000 head per year over the immediately preceding five years. The original threshold was 75,000 head. Also, the Secretary may consider other facilities to be packers based on processing plant capacity. Lastly, the reauthorization required USDA to study the price-reporting program for cattle, swine, and lamb. The study, to be conducted by AMS and the USDA Office of the Chief Economist, was directed to analyze current marketing practices and identify legislative and regulatory recommendations that are readily understandable; reflect current market practices; and are relevant and useful to producers, packers, and other market participants. AMS submitted the report to Congress in April 2018. <3. The LMR Program> LMR requires livestock buyers and sellers of meat products to report prices and other characteristics of their transactions. Ten types of transactions are reported for livestock, and each is described below. Several other marketing terms are defined in the text box following the description of transactions. Lastly, there is a discussion of LMR confidentiality requirements, AMS reporting, and enforcement measures. <3.1. LMR Livestock Transaction Types> Some types of transactions required under LMR are for specific livestock, such as cattle or swine, others cover all covered species. Negotiated purchase: a cash or "spot" market purchase by a packer of livestock from a producer under which the base price for the livestock is determined by seller-buyer interaction and agreement on a delivery day. Cattle are delivered to the packer within 30 days of the agreement. Swine are delivered within 14 days. Negotiated grid purchase (cattle): the negotiation of a base price, from which premiums are added and discounts are subtracted, determined by seller-buyer interaction and agreement on a delivery day. Cattle are usually delivered to the packer not more than 14 days after the date the livestock are committed to the packer. Forward contract: an agreement for the purchase of livestock, executed in advance of slaughter, under which the base price is established by reference to publicly available prices. For example, forward contracts may be priced on quoted Chicago Mercantile Exchange prices or other comparable public prices. Formula marketing arrangement: the advance commitment of livestock for slaughter by any means other than a negotiated or negotiated grid purchase or a forward contract using a method for calculating price in which the price is determined at a future date. Swine or pork market formula purchase: a purchase of swine by a packer in which the pricing mechanism is a formula price based on a market for swine, pork, or a pork product other than a future or option for swine, pork, or a pork product. Negotiated formula purchase (swine): a purchase of swine based on a swine/pork market formula that is negotiated lot-by-lot and scheduled for delivery and committed to the packer within 14 days of the negotiation. The sales are reported as producer- or packer-sold. Other market formula purchase: a purchase of swine by a packer in which the pricing mechanism is a formula price based on one or more futures or options contracts, and the sales are reported as producer- or packer-sold. Other purchase arrangement: a purchase of swine by a packer that is not a negotiated purchase, swine or pork market formula purchase, negotiated formula, or other market formula purchase and does not involve packer-owned swine. The sales are reported as producer- or packer-sold. Packer-sold swine: the swine that are owned by a packer (including a subsidiary or affiliate of the packer) for more than 14 days immediately before sale for slaughter and sold for slaughter to another packer. Packer-owned: livestock that packers (includes a subsidiary or affiliate of swine packers) own for at least 14 days immediately before slaughter. Information such as weight and dressing percent is reported on packer-owned livestock. <3.2. Meat Transactions> Meat packers are also required to report negotiated sales, formula sales, and forward contracts for boxed beef, boxed lamb, carcass lamb, and wholesale pork. Negotiated sales : a wholesale pork, boxed beef, or boxed lamb trade in which a price is determined by seller and buyer and is scheduled for delivery no more the 14 days from the date the price is established. Formula marketing arrangements: agreements in which the price is determined based on publicly available quoted prices. Forward sales: a wholesale pork, boxed beef, or boxed lamb sale in which the price is determined by seller and buyer and the delivery is scheduled beyond the time of a negotiate sale (over 14 days). Export sales: meats that are delivered outside the United States but not to Canada or Mexico. <3.3. Livestock Transaction Data> Figure 1 and Figure 2 show the monthly percentage since 2002 of cattle and swine purchases by transactions type. Both demonstrate the long-term declining trend in negotiated purchases and the move to formula-based purchases. In January 2002, almost 50% of cattle were traded on a negotiated basis, but negotiated purchases amounted to about 25% of purchases in May 2019. The declining trend in negotiated purchases in swine has gone from 17% in January 2002 to less than 2% in February 2019. AMS does not report the number of lambs sold on a formula basis because of confidentiality requirements. Throughout 2017 AMS was unable to report formula purchases in its National Weekly Lamb Report that included both lamb negotiated and formula purchases because of confidentiality requirements. AMS stopped publishing the report in December 2017. In 2016, about 40% of lambs were purchased on a negotiated basis and 60% on a formula basis. Currently, AMS reports the number of lambs, their weight and price range, and the weighted average price of purchased lambs on a negotiated basis, as well as comprehensive information that includes the average weight, net price, and dressing percent that combines negotiated and formula purchase information. Sufficient data are not available to publish all of the regular LMR transactions due to the limited number of transactions. <3.4. Selected Reporting Requirements> The text box above provides definitions of selected marketing terms that are used in LMR reports. The following sections discuss some of the main LMR reporting requirements, a description of confidentiality, and AMS reporting and enforcement of LMR. The complete LMR reporting requirements for cattle, swine, lamb, beef, pork, and lamb meat are in the LMR statute (7 U.S.C. 1635 et seq. ) and the LMR regulations (7 C.F.R. Part 59). LMR reports are available at the AMS Livestock, Poultry, and Grain Market News Portal . A description of selected reporting requirements under the LMR, and of the entities that are subject to them, follow. Packers that are subject to mandatory reporting are defined as federally inspected plants that have slaughtered a minimum annual average of 125,000 head of cattle, 100,000 head of swine, 200,000 head of sows and boars or a combination thereof, or 35,000 lambs during the immediate five preceding years. If a plant has operated for fewer than five years, USDA determines, based on capacity, if the packer must report. Packers are required to report the prices established for steers and heifers twice daily (10 a.m. and 2 p.m. central time), for cows and bulls twice daily (10 a.m. central for current day and 2 p.m. for previous-day purchases), barrows and gilts three times daily (7 a.m. central for prior-day purchases and 10 a.m. and 2 p.m. central), sows and boars once daily (7 a.m. central for prior-day purchases), and lambs once daily (2 p.m. central). Besides the established prices, packers report premiums and discounts and the type of purchase transaction for example, negotiated sales, formula sales, or forward contracts. Depending on the species, packers are required to report the quantity delivered for the day; the quantity committed to the packer; the estimated weight on a live weight basis or a dressed weight basis; and quality characteristics, such as quality grade. In addition to daily reporting, on the first reporting day of the week, packers file a cumulative weekly report of the previous week's purchases of steers, heifers, and swine. Lamb packers are required to report the previous week's purchases on the first and second reporting day of the week, depending on the data. Steer and heifer and lamb packers are to include data on type of purchase (negotiated, formula, or forward contract), premiums and discounts, and some carcass characteristics (e.g., quality grade and yield, average dressing percentage). Swine packers are required to report the amount paid in premiums that are based on noncarcass characteristics (e.g., volume, delivery timing, hog breed). Also, packers must provide producers a list of such premiums. In addition to livestock purchase prices, packers are required to report sales data for boxed beef, wholesale pork, and carcass and boxed lamb. Sales are reported twice daily for beef and pork and once daily for lamb. Packers are required to provide price, quantity, quality grade for beef and lamb, and type of cut. Packers must also report beef and pork domestic and export sales and domestic boxed lamb sales. Lamb importers who have imported a minimum average of 1,000 MT of lamb in the immediate four preceding years are required to report weekly lamb prices; quantities imported; the type of sale (negotiated, formula, or forward contract); cuts of lamb; and delivery period. <3.5. Confidentiality> The LMR law requires that price reporting be confidential to protect packer identity, contracts, and proprietary business information. In determining what data could be published, AMS initially adopted a "3/60" confidentiality guideline, which is commonly used throughout the federal government. Under 3/60, at least three entities must report in the regional or national reporting area, and no single entity may account for more than 60% of the reported market volume. Because of concentration in the livestock industry, AMS found that the "3/60" guideline resulted in large gaps in data reporting. For example, between April 2, 2001, and June 15, 2001, 24% of daily reports and 20% of weekly reports were not published because of confidentiality provisions. In order to address the data gaps, in August 2001 AMS adopted a "3/70/20" guideline, which requires that (1) at least three entities report 50% of the time over the most recent 60-day period, (2) no single reporting entity may account for more than 70% of reported volume over the most recent 60-day period, and (3) no single reporting entity may be the only reporting entity for a single report more than 20% of the time over the most recent 60-day period. These new guidelines eliminated most of the data gaps. <3.6. AMS Reporting> The Livestock, Poultry, and Grain Market News Division of the AMS Livestock, Poultry, and Seed Program is responsible for compiling and disseminating the information collected under LMR. It continues to operate a voluntary reporting program for livestock, poultry, and grain not covered under LMR. Under LMR, AMS publishes 24 daily cattle reports, 20 daily swine reports, and 2 daily lamb reports, and on a weekly basis, 21 cattle reports, 2 swine reports, and 3 lamb reports. It also publishes daily 6 boxed beef reports, 4 wholesale pork reports, and 1 boxed lamb and 1 lamb carcass report, and weekly 11 boxed beef reports, 10 wholesale pork reports, and 1 boxed lamb and 1 lamb carcass report. AMS also publishes 13 monthly cattle reports under LMR. According to AMS, LMR provides data for 78% of total slaughtered cattle, 94% of hogs, and 43% of sheep. For meat products, LMR covers 93% of boxed beef production, 87% of wholesale pork, and 43% of boxed lamb. Small operations that fall below required thresholds or nonfederally inspected meat packing facilities account for the remaining percentage of livestock slaughter and meat production. AMS market news operates on an annual appropriation of about $34 million, and the LMR program accounts for about $4 million of that amount. <3.7. Enforcement> AMS compliance staff enforces LMR through audits once every six months. AMS accomplishes this by reviewing support documentation for randomly sampled lots. AMS classifies noncompliance as major or minor violations. Major violations occur when packers do not submit information or submit incorrect information that affects the accuracy of reports. Minor violations are submissions that have typographical or data entry errors, for example, but have a minimal effect on report accuracy. If noncompliance is found, AMS will ask the packer to correct the problem. If the packer does not correct the problem, AMS may issue a warning letter and conduct additional audits. Ultimately, AMS could fine the packer $10,000 for each violation if corrective action is not taken. Packing plants have the right to appeal any noncompliance findings within 30 days of receiving a request for corrective action. In FY2015, AMS switched from quarterly plant visit reports to semiannual compliance reports on plant visits. For FY2018, AMS issued 369 noncompliance violations (270 major and 99 minor) during audits of 457 plants and 4,389 audited lots. <4. Issues for Reauthorization in 2020> As part of the 2015 reauthorization study requirement, AMS held several meetings with cattle, swine, and lamb industry stakeholders to gather feedback on the LMR program. Stakeholders represented at the meetings included industry associations, farm groups, meat processors and food companies. In several cases AMS has already implemented reporting changes to address industry concerns. A common concern among stakeholders is the limited volume of the negotiated purchase market (see Figure 1 and Figure 2 ). Other concerns cited went to issues of confidentiality and the need for greater clarity in how transactions are categorized in reports. Some stakeholders want to see more detailed information on transactions, such as premiums, especially as pricing models evolve, as well as changes in reporting on the number of livestock committed to packers. The sections below provide summaries of the baseline study and stakeholder feedback. <4.1. Baseline Study> In response to the report requirements in the 2015 reauthorization, AMS commissioned a baseline study that explored underlying changes in the livestock and meat markets that affect LMR. The study's findings include the following: 1. Since LMR was established, the meatpacking industry has become more concentrated and vertically integrated. Many producers are also looking to vertical integration to remain competitive. 2. The industry is responding to domestic and global consumer meat demand with product differentiation and a mix of new products that did not exist when LMR began. 3. Livestock and meat are traded differently than they were 20 years ago as negotiated trades represent a smaller share of transactions, while formula pricing, forward contracts, and other arrangements comprise an increasing share of the total trade. 4. There are new platforms for pricing, such as internet auctions, that did not exist in early years of LMR. The industry is likely to continue to develop other platforms that vary greatly from traditional trading of livestock and meat. The study's authors concluded that the loss of LMR data during the 2013 government shutdown left the industry without a benchmark to accurately evaluate the markets. During the 2018-2019 shutdown AMS continued LMR reporting. Further structural changes concentration and integration in the livestock industry create challenges for confidentiality in reporting. In addition, the effectiveness of LMR as a means of providing relevant information for market participants may need to be assessed in the context of changes, such as introduction of branded or specialty programs that are not captured by LMR as it is currently structured. Also, with international trade in meat increasing, the inclusion of more market information on exported meat products could add to transparency in the market. Lastly, the study noted that timely AMS collaboration with the industry is crucial to the usefulness of LMR. Stakeholders in the cattle, swine, and lamb industries provided a range of comments and suggestions during their meetings with AMS, and these are summarized below. <4.2. Cattle Industry> Cattle stakeholders did not offer legislative recommendations to AMS but suggested changes to LMR reporting. AMS has already addressed some cattle stakeholder concerns. For example, cattle stakeholders raised concerns about how AMS reports delivery periods for negotiated purchases. A period of 15-30 days for deliveries was added in 2008, but AMS was unable to report data because of confidentiality guidelines. Instead data was reported as deliveries of 0-30 days. In response, AMS conducted a study of delivery periods, and in November 2017 it began reporting weighted average negotiated cattle prices for delivery periods of 0-14 and 15-30 days. AMS has also adjusted reporting so that negotiated purchases delivered beyond 30 days are separate from forward contract purchase. Some in the cattle industry expressed the need for greater reporting of committed cattle. For example, hog packers report each morning the number of hogs they have committed to take delivery of during the next 14 days. Conversely, some cattle stakeholders disagree that additional data on committed cattle is needed, pointing out that cattle market numbers are smaller than swine numbers, and therefore the information could be misleading. <4.3. Swine Industry> Stakeholders in the swine industry also expressed concern about the low volume of transactions in the negotiated markets. They were also skeptical about whether LMR can adequately capture market information related to changes in consumer preferences for pork such as organic, antibiotic-free, raised without sow crates, or pork raised without the growth promoter ractopamine. In general, swine stakeholders also want AMS to report more noncarcass premiums, revise its reporting on the pork cutout (cut up parts of the carcass), and provide guidance on how transactions are categorized. Swine stakeholders offered the following six recommendations for legislative changes to LMR: 1. Remove the "negotiated formula purchase" definition and reporting requirement for swine that was included in the 2015 LMR reauthorization; 2. Amend the definition of non-carcass merit premium to more clearly differentiate the reporting requirements from premiums offered for carcass merit; 3. Define and report swine attributes, specifically addressing how attribute premiums, base prices, and net prices are reported by purchase type; 4. Amend the definitions of affiliate to lower the threshold of ownership or control to anything greater than 0 percent; 5. Add to reporting the volume of swine or pork market formula transactions that are priced on the pork carcass cutout; and 6. Remove the requirement for reporting wholesale pork on a free-on-board (FOB) Omaha basis. Wholesale pork is reported on an FOB plant basis and FOB Omaha basis, but most of the pork industry now uses FOB plant as the basis for pricing. <4.4. Lamb Industry> The U.S. sheep and lamb industry is a concentrated market that results in price-reporting challenges not necessarily experienced by the larger cattle and hog sectors. As a result, AMS is no longer able to publish lamb formula purchases because too few companies purchase the volume needed to meet reporting confidentiality guidelines. At the request of the lamb industry, AMS commissioned a study of lamb data and confidentiality. The study found that it is not feasible to relax confidentiality guidelines but suggested alternatives such as publishing a comprehensive report, which AMS has done, and developing a standardized pricing model that would produce a price based on the relationship of various reporting attributes. The lamb stakeholders raised concerns that AMS was not capturing price information for cooperative-owned lambs and for custom slaughtered lambs. AMS addressed the cooperative owned lamb issue in November 2017 by adding these lamb prices and their carcass weight information to its weekly sheep report. Under custom slaughter, ownership does not change. A producer's lambs are slaughtered on contract and are usually priced on a per-head basis. The lamb carcasses may then be sold to a lamb processor for fabrication (processing the carcasses into various cuts), but prices are not reported to AMS. Lastly, some stakeholders requested reporting of the number of lambs committed to be delivered to packers. However, the industry is not in agreement on reporting of committed lambs because of concern among some that this information would provide market information to import competitors. Lamb stakeholders involved in discussions with AMS proposed that three amendments be included in the reauthorization of LMR: 1. Lower the reporting threshold for lamb packers from 35,000 head per year on average to 20,000 head per year on average. 2. Define and require reporting of custom slaughtered lambs. 3. Define and require reporting of committed lambs. <5. Congressional Interest> LMR, as enacted and amended over the past 20 years, has increased market transparency for all market participants and livestock analysts. Livestock stakeholders have been generally supportive of LMR and its reauthorization over the years. The five-year reauthorization period has provided an opportunity for Congress to receive input from livestock stakeholders and evaluate whether or not the law and its implementation is fulfilling its purpose. This has proven especially critical when the industry is constantly changing and adapting to market and consumer demands. The 2015 reauthorization law that required that USDA provide a report to Congress on the LMR program offers a potential starting point for Congress to consider for possible 2020 reauthorization. Livestock stakeholders have offered specific proposals for Congress to consider should it choose to address reauthorization legislation. Other recommendations may be forthcoming. AMS regularly engages the livestock industry on LMR reporting issues and makes changes to reporting. During consideration of reauthorization, Congress may consider legislation to bolster LMR and whether AMS needs additional regulatory authority to address LMR issues. Stakeholders may have particular interest in adjusting confidentiality requirements for lamb reporting and expanding reporting requirements for certain attributes that address changing livestock markets.

The U.S. Department of Agriculture's (USDA) Agricultural Marketing Service (AMS) collects livestock and meat price data and related market information from meat packers under the authority of the Agricultural Marketing Act of 1946 (7 U.S.C. §1621 et seq. ). This information was collected on a voluntary basis until 2001, when most of it became mandatory. As the livestock industry became increasingly concentrated in the 1990s, fewer animals were sold through negotiated (cash or "spot") purchases and with increasing frequency were sold under alternative marketing arrangements that were not publicly disclosed under voluntary reporting. Some livestock producers, believing such arrangements made it difficult to impossible for them to assess "fair" market prices for livestock going to slaughter, called for livestock mandatory reporting (LMR) for packers who purchase livestock, process them, and market the meat. In response, Congress passed the Livestock Mandatory Reporting Act of 1999 ( P.L. 106-78 ) that mandated price reporting for cattle, boxed beef, and swine and allowed USDA to establish mandatory price reporting for lamb purchases. USDA issued a final rule that included lamb reporting in December 2000 and took effect in April 2001. Since then, the law has been amended to include more detail on swine reporting and has added wholesale pork as a covered product. The act has been reauthorized four times, and most recently the Agriculture Reauthorizations Act of 2015 ( P.L. 114-54 ) reauthorized LMR through September 30, 2020. In addition to extending LMR, the enacted legislation established the "negotiated formula purchase" category for swine and added additional swine reporting requirements (e.g., net prices and head counts by type of swine). The act also amended reporting volume thresholds for lamb importers and lamb packers. The reauthorization required USDA to conduct a study that analyzed current marketing practices, identified livestock industry stakeholder concerns, and solicited stakeholder legislative and regulatory recommendations for LMR. AMS submitted this report to Congress in April 2018. The LMR study found that the meatpacking industry has become more concentrated and vertically integrated since LMR was established. It also found that the industry is responding to domestic and global consumer meat demand with product differentiation and a mix of new products that did not exist when LMR began. And it concluded that the types of transactions for livestock and meat have significantly changed as negotiated trades decrease and are replaced by formula pricing, forward contracts, and other arrangements. AMS held several meetings with cattle, swine, and lamb industry stakeholders to gather feedback on the LMR program in 2016 and 2017. Stakeholders represented at the meetings included industry associations, farm groups, meat processors, and food companies. Since then, AMS has implemented reporting changes that address several concerns raised by stakeholders. A common concern among stakeholders is the low volume of negotiated purchases and a parallel trend toward increased formula purchases or other marketing arrangements. Other concerns are about confidentiality and a lack of clarity on how transactions are categorized in reports, with some stakeholders advocating for the inclusion of more details about transactions, such as premium levels—especially as the market changes—and reporting on the number of livestock committed to packers. Swine and lamb stakeholders have provided specific legislative recommendations to be considered during possible reauthorization of the act in the 116 th Congress. Swine stakeholders have recommended eliminating the "negotiated formula purchase" transaction and the reporting of wholesale pork prices based on shipment to Omaha, Nebraska, because these reporting requirements are rarely used in the swine industry today. They also recommended expanding definitions and reporting on certain swine attributes. Lamb stakeholders have recommended setting a lower threshold for the number of lambs processed by a packer to be covered by LMR and requiring custom slaughtered lambs and the number of lambs committed to packers to be reported.

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<1. Overview and U.S. Engagement> Mozambique, in southeastern Africa, faces political, economic, and security headwinds, some arguably related to the continuous domination of the state by the Mozambique Liberation Front (FRELIMO) political party. FRELIMO, a former armed liberation movement that fought for self-determination and freedom from Portuguese colonial rule, has held a parliamentary majority since achieving independence in 1975. Prior to a resurgence of political tensions and violence in 2013 between FRELIMO and RENAMO, a former armed rebel movement that is now the main opposition party, Mozambique was widely viewed as having made a durable transition to peace after its postindependence civil war (1977-1992). It also made a transition, beginning in the late 1980s, from politically and economically centralized, one-party, socialist rule, to a multiparty democratic system underpinned by a largely market-based economy. The development of large offshore natural gas reserves discovered in the country's north in 2010 is expected to lead to gas exports in the early to mid-2020s and, together with rising exports of coal, to spur rapid economic growth and reverse a slump that began in 2016. This downturn was preceded by nearly two decades of post-civil war economic expansion underpinned, in part, by inflows of foreign direct investment (FDI) tied to large industrial projects. Mozambique has also received large inflows of foreign aid aimed at addressing its myriad development challenges. While there has been marked progress in reducing poverty rates and raising a range of once very low socioeconomic indicators, most Mozambicans (see Figure 1 ) have remained poor, and there are many unmet development needs. There also have been regional and demographic disparities regarding access to the fruits of growth. Large FDI-driven industrial projects prioritized by the state, for instance, have helped speed macroeconomic growth rates, but often have provided relatively few jobs or economic gains for the general population. Corruption and elite use of political influence to accumulate private wealth also have grown over the post-civil war period (see below), with worrisome implications for the economy and stability. The post-2015 economic decline followed disclosures that the government had failed to report to the International Monetary Fund (IMF) over $2 billion in state-guaranteed debt, which violated the terms of Mozambique's cooperation with the IMF. Two foreign banks provided these loans, in an allegedly corrupt manner, to state-owned firms registered as private entities and controlled by state intelligence officials. This set of events, known as the "hidden debt affair," has had far-reaching consequences. It has spurred an ongoing major political scandal, Mozambican and U.S. prosecutions, and aid suspensions by multiple donor governments (albeit not by the United States). Along with broader indicators of corruption, the debt affair also has prompted some observers to question whether the state has the political will and capacity to administer effectively and in the public interest a large projected windfall of earnings from the energy sector. The government recently requested IMF technical assistance in undertaking an assessment of governance and corruption challenges. The scandal also reduced Mozambique's sovereign debt ratings and placed it in debt distress, reducing the state's access to credit needed for development projects and government operations. As of late 2018, Mozambique's public debt totaled about $15.9 billion 110.5% of gross domestic product (GDP) and the country was $1.2 billion in arrears. Mozambique also faces security challenges. It is gradually overcoming a destabilizing political dispute spurred by long-standing RENAMO grievances over alleged electoral misconduct and continuous de facto FRELIMO control of the state. The dispute turned into a low-level armed conflict between RENAMO and state forces between 2013 and late 2016, when a temporary cease-fire was signed. It was later extended. In 2018, the two parties signed political and military agreements to end their dispute, and in August 2019 they signed a permanent cease-fire prior to signing a comprehensive peace accord. Since late 2017, the country also has faced a brutal insurgency by armed Islamist extremists in its far north, in an area where large-scale gas development operations are underway. Trafficking of persons, wildlife, and illicit drugs, along with other organized crime activity, also poses security challenges. Mozambique enjoys cordial relations with the United States and receives sizable U.S. global health assistance, but has received relatively limited congressional attention since the early 2000s. However, the country hosted congressional delegations in 2016 and 2018 that focused on such issues as U.S. health and wildlife aid and the RENAMO-FRELIMO conflict. Recent developments and policy challenges in Mozambique have the potential to draw increased congressional attention. These include increasing U.S. private-sector stakes in the energy sector, the implications of state corruption for the government's integrity and status as a U.S. development and investment partner, U.S. government counterterrorism concerns, and recovery from two powerful cyclones that hit the country in March and April 2019. The devastation caused by the cyclones has prompted an ongoing U.S. assistance response funded at a level of $74 million as of May 31 in support of humanitarian needs and longer-term recovery efforts, alongside a broader international response. (On these issues, see CRS Report R45683, Cyclones Idai and Kenneth in Southeastern Africa: Humanitarian and Recovery Response in Brief .) <2. Political Background and Dynamics> Mozambique gained independence in 1975, after a long FRELIMO-led armed struggle against Portuguese colonial rule. In 1977, RENAMO, a guerrilla group initially formed as a proxy of the white minority regime in Rhodesia (now Zimbabwe), initiated attacks against the socialist FRELIMO-led state, sparking a civil war. The war caused hundreds of thousands of deaths, social displacement, a mass refugee exodus into nearby countries, and widespread destitution. These effects were exacerbated by natural disasters, as well as by FRELIMO's abortive attempts to control the economy, which prompted a turn toward economic liberalization in the late 1980s. After internationally aided peace talks, a new constitution was ratified in 1990. Peace accords signed in 1992 ended the war and, along with U.N.-aided peacebuilding efforts, paved the way for RENAMO's transformation into a political party and multiparty elections in 1994. Postwar politics mainly have centered on intra-FRELIMO competition and polarized rivalry between FRELIMO, which has held an electoral majority since 1994, and RENAMO. Broad public postwar support for reconciliation and peacebuilding initially led to a system of informal bargaining among political elites over policymaking, giving RENAMO influence that it might not otherwise have had. Over time, however, FRELIMO increasingly wielded its electoral majority, aided by its strong influence over the electoral system, to marginalize RENAMO. The country's constitution, which concentrates executive power in the office of the directly elected president, augmented FRELIMO's power, as did its influence over the economy and FDI flows. This was notably the case under former President Armando Guebuza (in office 2005-2015), a FRELIMO hardliner who accrued substantial private wealth. He centralized power in the presidency, appointed loyalists to state posts, and reportedly fostered an influential network of relatives and associates, many of whom used political ties to advance their business interests. Resentful of FRELIMO's continuous political and economic dominance and of not being allocated governorships in provinces where it claimed electoral majorities and due to enduring bitterness over a narrow 1999 presidential election loss RENAMO has routinely engaged in a politics of obstruction and protest. It has repeatedly boycotted elections or parliament, usually citing electoral grievances, and periodically it has threatened to withdraw from the political process or resort to violence to achieve its aims. Afonso Dhlakama RENAMO's sole postwar leader until his death in 2018 spearheaded this approach, to mixed effect. While RENAMO's approach periodically won it concessions, such as incremental electoral reforms, Dhlakama often appeared to overplay his hand, making weighty demands that the FRELIMO government often rejected, either outright or after parliamentary debate. RENAMO was also considered to be afflicted by internal divisions, poor organization, and erratic leadership under Dhlakama. He also thwarted the emergence of rivals within the party, which helped spur the formation in 2009 of the Democratic Movement of Mozambique (MDM) by RENAMO dissidents led by Daviz Simango, the mayor of Beira, a key city. The MDM became the third-largest party in parliament in 2009 and nearly doubled its gains in the 2014 election. It also won four city elections in 2013, but lost all but Beira in 2018. Until 2013, periodic warnings by RENAMO that it might resort to coercion or violence to achieve its aims remained only threats, notwithstanding many small-scale, mostly unarmed confrontations between its supporters and authorities. Its potential to employ the force of arms, however, was always a risk, as the 1992 peace accords had permitted Dhlakama to maintain an armed personal protection unit with police-like powers. RENAMO also has long held the loyalty of ex-fighters who were not integrated into the national military at the end of the war, some with access to civil war-era arms caches and abiding postwar reintegration grievances. <2.1. RENAMO-Government Armed Conflict> In late 2012, Dhlakama retreated to his former wartime base and began to marshal a military force. In early 2013, RENAMO in a manner reminiscent of its civil war tactics launched armed attacks on police and military personnel, state facilities (e.g., health posts), and some civilian targets. Periodic clashes with state forces led to dozens of fatalities, including of civilians. Conflict waned for a time after a 2014 preelection cease-fire accord. RENAMO, however, dissatisfied with the 2014 election results and other responses to its demands, later abandoned the accord, and hostilities resumed. The renewed conflict, Human Rights Watch (HRW) reported, featured "enforced disappearances, arbitrary detentions, summary killings and destruction of private property allegedly committed by government forces, and political killings, attacks on public transport and looting of health clinics by alleged RENAMO forces." Throughout the conflict, there were numerous on-again-off-again peace talks and provisional agreements, but binding accord was stymied repeatedly by violence, brinksmanship, and intransigence by the two sides and by RENAMO's often shifting demands. At the start of the conflict, these centered on electoral law reforms and equitable party representation on the electoral commission. Later, among other ends, RENAMO sought the inclusive and nonpartisan allocation of the fruits of economic growth, including extractive sector earnings; completion of the integration of an agreed number of RENAMO fighters into the military, command posts for RENAMO officers, and related demands; and an end to FRELIMO domination of the state, including through a process of increased political decentralization under which RENAMO would be allocated governorships in areas where it has claimed high rates of electoral support. A 2016 cease-fire largely halted hostilities, and in early 2018, President Filipe Jacinto Nyusi and Dhlakama negotiated a framework accord on political decentralization. Uncertainty over prospects for the agreement arose after Dhlakama's death in early May 2018, but weeks later parliament enacted a series of constitutional amendments largely in line with the accord. These provide for elected provincial, district, and municipal assemblies, and for the leading delegate of the party with a simple majority in each assembly to become the chief executive at that level (i.e., governor, district administrator, or mayor.) RENAMO's disarmament has remained a bone of contention for FRELIMO. After the May 2018 decentralization reforms, FRELIMO parliamentarians delayed action on additional legislation necessary to implement the reforms, pending RENAMO's disarmament. In July 2018, however, the government and RENAMO signed a memorandum of understanding (MOU) on RENAMO military integration and demobilization. Parliament then passed some decentralization laws, and in early August, an agreement for implementing the July military accord was signed. Tensions over RENAMO's claims of fraud in the October 2018 local elections slowed the demobilization process, as did late 2018 disputes over RENAMO integration into the military and police. <2.1.1. 2019 Permanent Cease-fire and Peace Agreement> In July 2019, a group of 50 RENAMO fighters began the process of demilitarization, demobilization, and reintegration (DDR) at a largely symbolic ceremony at Satunjira, RENAMO's wartime headquarters in central Mozambique. The DDR process was conducted by a committee of government and RENAMO military representatives and foreign military observers, including a U.S. officer. Six demobilizing RENAMO members handed over weapons. Why more did not turn in weapons is not clear from news accounts, but this outcome could raise questions over RENAMO's commitment to the process if it resulted from a deliberate decision by RENAMO to defer a more extensive handover of arms. DDR began on the same day that the parliament passed a law providing immunity from prosecution for those accused of crimes related to the post-2013 armed hostilities between the government and RENAMO. On August 1, 2019, President Nyusi and RENAMO leader Ossufo Momade signed an agreement making the 2016 cease-fire permanent, and on August 6 signed a final peace accord. The signing drew widespread international plaudits. During a September 2019 visit to Mozambique, Pope Francis strongly endorsed the accords and the message of reconciliation underlying them. He also warned against corruption and plundering of natural resources. On August 21, a parliamentary majority adopted the peace accords as law though MDM, the third largest party, abstained, and 37 of 89 RENAMO legislators were absent. The law includes the two 2019 agreements accords, the August 2018 DDR agreement, and related documents on implementation and monitoring. Key outcomes are to include the final disarmament and DDR of all armed RENAMO elements, the decommissioning of RENAMO bases, the provision of police protection for senior RENAMO officials, and the integration of selected RENAMO elements into the police and military, including at unit command levels. The accord does not provide for a RENAMO role in the State Information and Security Service (SISE), a longstanding RENAMO demand; RENAMO reportedly views SISE as having played key roles in the government's post-2012 security operations against RENAMO. International funding to support implementation of the accord is anticipated under the accords, which provide for a donor-funded "basket fund," but do not specify which governments would contribute to the fund, the amounts needed, or what the fund would support. Press reports have suggested that an informal side agreement or "elite bargain" may exist under which "significant monetary compensation" might be paid to RENAMO leaders. Whether provided officially by donors or through unofficial supplementary arrangements, the allocation of funding for the peace process particularly any payments to individuals could become contentious. Successful implementation of the accords would require progress on a number of fronts, including final passage of pending legislation relating to the decentralization of state power, a free, fair, and transparent electoral process, and completion of the DDR process for all of RENAMO's 5,000-plus fighters. Such demobilization could be hindered by internal RENAMO splits (see below) or if armed RENAMO members perceive that they face threats if they proceed with disarmament. The possible salience of the latter concern was underscored by RENAMO's mid-August claim that "dozens" of its members had "been assaulted by police and members of the ruling Frelimo party across the country" after the August 6 peace agreement was signed. RENAMO has also reported that its members have faced harassment and property arson, as well as removal of party flag displays, which it blames on government elements. Another potential hindrance to disarmament and possibly to RENAMO's electoral prospects are ongoing intra-RENAMO divisions. Such splits emerged in early 2019 when Momade replaced several top RENAMO civilian and military officials after he was elected president of RENAMO. In June 2019, a group of RENAMO combatants accused Momade RENAMO's 2019 presidential candidate of ethnically centered nepotism over the allocation of internal party and military integration posts. They also accused him of cooperating with the state intelligence service and of ordering the execution of two RENAMO officers. They demanded he resign, threatened to kill him if he did not, and asserted that demobilization would not proceed while he was leader. The group, whose members call themselves the RENAMO "Junta Militar" (military board), claim to represent RENAMO nationally and consider the peace accords null and void. They elected RENAMO general Mariano Nhongo as their leader in mid-August. A key Junta Militar grievance is their claim that Momade has "excluded 60%" of RENAMO forces from the DDR and security service integration process. The group also has called for elections to be postponed to enable Nhongo to compete in the electoral contest. The Junta Militar may not be able to force a postponement of the election or displace Momade as national RENAMO leader. Observers and the opposition MDM party, however, see a need for the Junta's concerns to be addressed, as the group is a potential peace- and electoral-process spoiler. The Junta has threatened to violently halt the 2019 election, and press reports have attributed several attacks by unidentified assailants to the group, which reported in early September 2019 that the national military had attacked a Junta's base. A separate smaller RENAMO subgroup also has demanded Momade's departure. <2.2. Recent Elections and Forthcoming 2019 Electoral Contest> General elections were last held in 2014, after tense local elections in 2013, which RENAMO boycotted. Electoral preparations took place amid armed RENAMO-government clashes, but hostilities waned after a prevote cease-fire. Because then-President Guebuza was term-limited, FRELIMO chose as its candidate then-Minister of Defense Filipe Jacinto Nyusi, a longtime party member from the gas-rich north. Nyusi won the presidency with 57% of the vote a sharp drop from Guebuza's 75% in 2009. Dhlakama won 37%, and MDM leader Simango won 6%. FRELIMO garnered 144 of 250 seats in parliament, RENAMO, 89, and the MDM, 17. Despite some local and international criticism of the vote and a reported range of electoral process irregularities, the results were internationally accepted as generally credible and confirmed by the constitutional court although it questioned the vote tabulation process. RENAMO rejected the results, boycotted parliament in protest, and demanded the creation of a joint FRELIMO-RENAMO caretaker government, as well as the appointment of governors, ministers, and other officials from both parties. FRELIMO rejected these demands and RENAMO later took its parliamentary seats. Local elections in October 2018 were generally peaceful in most of the country, notwithstanding some electoral violence and procedural irregularities, and allegations of police protection of FRELIMO supporters involved in violent acts. Prior to the vote, RENAMO threatened to deploy armed men to stop what it asserted were state efforts to rig the results. After the vote, opposition parties launched multiple legal appeals, but local courts reportedly rejected nearly all on technical grounds. RENAMO and the MDM, claiming fraud and irregularities, protested the outcomes in multiple cities, and RENAMO threatened to halt the peace process, but ultimately did not do so. As discussed above, the peace process has continued, but remains incomplete. National elections are to be held in October 2019, and campaigning opened in late August. Press outlets have reported the alleged FRELIMO use of state resources and pressuring of public workers to support the party, localized intimidation of election campaigners of various parties, and sporadic election violence, including two murders. Pre-election voter registration in spring 2019 was controversial. Some 90% of voting-age adults reportedly registered to vote, but the process featured indications of possible manipulation by STAE, the election administration secretariat. STAE calculated an unusually high adult population in at least two historically pro-FRELIMO provinces and sent extra registration teams to those areas, while doing the opposite in Zambezia, a RENAMO stronghold. As a result, registration in several key pro-FRELIMO provinces exceeded the number of voting-age adults. On the basis of the larger electorate in Gaza, the national election commission, the CNE, awarded nine additional seats to the traditionally FRELIMO-leaning province. RENAMO appealed the registration in Gaza, but its case was thrown out on a technicality. In August the CNE rejected a private organization's offer to audit the Gaza registration. The Gaza controversy also prompted the resignation of the head of the National Statistics Institute. He had faced sharp criticism from President Nyusi after strongly defending the integrity of the census data at the heart of questions over 2019 voter registrations in the province, thus bolstering questions over the integrity of the voter registration process. Another factor that could work in the government's favor is the impact of the large cyclones that hit the country March and April 2019, primarily in areas where RENAMO is viewed as enjoying positive electoral prospects. Thousands of potential voters in the affected region were displaced and/or lost identification or voter registration papers as a result of the storms and related flooding. RENAMO has also accused STAE's chief of favoring FRELIMO. <3. Violent Islamist Extremism> Mozambique faces a growing security threat that is separate and distinct from the RENAMO-state conflict. Since October 2017, members of an Islamist extremist group have carried out many attacks in mostly Muslim coastal districts of Cabo Delgado Province, adjacent to Tanzania. The group is known locally as Al Shabaab ("the youth" in Arabic, and also the name of a separate Al Qaeda-linked Somali group) and as Ansar al Sunnah ("Defenders of the Sunnah" [Islamic prophetic tradition]) or Al Sunnah wa Jama'ah (ASWJ, "Adherents of the Sunnah"). The group, whose leadership and aims remain opaque, has targeted police stations, other state facilities and personnel, and local civilians along with contractors working for the U.S.-based energy firm Anadarko. ASWJ attackers have raided provisions and arms and used arson to cause extensive destruction to village buildings and crops. They often employ crude weapons, notably machetes, but also guns and explosives and have reportedly killed more than 300 people often by beheading spurring population displacements. Group members often reportedly target those they view as cooperating with the state. Several recent attacks attributed to ASWJ have killed significant numbers of state security forces, as well as civilians. Numerous insurgents have also been killed in clashes with security forces. Information on the group is limited and contested, as access to the affected area by journalists and researchers has been curtailed by insecurity largely viewed as attributable to the group and by systemic state obstruction and harassment of journalists in the area. The group may include members of a violent Islamist Tanzanian movement and may have ties to the potentially Islamic State (IS)-linked Allied Democratic Forces (ADF) group in Central Africa; several reported ADF members from Uganda with alleged links to ASWJ have been arrested in Mozambique. In May 2018, several ASWJ members posted a social media video stating that they planned to pledge allegiance to IS. In 2019, IS has claimed responsibility for several attacks. ASWJ was reportedly formed in 2014 by two or more local Islamists, some of whom may have received military training abroad, and foreign African Islamist extremists. It may also have roots in a group formed by dissidents from the state-affiliated Islamic Council who formed a group called Ansar al Sunna in the late 1990s. The group generally does not claim its attacks and has issued few statements about its goals. Some researchers report that the group espouses jihad (armed struggle against perceived enemies of Islam), the creation of a Sharia (Islamic law)-based state, and rejection of state institutions and services (e.g., education, taxation, and voting). Its ideas may be influenced by foreign Islamist ideologies, and by trade and social ties to the Swahili Coast, a cultural-linguistic and religious region extending northward to southern Somalia. Some accounts suggest that the group has been influenced, in particular, by Sheikh Aboud Rogo Mohammed, a Kenyan preacher whose Swahili-language teachings circulated widely in East Africa. Rogo, who was subject to U.S. and U.N. sanctions for supporting Somalia's Al Shabaab, was assassinated in 2012. ASWJ members reportedly initially proselytized locally to advance their beliefs and build a base of adherents, and later employed a mix of payments and coercion to recruit. Their activities attracted a mix of local opposition, including from the provincial officials of the national Islamic Council, and local support. ASWJ reportedly has provided business loans and employment to locals in exchange for fealty to the group. Poor young males with limited education appear to be key targets, and ASWJ may sponsor the Islamic education abroad of some. Some analysts contend that ASWJ, like many African Islamist armed groups, largely comprises disaffected youth who may be influenced by Islamist ideology but are driven primarily by anger over local grievances (e.g., economic disparities, limited or poor state services, and high unemployment). Other notably intense sources of local anger that the group may exploit include the loss of local agricultural and fishing livelihoods, the seizure of land by local and state elites, and nontransparency and corruption in compensation processes associated with the growth of the natural gas and gemstone mining industries. Other sources of local tension are rivalries, including over land and political party affiliation, between the mostly Catholic Makonde and mostly Muslim Mwani people, among other local ethnic groups. Some analysts believe that ASWJ is directly involved in illicit activity that is prevalent in the region. Others suggest that the group does "not control any major contraband trade" and that the "illicit economy as a whole provides varied opportunities" exploited by the group, which in the future could potentially become more deeply involved in illicit trafficking and other networks. Illicit activity in the affected region includes petty corruption (e.g., police and public services bribery), trafficking of heroin, persons, ivory and other poached wildlife items, gold, and gemstones, as well as illicit timber trade and an untaxed cross-border trade in consumer goods. State officials are key reported beneficiaries of such trade. State security forces' heavy-handed, arguably often ineffective responses to ASWJ violence also appear to have alienated local populations. Security forces reportedly often arrive at attack sites well after the insurgents have departed and arrest locals whom they identify as linked to the group, often on dubious grounds. Detainees have been beaten or treated inhumanely and illegally detained by military forces, or held by police without charges and beyond the legally permitted period. Some have reported torture, and there are unconfirmed reports of extrajudicial killings by security forces. Mass arrests, starting after ASWJ's October 2017 initiation of conflict, have been followed by mass trials of alleged perpetrators of ASWJ-linked crimes. <4. Economy, Development Challenges, and Aid> Mozambique sustained rapid post-civil war growth: GDP grew by an annual average of 8.4% from 1993, at the end of the war, through 2015. In 2016, however, growth fell to 3.8% from 6.6% in 2015, and in 2018 has slumped further, to 3.3%. The IMF has attributed this decline to weak global commodity prices, poor weather conditions, and "the issue of undisclosed loans in the spring of 2016 and the ensuing freeze in donor support." The RENAMO-government conflict also may have contributed to the slowdown, and the effects of the two cyclones in 2019 may further reduce growth in the short to medium term. While Mozambique's long period of post-civil war growth reduced extreme poverty, poverty rates generally remain high. In 1996, shortly after the war, 83% of the population lived on less than $1.90 a day (the international comparative poverty line, as measured in constant 2011 dollars); by 2014 (when last measured) 62.4% did so. Mozambicans have remained among the world's poorest people, with an estimated average GDP per capita of $476 in 2018 (current dollars) the seventh-lowest globally, and down from a peak of $620 in 2014. In addition, income is unequally distributed. Similarly, while multiple social indicators have improved since the war (e.g., rates of child and maternal mortality and access to health care and education), they have advanced from a low starting point, and many remain poor by regional and global standards. Mozambique ranked 180 th among 189 countries assessed on the 2018 U.N. Human Development Index (HDI, a comparative statistical composite measure), and is making limited progress toward achieving most of the U.N. Sustainable Development Goals. Development gains may have remained limited due to a growth pattern in which FDI inflows have centered on large export-oriented industrial projects (e.g., bauxite smelting, power plants, mining, large-scale agriculture, and, recently, natural gas development). While such projects have helped spur high aggregate GDP growth rates, they often have functioned as commercial enclaves with weak linkages to the broader economy. Many such projects have generated relatively few permanent jobs or other benefits for the general population, and some have enjoyed state policy favoritism and tax breaks that tend to benefit project investors, rather than society at large. Financial gains from such activities have strongly favored politically connected elites involved in such projects as investor intermediaries, technical experts, regulators, and local business partners. Some megaprojects, such as large mines, have resulted in loss of farmland and population displacements, sometimes to marginal areas where subsistence farming is difficult. Some large projects, however, may be starting to benefit the broader society, as with extractive sector investment in multiuse infrastructure (e.g., roads and railways). The disjuncture between the local economy and megaproject activity is significant. Most Mozambicans, an estimated 86% or more of the work force, make their living in the informal sector, often as subsistence and cash crop farmers, fishermen, and small-scale manufacturers and traders. Productivity within this large segment of the economy, however, is constrained by little access to credit, business training, or technical expertise. Youth unemployment is a particular challenge. Nearly 68% of Mozambicans are age 25 or younger, and many young people from rural areas, home to 65% of the population in 2017, often gravitate toward cities, where job growth has not kept up with increasing education and training rates even though these are low. Mozambique's socioeconomic development gains have remained moderate, despite sizable inflows of net official development assistance (ODA). Such aid averaged $1.96 billion annually from 2008 through 2017, making the country the 15 th -largest recipient globally in the period, during which the United States provided an average of $367 million annually (19% of net ODA) and was the largest bilateral donor. <4.1. Investment Climate and Sectoral Trends> Despite some improvements in the ease of doing business, the economy remains constrained by high transaction costs and taxes, cumbersome regulations and laws, poor transport and other infrastructure, and corruption (see below). Mozambique scored 16 th out of 48 sub-Saharan African countries assessed in the World Bank Doing Business 2019 survey score, but it scored 135 th out of 190 countries globally. Its indicators for starting a business, access to credit, certain investor protections, and tax payment complexity were notably poor. Recent FDI activity has centered on the growing coal sector and natural gas development (see below). FDI peaked at $6.2 billion in 2013 but has since declined steadily, to $2.3 billion in 2017 (latest data), though levels remain far higher than prior to the discovery of gas. Mozambique is a top regional FDI destination; it received the sixth-largest FDI inflows in Africa in 2017. Its total FDI stock is also large; at $37.5 billion in 2017, it was the fourth-largest in Africa. Annual U.S. FDI into Mozambique from 2013 to 2017 averaged $824 million a year (18% of such FDI). Agriculture. Agriculture is the backbone of the domestic economy and plays an indirect role in ensuring stability, as a source both of incomes and affordable food for urban consumers. Mozambique has extensive agricultural land and water resources and favorable agro-climatic conditions in many areas, though soil quality is often nutrient-poor, and droughts and floods are frequent. In 2017, the sector employed an estimated 72% of the labor force and contributed about 21% of GDP. The sector is dominated by smallholders (about 90% of producers) but has attracted more than 400 large commercial investment projects over the past two decades. Such projects have centered on food production, sugar, tobacco, cotton, cashew nuts, biofuels, and timber, and attracted at least $6.5 billion in investment between 2002 and 2012. The sector, and notably agro-processing, remains a key source of FDI opportunities. Notwithstanding agriculture's prominence in the economy and in state economic plans, for years the sector has reportedly received relatively limited state funding. Key challenges include low productivity rates and diverse constraints (e.g., relating to transport, input and credit access, and underinvestment in various areas), and contested land rights. The impacts of large FDI agro-projects have been mixed. Some have been given preferential access to prime land by the state and/or displaced smallholders, but a number have created jobs, often via smallholder contract farming involving the provision of technical assistance and inputs. Many also contribute to the national food supply; farming projects targeting local markets have enjoyed particular success. Mining . Mozambique is reported to have up to 25.6 billion tons of coal reserves, although the amount that may be recovered on economically favorable terms may be far smaller. Production and exports began in 2010 and have risen rapidly, notwithstanding a price-induced slump in coal export volumes in 2016. Mozambique is now Africa's second-largest coal producer (after South Africa). Coal exports contributed 45% of all export value in 2017 and are expected to rise. Mining of other resources is also growing. Exports of graphite (used in lithium ion batteries), titanium, and related ores (niobium and tantalum) are increasing: these exports contributed 4% of export value in 2017. Mozambique has long exported precious stones (3% of exports in 2017) and has other varied, largely untapped mineral and ore reserves. Power Sector . About 27% of Mozambicans had access to electricity in 2017. The power sector is a key focus of FDI and state investment, both for export and local use. Hydropower accounts for about 81% of installed capacity, but there are several coal, natural gas, and solar electricity generation projects underway, primarily for industrial and commercial use, and sizable further generation potential. Key challenges include grid weaknesses, regional domestic access disparities, poverty (i.e., an inability to pay), and regulatory and policy challenges (e.g., a need for price, market, and sector financing reforms). In 2017, the World Bank provided $150 million to upgrade the grid and improve the public utility. Mozambique also receives support under the U.S. Agency for International Development (USAID) Power Africa program. Natural Gas . Mozambique is estimated to have at least 100 trillion cubic feet (TCF) of proved reserves of natural gas (hereinafter, "gas"), placing it among the top 15 countries in terms of reserves. Some sources report far higher estimates, and further exploration and assessment is underway. Energy firms are building gas extraction and processing infrastructure to export output from the main reserves, which were discovered beginning in 2010 in a complex of offshore gas fields in the Rovuma Basin, a geologic zone in Mozambique's far north. Such activity is expected to grow; the IMF has projected that total Rovuma Basin investments may exceed $100 billion. U.S.-based Anadarko Petroleum leads one international consortium developing the Rovuma reserves, with production slated to begin in 2024. U.S.-based ExxonMobil leads development of a second area in partnership with Italy's ENI and several smaller energy firms. An ENI-operated offshore floating liquefied gas processing and export platform is expected to produce Mozambique's first Rovuma exports in 2022. Additional offshore blocks are also being explored. Gas exports are expected to greatly expand public revenues after the state's share of capital development costs are paid off and fuel rapid GDP growth. The IMF projects a gas-linked spike in GDP growth from 4% in 2022 to 11.1% in 2024. Gas is also forecast to be used domestically in a variety of industries. Since 2004, gas has been exported via a pipeline to South Africa from two smaller onshore gas fields in central Mozambique. The pipeline also feeds a power plant in Mozambique. <4.2. Mozambican Government Debt Controversy and U.S. Prosecutions> Beginning in 2013, the government guaranteed a series of allegedly corrupt, off-budget bank loans to state-owned enterprises (SOEs) totaling more than $2 billion. It did not report this debt to the IMF until 2016, well after the loans were revealed in the press. This failure to report violated its obligations to the IMF and created an ongoing scandal that led some donors to suspend some aid. The funds at issue, loans or securities syndicated by foreign private banks, went to three SOEs owned by the State Information and Security Service (SISE), the Defense Ministry, and other state agencies. The SOEs' affairs could be kept confidential because technically they were private and because SISE classified their activities as secret on national security grounds. SISE ostensibly formed the SOEs ProIndicus, Mozambique Asset Management (MAM), and Empresa Mo ambicana de Atum (Ematum) to, respectively, perform coastal surveillance; build and maintain shipyards; and engage in tuna fishing. Ematum reportedly was also to be used as a channel for off-budget maritime security spending. The SOEs' business plans were based on dubious assumptions and the firms pursued few of their ostensible intended purposes. None turned a profit and all entered credit default, saddling the state with repayment. In late 2018, the U.S. Department of Justice (DOJ) indicted three Mozambican officials, an executive of Privinvest, a foreign shipbuilding firm, and foreign investment bankers whom DOJ accused of a joint conspiracy "to defraud investors and potential investors" in relation to the SOEs' loans. DOJ said the indictees "created the maritime projects" to divert parts of the financing to "pay at least $200 million in bribes and kickbacks to themselves," state officials, and others. The loans at issue were provided by Russian state-owned VTB Bank and multinational investment bank Credit Suisse and/or syndicated as securities sold by the latter. Indictees include then-Finance Minister Manuel Chang, a SISE official, and a representative of the office of then-President Guebuza. They collaborated with two Privinvest officials and three Credit Suisse employees, all indictees in the case. No employees of VTB Bank were charged. DOJ also charged that "to hide from the public and the IMF" the fraud-related "near bankruptcy" of the SOEs, the indicted bankers proposed an exchange of Mozambican-issued Eurobonds for Credit Suisse securities sold to fund the Ematum loan. The state and Ematum's investors accepted the exchange in April 2016. The three SOEs then defaulted on their loans. After the debts were revealed, the government resisted disclosing further information about the loans, but was forced to do so as a condition for continuing cooperation with IMF, which has publicly linked the loans to corruption. The IMF and the World Bank demanded an audit, which the independent firm Kroll Associates conducted on behalf of Mozambique's national prosecutor. The government restricted Kroll's access to documents, but the firm was able to identify $713 million in apparent deal price inflation and $500 million in unaccounted-for financing. Mozambique's parliament also investigated the loans, and national judicial authorities are pursuing criminal prosecutions, although local civil society groups have criticized these efforts as slow and selective. Local arrests in the case, including a son of ex-President Guebuza, SISE officials, and other high-profile figures, began only after the U.S. indictment was issued. In late 2018, Chang was arrested in South Africa on a U.S. extradition warrant, but South African officials instead accepted an extradition request from Mozambique. In late May 2019, the government and its creditors provisionally agreed to restructure the Ematum Eurobond bonds and $535 million in VTB MAM debts, though further negotiation is likely. The case has generated multiple lawsuits, including a government effort to negate portions of the debt. Two of the indicted bankers have pled guilty to various charges. More legal and financial fallout is possible, particularly if the government of President Nyusi the defense minister when the loans were signed does not effectively ensure that those responsible are held to account, or if indictees in the case reveal new information or other cases of corruption. Meanwhile, local and international civil society groups are advocating nonpayment of the debt and asserting that the debt is "odious," or morally and legally illegitimate, and thus subject to repudiation. On June 4, the Mozambique Constitutional Council ruled that the Ematum debt was illegal, but the implications are unclear. <5. Corruption and Crime> The debt scandal is the highest-profile instance of corruption, but it is not unique. Corruption, both small- and large-scale, is "endemic ... particularly in the police, judiciary and civil service," but corruption prosecutions, especially of officials, are rare. The country ranked 158 out of 180 countries on Transparency International's Corruption Perceptions Index 2018 , and its World Bank Worldwide Governance Indicators (WGI) rankings also have declined. While the IMF reports that Mozambique has a "relatively comprehensive anti-corruption legislative framework," the institutional capacity to implement the framework has remained weak, as has judicial accountability. Heavy state involvement in multiple economic sectors, and nontransparency in state processes, contracting, and outcomes, the IMF reports, also create opportunities for corruption and conflicts of interest, notably in the extractive sector. A nexus also reportedly exists between public corruption, organized crime, and large black markets in goods. Drug trafficking has been reported to fund political party activity, and corruption may be tied to some political killings. The analytical nonprofit Global Financial Integrity (GFI) reports that illicit financial outflows (i.e., business bribery, tax evasion, money laundering, and trade and transfer mispricing/misinvoicing) may have contributed as much as 48% of the country's trade with advanced economies in 2015. According to the State Department, "[f]inancial fraud, especially tax evasion, and drug trafficking," alongside "misappropriation of state funds, kidnappings, human trafficking ... and wildlife trafficking," generate a large share of money laundering. Trafficking is facilitated by a "largely unpatrolled coastline, porous land borders, and a limited rural law enforcement presence," making the country a major corridor for flows of illicit goods. Drug trafficking is a notable challenge. Mozambique has long been and remains a transit point for illicit trafficking of heroin (mostly from South Asia, notably Pakistan, via sea), cocaine (from South America, via air), and precursor chemicals. Most narcotics are reportedly bound for South Africa and other countries in the region, but some transit onward to Europe and North America. The heroin trade is especially well developed. The volume trafficked through the country may total 40 tonnes or more a year and contribute $100 million or more to the local economy. Given the weakness of fiscal and anticorruption institutions, some observers have questioned whether the state has the political will and ability to effectively govern the large expected influx of gas revenue. The government has taken some steps to address such challenges. For instance, in 2009, Mozambique joined the Extractive Industries Transparency Initiative (EITI), a voluntary international effort to make extractive industry revenue contracts and revenue payment and receipt data publicly accessible, and to increase related fiscal accountability. The government plans to require beneficial ownership and business interest transparency, to establish a sovereign wealth fund to preserve and manage gas income, and to allocate a fixed share of gas revenue to fund infrastructure development, poverty reduction, and economic diversification. <6. U.S. Relations and Assistance> Bilateral relations are cordial, although the United States has expressed concern over the hidden debts affair a concern underlined by the late 2018 U.S. DOJ indictment of several high-ranking Mozambican officials in the matter. Stated U.S. policy goals in Mozambique include democratic, transparent, and inclusive governance; enhanced health and education; sustainable economic growth, trade, poverty reduction, and investment; and food security and access to nutrition. U.S. aid programs also have sought to strengthen Mozambique's ability to respond to transnational crime, including trafficking in persons, narcotics, and wildlife. Efforts to counter the growing extremist threat in an area that hosts large U.S. natural gas industrial operations are another growing priority. The United States also is the leading bilateral donor in international efforts to address humanitarian and rebuilding needs caused by widespread destruction in central and northern areas hit by massive cyclones in early 2019. The State Department projects that cyclone recovery may require billions of dollars in the years ahead. The United States also supports efforts to reach a durable settlement between RENAMO and the government. It is a member of the ad hoc international contact group on Mozambique, which helps mediate between the two parties and includes the European Union, China, Botswana, the UK, Norway, and Switzerland (the group's chair). The United States also planned to deploy military observers to join a team that was to monitor implementation of the 2014 cease-fire, but never did, as the accord fell apart due to RENAMO's refusal to disarm. Cooperative bilateral ties were reflected in a five-year, $506.9 million Millennium Challenge Corporation compact signed in 2007 and completed in 2013. The compact supported increased access to clean water and sanitation, transportation upgrades, land tenure improvements, and increased farmer income and production, primarily in northern Mozambique. In addition, a 196-volunteer member Peace Corps program supports education and health care projects. According to the FY2020 State Department budget request for Mozambique, U.S. bilateral aid seeks to address key drivers of instability in northern Mozambique, including ineffective local governance and government service delivery, and a pervasive lack of jobs, especially for youth. Assistance will help local institutions to transparently and effectively address citizens' basic needs; support the government in providing high quality basic education services; and catalyze private sector investment to help the large youth population develop workforce skills essential to participate in emerging economic opportunities. U.S. nonemergency bilateral development aid totaled nearly $472 million in FY2018 appropriations. Of this, $428 million was for health programs, nearly $40 million for development activities, $0.7 million for International Military Education and Training (IMET), and $3.6 million for food aid. The Trump Administration requested $251.7 million in development aid for Mozambique for FY2019, of which it proposed to allocate 97% to health programs. While Congress has enacted FY2019 foreign aid appropriations, country allocations which the Administration and appropriators negotiate annually have not yet been finalized. The FY2020 request is for $403.5 million, of which health aid would compose 98.5% ($397.5 million), with $5.6 million for other development activities and $0.5 million for IMET. Health care programs have been the main focus of U.S. aid programs for years. The bulk of funding has supported HIV/AIDS programming to address Mozambique's high adult HIV prevalence rate of 12.5% (2017). Most of this aid has been funded under the Global Health Program (GHP)-State Department account and administered under the U.S. President's Emergency Plan for AIDS Relief (PEPFAR). Additional GHP-USAID funds support programs to combat malaria the cause of roughly 29% of all deaths and 42% of deaths of children under the age of five under the President's Malaria Initiative. Such funds also support programs to combat tuberculosis and enhance maternal and child health, family planning and reproductive health, and nutrition. Until FY2017, agricultural development, mostly under the U.S. Feed the Future (FTF) initiative, was another priority area for U.S. aid. FTF activities have focused on enhancing agricultural productivity, improving nutrition, and connecting farmers to markets, notably in north-central Mozambique in areas with poor nutrition that contain or are near key trade corridors. Basic education was a key priority in FY2018, with funding at $13.7 million, but requested funding for education decreased to $3.5 million in FY2019 and $3 million in FY2020. Aid has also supported good governance programs, with a focus on building the capacity of civil society groups to engage in policy analysis and advocacy. Mozambique periodically receives some U.S. Fish and Wildlife Service funding, and USAID supports a range of wildlife law enforcement capacity building, conservation, and CBNRM programs. In recent years, USAID has also supported coastal urban city governments' adaptation to rising sea levels and regional conservation and management, as in the Limpopo River Basin. Wildlife-centered programs aim to address widespread wildlife poaching, wildlife trafficking both of wildlife from Mozambique and that trafficked through Mozambique to and from other countries and the recovery of wildlife populations that in some areas were systematically depleted by hunting during the civil war. In addition to being a key ivory source country, Mozambique is a key regional wildlife trafficking transit country, notably of elephant ivory and rhino horn destined for Asia. Other key species, including lions and other big cats, are also systematically poached in Mozambique. <6.1. Security Issues> According to the State Department, Mozambique's government lacks adequate capacity to deal with the "complexity of violent extremism." The department is helping the government to develop a comprehensive counterextremism approach, including a "holistic security, community engagement, and communications approach ... to address governance and development issues" while also helping to build the capabilities of Mozambican security forces. Together with other donor governments, the State Department is working to help foster those outcomes and increase U.S. counterextremism program assistance. U.S. government interagency teams and experts have consulted in Mozambique with state, civil society, academic, and private-sector actors to better understand the drivers of violent extremism and unmet socioeconomic needs and grievances that may underlie the phenomenon. They have also compiled an "extensive list of recommended interventions" aimed at countering the growth of extremism and addressing unmet needs. The State Department nevertheless reports that "there are still significant gaps in our understanding of the violent extremism affecting northern Mozambique ... [including] the extent of the groups, their motivations, objectives and funding sources." It plans to adjust the U.S. strategy as knowledge increases. According to State Department Southern African Affairs Director Stefanie Amadeo, some recommended activities are underway, including [a] grant program to promote constructive dialogue between local residents and youth, religious leaders, and security forces in Cabo Delgado province through the Islamic Council; a baseline assessment and strategic communications program to assist key stakeholders with more effective youth messaging and outreach; the provision of U.S. logistics and communications advisors to support the Mozambican government's efforts; and programs to build the capacity of civilian law enforcement to engage with affected communities and investigate suspected acts of terrorism. USAID is also funding a $2 million program centered on mitigating drivers of instability and violent extremism in Cabo Delgado through efforts to increase youth economic and civic empowerment, foster constructive community-local government engagement, and build local governments' capacity to address community and youth priorities. In addition, in mid-2018, Mozambique became a Partnership for Regional East Africa Counterterrorism (PREACT) country. PREACT activities have yet to be determined, but may include funding for law enforcement, justice, military, and civil society programs. PREACT is a multiyear, multisector initiative that supports a range of counterextremism programs and efforts to contain and/or disrupt terrorist networks. Programs range from vocational and educational efforts to counter extremist messaging and economic inducements to law enforcement, military, and specialized counterterrorism unit training and capacity-building to intelligence, surveillance, and reconnaissance equipment and technical assistance. International narcotics smuggling through Mozambique is a long-standing U.S. concern. In 2017, the Drug Enforcement Administration (DEA) opened an office in Maputo, and it is currently "developing mechanisms to facilitate future information sharing on money laundering." These include a "working relationship" with Mozambique's attorney general and National Criminal Investigations Service (SERNIC), the lead antidrug law enforcement agency, which in 2018 "agreed to establish a joint DEA/SERNIC drug investigative unit to combat transnational organized crime." The State Department reports that while a range of weaknesses remain, the government has shown progress in enforcing anti-money-laundering (AML) laws and regulations including by investigating ties between heroin trafficking and official corruption and that efforts are underway to establish bilateral AML records-exchange procedures. In addition, Mozambique engages in military-to-military cooperation with the U.S. Defense Department's Africa Command (AFRICOM), and in early 2019 participated in Cutlass Express 2019, a multination naval exercise. A portion of the exercise focused on combatting illegal trafficking and maritime piracy, and the interception of illegal fishing vessels in Pemba and offshore waters near Mozambique's gas fields. <6.2. Trade> Mozambique is eligible for trade benefits under the African Growth and Opportunity Act (AGOA, Title I, P.L. 106-200 , as amended), including textile benefits, but its AGOA exports are limited. They accounted for less than 1% of an average annual $123 million in total exports to the United States from 2014 through 2018. U.S. exports to the country averaged $231 million a year during the same period. To help the government increase firms' use of AGOA, USAID supported development of a Mozambique AGOA utilization strategy, released in May 2018. Mozambique hosted the U.S. Corporate Council on Africa's US-Africa Business Summit in June 2019, which was attended by a U.S. high-level delegation. The U.S. Commercial Service has recently expanded its presence in Mozambique, in part due to rising U.S. investment in the energy sector. <7. Outlook> Mozambique may enjoy substantial economic growth after expected gas exports begin in the mid-2020s, and as coal exports rise, but the government may face significant challenges in effectively using those resources for the benefit of its people. A range of governance challenges including corruption, state institutional weaknesses, and an untested new system of political decentralization may continue to hinder socioeconomic development. The still-incomplete peace process between RENAMO and the government also poses a risk to stability, as does the geographically limited but extremely brutal extremist violence in the north. The United States is providing assistance to help the country address these challenges, in addition to continuing to provide significant amounts of assistance for the health sector. If recent-year aid allocation trends are maintained, such cooperation is likely to persist in the coming years.

Mozambique, a significant recipient of U.S. development assistance, is a southeastern African country nearly twice the size of California, with a population of 27.9 million people. It achieved rapid growth following a postindependence civil war (1977-1992), but faces a range of political, economic, and security challenges. These include a political scandal over state-guaranteed, allegedly corrupt bank loans received by state-owned firms, which created public debt that the government did not disclose to the International Monetary Fund (IMF). This placed the country's relations with the IMF at risk and has had major negative repercussions for the economy, donor relations, and Mozambique's governance record. Other challenges include unmet development needs, a range of governance shortcomings, organized crime, an ongoing economic slump, and political conflict and violence involving both mainstream political actors and violent extremists. Mozambique is also recovering from two powerful cyclones that hit the country in March and April 2019 (addressed in CRS Report R45683, Cyclones Idai and Kenneth in Southeastern Africa: Humanitarian and Recovery Response in Brief ). Between 2013 and 2016, the country experienced political violence arising from a dispute between the former socialist majority party, FRELIMO, and the leading opposition political party, RENAMO. (The latter is a former armed rebel group that fought the FRELIMO government during the civil war.) Their recent dispute, prompted by years of varied RENAMO grievances linked to FRELIMO's control of the state, led to numerous armed clashes between government and RENAMO forces. In 2019, the two parties signed a permanent cease-fire and a final political and military accord to end their dispute, but they have yet to fully implement those agreements, and the potential for failure remains. Since late 2017, Mozambique also has faced attacks by a violent Islamist extremist group that is active along its far northern coast. The group—known as Al Sunnah wa Jama'ah (ASWJ), among other names—has killed hundreds, often via beheading. The loan scandal has had far-reaching consequences: It has spurred local and U.S. criminal prosecutions, led some donor governments to suspend aid, undermined the state's credibility, and placed the country in debt distress, reducing its access to credit financing needed to help fund development and government operations. The scandal also is widely seen as contributing to a post-2015 slump in economic growth, which had been rapid for most of the post-civil war period. While that growth expanded the economy and contributed to a decline in extreme poverty, the majority of Mozambicans have remained poor, and while some socioeconomic indicators have improved, the country faces a range of persistent socioeconomic challenges. Development gains have remained limited despite large inflows of foreign assistance and foreign direct investment (FDI). Much of this FDI has financed large industrial projects, many of which have been criticized for being poorly integrated with the broader domestic economy—in which the informal sector and small-scale economic activity prevail—and for generating relatively few jobs or broad reductions in poverty. Mozambique's future may be transformed by the development of large natural gas reserves, discovered in the county's north in 2010. Gas exports are expected to begin in the early to mid-2020s and, together with rising exports of coal, to spur rapid economic growth. The U.S.-based firms Anadarko and ExxonMobil, the latter in partnership with Italy's ENI energy firm, lead international oil company consortia developing the reserves, although a merger involving Anadarko is likely to result in the sale of its Mozambique assets to France's Total SA. While the state may face challenges in effectively governing and managing the large anticipated influx of gas revenue, it has taken some steps to address such challenges. The government plans to establish a sovereign wealth fund to preserve gas income, which it intends to allocate, in part, to infrastructure development, poverty reduction, and economic diversification. U.S.-Mozambican ties are cordial and historically have centered on development cooperation. U.S. assistance, funded at an annual average of $452 million between FY2016 and FY2018, has focused primarily on health programs. Given recent events, U.S. engagement and aid may increasingly focus on the development of economic ties and security cooperation, notably to counter ASWJ, which is active in the area where large-scale gas processing development is underway. For many years, Mozambique received relatively limited congressional attention, but interest in the country may be growing; the country hosted congressional delegations in 2016 and 2018. U.S. humanitarian responses to the recent cyclones have also drawn congressional engagement. Developments in the country—including the rise of violent extremism and prospects for U.S. private-sector investment and U.S. bilateral aid program outcomes in a context in which state corruption poses substantial challenges—could attract increasing congressional attention in the coming years.

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<1. Introduction> Driving a commercial vehicle is one of the most dangerous occupations in the country. In 2018, 28.3 out of 100,000 full-time equivalent truck transportation workers died on the job, eight times the average rate across all occupations. Commercial truck driving is also dangerous to others; in 2017, 3,920 people not engaged in trucking were killed in crashes involving trucks, in addition to 841 truck occupants. Nor has trucking become safer in recent years: the fatality rate for occupants of large trucks, including both drivers and passengers, rose from 0.17 per 100 million vehicle miles traveled in 2009 to 0.28 in 2017. In that same year, 232 buses were involved in fatal accidents, including 13 intercity buses. It has been estimated that up to 20% of crashes involving large truck or buses involve fatigued drivers. Long driving hours, irregular work schedules, and variable sleeping circumstances make driver fatigue a significant concern in the commercial truck and bus industries. Truck and bus drivers are typically driving within a few feet of other drivers whose actions are not entirely predictable, so the commercial drivers need a generally high level of alertness. Automated driver-assistance safety systems (e.g., lane departure warning, automatic emergency braking) are now becoming available for commercial vehicles to help commercial drivers deal with traffic interactions, but such systems are not yet widespread. Congress has legislated limits on the amount of time that commercial drivers are allowed to drive in a day and in a week since 1935. These regulations are known as the HOS rule. An estimated 3.42 million drivers and 540,000 carriers are subject to the HOS rule. In 2012, concerned about the impact of fatigue among truck and bus drivers on highway safety, Congress mandated that most commercial drivers of trucks and buses have their hours of service recorded by electronic logging devices (ELDs). This mandate went into effect in December 2017. This report reviews the ELD rule and the HOS rule that motivated it. The term "driver," as used in the report, refers to commercial drivers of trucks and buses, unless otherwise indicated. <2. Understanding Driver Fatigue> The commercial motor vehicle industry operates 24 hours a day, 7 days a week. In addition, there are typically economic incentives for both carriers and individual commercial drivers to have drivers work well beyond a standard 40-hour workweek. As a result, managing fatigue among truck and bus drivers is a challenge. Fatigue includes a general lack of alertness and deterioration in mental and physical performance. Fatigue can increase a driver's risk of poor performance or impaired decision-making, leading to a crash or other incident harmful to the driver and to others. Studies have found that aviation, railroad, and public transportation workers face similar risks from fatigue. The National Transportation Safety Board has included managing fatigue among transportation workers on its "most wanted" list of safety improvements since 1990. A major complication in measuring the extent of fatigue-related crashes, as well as in managing fatigue among drivers, is that there is no convenient marker for measuring fatigue, akin to a blood-alcohol content level for measuring intoxication. In the absence of such a marker, it is difficult to determine the contribution of fatigue to crashes, with the result that the role of fatigue in crashes is likely underestimated. A National Academies of Sciences, Engineering, and Medicine panel concluded that, in spite of a number of studies that have produced various estimates of the proportion of crashes that can be attributed to driver fatigue, there is not enough information to support a reliable estimate. In any given case, it may be difficult to determine whether fatigue played a role in a commercial motor vehicle crash incident. The prevailing theory of crash investigators is that a crash is usually the result of a number of factors, not a single factor. In the case of commercial motor vehicle crashes, crash investigators, lacking a biological marker for fatigue that they can measure and typically not trained to recognize evidence of fatigue after the fact, are reluctant to list fatigue as a factor on crash reports, because they may be expected to explain their determination in court. While sleep is generally an antidote to fatigue, sleep is not always easy to come by and is not always restorative. Federal regulations can limit the number of hours drivers spend on duty and operating vehicles, but the regulations cannot mandate that those drivers rest when off duty; that is the responsibility of the driver. It is a common experience for a person to feel tired and attempt to fall asleep, and yet to lie awake, impatiently awaiting the onset of sleep. Moreover, medical conditions such as obstructive sleep apnea can result in people getting what appear to be adequate hours of sleep and yet still being subject to fatigue because their sleep is not restorative. Sleep apnea is widespread among commercial truck drivers. Many other factors contribute to the experience of, and severity of, fatigue. A study of fatigue among airline crew members, which is also relevant to drivers, identifies the following factors: the time of day. All else being equal, fatigue is most likely to occur and to be most severe between 2 a.m. and 6 a.m., due to circadian rhythms. the length of time a person has been working without a break. The longer the period, the more likely the worker is to experience fatigue. the length of time a person has been awake is directly related to the likelihood he or she will experience fatigue. the amount of sleep in the previous 24-hour period. The less sleep, the more likely the person is to experience fatigue. the amount of sleep a person has had in the previous several days. Getting insufficient sleep for several days has cumulative effects. variation in individuals' responses to these factors. Translated into the nature of a driver's work, these factors appear in such forms as long periods of wakefulness, long driving hours, inadequate sleep, erratic work schedules, disruption of circadian cycles, fatigue from work-related non-driving tasks (such as helping to load and unload the vehicle), difficulties in finding a safe place to rest when it's time to stop, and insufficient time to recover before starting the next work period. Other factors that have been cited as contributing to fatigue include prolonged experience of whole body vibration, noise, carbon monoxide exposure, extreme temperatures, and working in a high-pressure situation with little autonomy and control over one's time. Conversely, studies have identified safety practices that may help to offset fatigue-inducing factors associated with commercial driving, such as establishing a strong safety culture within a truck or bus firm, having dispatchers take account of fatigue when setting schedules, and providing assistance with fatiguing behaviors such as loading and unloading the truck. <2.1. Fatigue Models> Directly studying the elements that affect driver fatigue is difficult, because individuals' reports of the quality and duration of their sleep are not very reliable, even in the absence of incentives to slant the reports. Techniques to directly measure sleep quality and duration are invasive and, at the scale needed for reliable studies, expensive. To address these difficulties, one approach taken by fatigue researchers has been to develop biomathematical models to estimate alertness based on sleep-wake schedules and the timing of work schedules. Such models can be used to improve safety and reduce risk of fatigue by comparing different work-shift or work-rest schedules. Such models are of interest to the Department of Defense as well as the Department of Transportation (DOT). Currently, the Federal Aviation Administration uses a biomathematical model as part of its process for evaluating fatigue risk management system applications from airlines. While such models can be useful for developing general work-rest schedules, current models do not account for individual differences in response to factors that lead to fatigue. A National Academies of Sciences, Engineering, and Medicine report on fatigue among truck drivers recommends caution in using biomathematical models to deal with irregular work schedules. Also, given the diversity of driver groups, the use of such models and other approaches to address fatigue is inconsistent. Drivers employed by carriers with large fleets of trucks may have more flexibility in scheduling and may also have company-sponsored health and wellness programs. Drivers for small firms and independent owner-operators may not have such resources. Lacking a conveniently measurable marker for fatigue, it is difficult for drivers or managers to know in advance the probability that a driver will experience an episode of fatigue. For this reason, attempts to manage fatigue among drivers have focused on limiting the number of hours they can work. Such "hours of service" regulations have been in place for many decades, and have changed over time. The regulations typically limit the length of daily and weekly work periods, and include minimum required periods off-duty during which workers may rest. <3. The Legal Background of the Hours of Service (HOS) Rule> Congress directed that hours of service regulations be established for the interstate trucking industry in the 1935 law that first subjected interstate trucking to federal safety and economic regulation. The HOS regulation is one facet of the safety standards Congress has established for commercial motor vehicle safety. These standards also address vehicle maintenance and operation, requiring that the tasks imposed on drivers do not impair their ability to drive safely, that their physical condition is adequate for them to drive safely, that the operation of their vehicle does not impair their health, and that they not be coerced by others to operate in violation of safety federal standards. Commercial long-haul truck and over-the-road bus drivers work face challenging conditions for maintaining health, including long work hours, variable work schedules, long periods of sitting still, and difficulties in getting adequate sound sleep. It is accepted now in the medical community that lack of exercise and insufficient sleep over a period of time has harmful effects on a person's health, including increasing the risk for obesity, diabetes, high blood pressure, and premature death. The International Agency for Research on Cancer has classified night shift work as "probably carcinogenic to humans" due to its disruption of circadian rhythms. Studies indicate that many commercial drivers sleep less than seven hours per night during a normal work week; in one survey the median was just under seven hours, with a significant number reporting average sleep of less than six hours. That is an improvement from the past. Prior to changes to the HOS rule in 2003, studies had found drivers getting an average of just over five hours of sleep a night. The 2003 changes included an increase in the minimum off-duty time from 8 to 10 consecutive hours. Studies suggest that drivers were getting more sleep after the 2003 HOS changes, an average of 6.28 hours in one study. However, this is still less than the seven to eight hours recommended by experts in the relationship of sleep and health. <4. HOS Rule and Enforcement> Although these studies suggest that drivers may be getting more sleep as a result of the 2003 HOS changes, fatigue continues to be a significant safety and health issue for drivers. Fatal crashes involving large trucks and buses, after a drop related to reduced activity during the Great Recession of 2008-2009, rose 40% between 2009 and 2017, the most recent year for which statistics are available. The HOS rule was most recently revised in 2011. It applies to drivers in both passenger and freight operations, though the rule for drivers carrying passengers is slightly different from that for drivers carrying freight (see Table 1 ). The extent to which drivers are affected by the rule depends greatly on the nature of their work. The 700,000 registered trucking carriers range from independent owner-operators to corporations with thousands of vehicles and employee-drivers. Drivers' work ranges from carrying passengers to carrying diverse types of freight, including specialized cargoes and hazardous materials that require certification beyond a commercial driver's license. Some drivers are at the wheel all day, while others drive a few hours each day and wait in between routes. Local delivery drivers can sleep in their own beds each night, whereas over-the-road truckers may be away from home for weeks at a time. School bus drivers typically work a few hours in the morning and a few hours in the afternoon with a break in between, and are little affected by the HOS rule, while drivers of transit buses may have their schedules determined as much by collective bargaining agreements as by the HOS rule. The HOS rule is most consequential for long-haul drivers, who may transport several loads during an extended period away from home, during which they may be driving at any hour of the day or night. These drivers represent roughly half of the drivers who are subject to the HOS limits. They are perhaps the most subject to fatigue among the different types of commercial drivers, due to the nature of their work. Because long-haul truck drivers are typically paid by the mile or by the load, and most roads have a maximum speed limit, the simplest way for a driver to increase income is to drive more hours. This is also the simplest way to deal with unexpected delays a driver may encounter. Thus, many drivers have an incentive to violate the HOS rule. In the period prior to the ELD mandate, violations were frequent. For many decades enforcement was based on review of a paper log-book in which each driver recorded hours of service by hand; due to the ease with which the driver could enter false information, the log-book was sometimes derisively referred to as a "comic book." Surveys of commercial drivers found that 40% to 75% admitted to violating the hours of service regulations, depending on the definition of "violation" used in the survey. Penalties for violating the HOS rule can be imposed by federal, state, and local officials. A driver found to have violated the HOS limits in a roadside inspection can be forbidden to drive (placed "out of service") until enough off-duty time has passed to bring the driver back into compliance. Federal, state, and local officials can impose civil and criminal penalties for HOS violations. Additionally, both the driver and the employer's safety scores can be affected. A driver with a poor safety score may experience greater difficulty finding work, and a carrier with a poor safety score may be less attractive to prospective drivers and customers and may be subject to closer attention from the Federal Motor Carrier Safety Administration (FMCSA). Since the HOS rule limits the productivity and flexibility of the industry and the potential income of drivers, changes to the rule are often contentious. For example, one 2011 revision affected the so-called 34-hour restart rule. That provision formerly allowed drivers to resume work within the same week after hitting the 60-hour weekly limit by taking 34 consecutive hours off. The revision required that the 34-hour period would have to encompass two consecutive 1 a.m. to 5 a.m. periods in order to better align the rest period with drivers' circadian rhythms to improve the chances that the drivers got sufficient rest to prevent cumulative fatigue. Practically, it meant that the minimum 34-hour rest period could extend longer, depending on the time of day at which the driver began it. Portions of the industry and some drivers protested that this change limited the flexibility of the timing of the 34-hour rest period. Congress suspended enforcement of that change in 2014, with a provision that the suspension of enforcement would continue unless a new study by FMCSA found that the change provided "statistically significant improvement in all outcomes related to safety, operator fatigue, driver health and longevity, and work schedules." The study, submitted to Congress in March 2017, found that the change did not meet all four of the required areas of improvement. As a result, the previous restart rule is once again in force. <5. Fatigue Risk Management Plans and Systems> Fatigue management programs contain policies and procedures for managing and reducing fatigue among employees, and often include goals of promoting both operational safety and employee health. Such programs can be divided into two broad categories: fatigue risk management plans and fatigue risk management systems. Fatigue risk management plans typically include fatigue awareness training for employees as well as a process for reporting instances of fatigued driving (in the commercial motor vehicle industry). FMCSA, in concert with Transport Canada, trucking industry trade associations, and other associations, developed the North American Fatigue Management Program, an online education program for commercial drivers, their employers, and others involved in commercial trucking. It is intended to inform these groups about the causes of driver fatigue, the impact of driver fatigue on increasing the risk of crashes, the long-term consequences of fatigue for driver health, and measures that can be taken to manage driver fatigue. Fatigue risk management systems include the elements of a fatigue risk management plan, plus a means for continuously monitoring and measuring individual workers' schedules using both subjective and objective data. A recent report from the National Academies of Sciences Engineering, and Medicine noted that the effectiveness of the program has not been properly assessed, and as for the impact of fatigue management programs in general, A few large truck carriers have derived positive results from their almost 10 years of experience in integrating health and wellness and fatigue management programs, and they have shared those experiences, including the return on their investment in such initiatives. However, most studies of these programs have not sufficiently and reliably validated their efficacy for achieving the goal of reducing crash risk or their scalability. Also, little is known about the use of health and wellness programs by independent owner-operators. The report called for evaluation of the North American Fatigue Management Program. FMCSA is collaborating with the National Institute for Occupational Safety and Health on an evaluation of the effectiveness of the program. The results are not expected until 2022 or later. <6. The Electronic Logging Device (ELD) Rule> The purpose of the congressionally mandated ELD requirement is to promote highway safety by improving compliance with the commercial motor vehicle hours of service rule. An ELD is a piece of hardware that is connected to a vehicle's engine control module, often through the diagnostic port that mechanics use to investigate the engine's condition. The device must automatically record driving time, retain the data for at least seven days, and transmit it so that the driver's compliance with the HOS rule can be determined during a roadside inspection. It is generally regarded as more reliable than paper log books in recording drivers' start and stop times. <6.1. Potential Benefits of the ELD Rule> <6.1.1. Safety Benefits> In issuing its rule implementing the ELD mandate, FMCSA stated that the rule was expected to result in greater adherence to the HOS rule, and thus reduce the amount of driving while fatigued. The end result is expected to be fewer crashes caused by fatigued drivers. Several studies prior to the mandate found that ELDs installed voluntarily by fleet owners had this effect. FMCSA estimated 1,844 crashes would be avoided annually as a result of the mandate, thus avoiding injuries to 562 persons and 26 fatalities. FMCSA estimated that the financial benefit of the reduced number of crashes would be $575 million annually. Although data are available on the number of truck crashes in 2017 (before the mandate took effect) and 2018 (after the mandate took effect), real-world truck crash numbers are affected by many variables, including weather and changes in demand for freight carriage by truck. Sufficient time has not yet passed, and sufficient data are not yet available, to assess whether ELDs have reduced the number of crashes as FMCSA had anticipated. A study that looked at roadside inspection reports and crash data from the first nine months of 2018 found that HOS violations had gone down, particularly for owner-operators and very small fleets. (HOS violations by drivers for carriers with larger fleets were already low, in part because many of these carriers had already installed ELDs on their trucks.) The study also found that the average number of crashes per week had gone up slightly after the HOS mandate went into effect compared to 2017. For larger fleets the crash rate went down slightly. The study used freight shipment data and truck registration data to attempt to control for changes in vehicle miles traveled to see whether the increase in crashes was due to increased travel, and concluded that changes in freight shipment activity did not explain the increase in crashes. The study also found that the number of unsafe driving violations by individual owner-operators and drivers for very small fleets (two to six trucks) went up significantly after the ELD mandate went into effect, while such violations did not increase among drivers for larger carriers (who were more likely to have been operating with ELDs prior to the mandate).The authors hypothesized that in the period immediately after implementation of ELDs, independent owner-operators and drivers for small fleets had reduced the amount of time they spent driving and on duty, but were driving faster in order to travel the same number of miles and thus avoid a reduction in their incomes. If the results of this study are supported by other studies over time, it may suggest that differences between the drivers employed by large fleets and those who are self-employed or employed by very small fleets or between the circumstances facing drivers in those two industry groups lead to a higher propensity for risky behavior among drivers in the latter group. Such a difference would have implications for public safety and enforcement activity. <6.1.2. Operational Benefits> FMCSA estimated that the savings from reduced paperwork would be $2.4 billion annually. This benefit accrues partially to drivers and partially to their employers. For drivers, who are customarily paid by the mile rather than by the hour, the savings come from reducing the amount of time spent filling out paper logs rather than driving. For carriers, the savings come from automating the process of compiling driver records for recordkeeping and reporting. With total costs estimated at $1.8 billion, the estimated administrative benefits ($2.4 billion) combined with the safety benefits ($575 million) provide an estimated net benefit of $1.2 billion annually, according to FMCSA. These are estimates, and critics of the mandate, such as the Owner-Operator Independent Drivers Association (OOIDA), have contended that FMCSA has underestimated the costs and overestimated the benefits. OOIDA represents operators who own their trucks and are responsible for the cost of the ELD; many of its members view the ELD as an intrusion into their work life. Conversely, the American Trucking Associations, representing larger carriers, some of which had installed electronic logging devices or similar technology in their fleets years before the mandate to better track their operations, contend that ELDs offer many benefits beyond the ones that FMCSA included in its estimate. Some carriers have responded to stricter enforcement of the HOS rule by using driver relays, in which one driver drives as far as the hours of service limit will allow, then is met by another driver who takes the trailer and continues the delivery. The first driver rests as required, then receives another load from a dispatcher. This method can also offer health and lifestyle benefits to drivers by enabling them to drive outbound one day and back toward their home on the following day, potentially making driving a more appealing job. <6.1.3. Potential Policy/Regulatory Benefits> The Government Accountability Office has noted that the ability of FMCSA and others to evaluate the impact of the commercial motor vehicle HOS regulation and proposed changes to it is limited due to the limited availability of data about driver schedules. The Federal Aviation Administration and the Federal Railroad Administration collect representative schedule data to evaluate the impact of hours of service rules in the aviation and railroad sectors, respectively, but FMCSA does not collect representative data that could be generalized to the trucking industry as a whole for purposes of better analyzing the impacts of the HOS rule. The widespread use of paper records by drivers made the task of collecting such data in representative amounts difficult. The ELD regulation, which requires carriers to collect and store such data in electronic form, aims to simplify the task of collecting representative data on drivers' schedules, and thus could provide the opportunity for FMCSA and other analysts to better evaluate the impact of the HOS rule and proposed changes to the rule. However, there are several obstacles to this use of such data, including a statute limiting DOT's use of this data to enforcement of motor carrier safety, as well as privacy and cost concerns. Given the potential value of the ELD data for regulatory analysis, Congress may examine how these data could be made available for this purpose. <6.2. Potential Costs of the ELD Rule> The primary direct costs of the ELD mandate are the purchase and maintenance of ELDs. FMCSA estimated this cost at $1 billion annually, an average of around $495 per truck or bus. While prices vary according to features and other factors, there are ELDs now available for less than FMCSA's estimated average cost, potentially reducing the economic impact of the mandate. <7. Issues> <7.1. The Impact of Pay by the Mile on Safety> One reason many truck drivers raised concerns about stricter enforcement of the HOS rule is that most interstate truck drivers are paid by the mile. Limiting the number of hours they can drive in a day and a week automatically imposes a ceiling on their earnings. That ceiling also amplifies the economic impact of any delays they may encounter during their workday, such as traffic congestion or time spent waiting for their cargo to be loaded or unloaded. Numerous studies have found a connection between drivers being paid by the mile, limits on driving time, and driver propensity to speed and work longer hours. Speeding is dangerous in two ways: it increases the risk of crashes by reducing a driver's time to react to events, and it increases the severity of crashes. Working longer hours is associated with fatigued driving and a resulting increased crash risk. The HOS regulation give drivers some flexibility to deal with delays, as they may have up to 14 duty hours each day, of which up to 11 hours may be spent driving. But that flexibility may not always feel beneficial, as it can allow a driver paid by the mile to be on duty without being paid for up to three hours a day. In 2015, prior to enactment of the Fixing America's Surface Transportation Act ( P.L. 114-94 ), which reauthorized surface transportation programs, including the activities of FMCSA, the Obama Administration proposed to require that commercial drivers subject to the HOS regulations who are paid by the mile be paid for time they spend on duty but not driving. Studies suggest that arrangement leads to drivers reducing their work hours, and thus reduces the risk of fatigued driving. The proposal was not enacted. <7.2. Detention Time> The use of ELDs may help to quantify a challenge faced by drivers: inroads into their driving time caused by delays in loading and unloading their cargo by shippers and receivers. By one estimate, unpaid "driver detention time" costs drivers who are paid by the mile $1.1 billion to $1.3 billion a year (an average of $1,300 to $1,500 per driver). This detention time is also estimated to increase the risk of crashes, as it uses up a driver's available duty time, pushing their driving time later into their duty period when they are more likely to feel tired, and may lead them to speed to make up for the detention time. This and other studies have found that drivers working for smaller carriers experience longer average detention times than drivers for larger motor carriers. <7.3. Shortage of Parking Spots for Truck Drivers> When a truck driver reaches the HOS driving time limit, the driver must stop and rest. It is not always easy to find parking for a large truck. A variety of factors, including weather and traffic, can make it difficult for a truck driver to know in advance the location at which it will become necessary to stop driving and park the vehicle, and a truck parking facility may be full when a driver reaches it. A shortage of truck parking facilities can pose two public safety hazards: a tired driver may continue driving in search of a place to park and thus increase the risk of a crash, and a driver may park in a place that is unsafe for himself or other drivers, such as on the shoulder of a busy road. In 2005 Congress directed DOT to create a pilot program to address the shortage of truck parking on the National Highway System. Following a 2009 incident in which a driver who had stopped to rest at an abandoned gas station often used by truck drivers in need of parking was robbed and murdered in South Carolina, Congress passed Jason's Law, which made safe parking for truck drivers a national priority, required DOT to periodically survey the extent of truck parking facilities, and explicitly made construction of truck parking facilities eligible for federal funding. State transportation agencies and private truck stop operators both supply parking spaces for truck drivers. The most recent survey of parking facilities found that the demand for truck parking exceeded the supply in most parts of the country, with an extreme shortage in the Mid-Atlantic region. A number of factors contribute to this situation, including the disinclination of truck drivers to pay for parking, a prohibition on commercial facilities at Interstate Highway rest areas, the interests of truck stop operators who oppose the provision of free public truck parking, and the relatively high cost of land at Interstate Highway access points. <7.4. Lack of Data Regarding Bus Drivers and Crashes> There are relatively few studies of the causes and effects of fatigue to bus drivers, compared to those examining truck drivers. In part this may be due to the relatively safer bus experience; as noted above, the number of people killed in bus crashes each year is a small fraction of the number killed in truck crashes. However, the comparatively low number of fatal bus crashes means that developing a nationally representative sample of bus crashes for analysis would require significant resources over many years. The shortage of information on whether fatigue among bus drivers has different causes and effects than among truck drivers makes it tempting to extrapolate truck driver fatigue research to bus drivers. However, this may not be justified, as the population of bus drivers differ in certain respects from the population of long-distance truck drivers. For example, females represent a larger portion of bus drivers than of long-distance truckers. <8. Proposed Changes to the HOS Rule> <8.1. Adjustments Within the General Framework ("Increased Flexibility")> On August 22, 2018, FMCSA published an Advance Notice of Proposed Rulemaking (ANPRM) seeking information and public comment about several potential changes in the Hours of Service rule for commercial drivers. The changes were described as providing more flexibility for drivers and carriers. The changes FMCSA is considering would mainly address complaints about the enforcement of the HOS rule through electronic logging from sectors of the trucking industry in which drivers' typical work schedules involve short periods of driving and long periods of being on duty but not driving, such as utility services and oilfield operations. The changes being considered are the following: Short haul operations . Drivers who operate within a 100 air-mile radius of their normal work reporting location, and whose on-duty time does not exceed 12 hours, are not required to record their driving time and thus are not required to use an ELD. These drivers are assumed to be returning to their homes when off duty. FMCSA is considering expanding this exemption to short-haul drivers who spend up to 14 hours on duty, matching the on-duty period for other truck drivers, but permitting drivers claiming this exemption to continue to operate without recording their driving time. There would thus be no way to enforce the HOS rule with respect to short-haul driver. Adverse driving conditions . Drivers are allowed two extra hours of driving time under adverse conditions, which are defined as "snow, sleet, fog, other adverse weather conditions, a highway covered with snow or ice, or unusual road and traffic conditions, none of which were apparent on the basis of information known to the person dispatching the run at the time it was begun." This exception allows a driver up to 13 hours of driving time, but does not extend the 14-hour on-duty limit. FMCSA is considering adding 2 hours to the 14-hour on-duty period for adverse conditions, thus allowing a maximum of 16 consecutive hours on duty. 30-minute break . FMCSA is seeking information on alternatives to, and the impact of eliminating, the required minimum 30-minute rest break after no more than 8 hours have passed since the driver either (a) came on duty or (b) spent a period of at least 30 minutes in the sleeper berth of a truck. FMCSA added the 30-minute break requirement to the HOS rule in 2011 based on evidence from several studies that for a period after taking a break from driving a driver is less likely to be involved in a crash. Split sleeper berth time . A driver in a truck with a sleeper berth can divide the minimum 10 off-duty hours into 2 separate periods totaling at least 10 hours; one of those periods must include at least 8 hours spent in the sleeper berth. FMCSA initially planned to conduct a pilot program giving drivers more flexibility in the length of the sleeper berth periods, in order to collect data regarding the impact of providing such flexibility on driver rest and alertness. In October 2018, FMCSA announced that it was cancelling the proposed pilot program, saying it already had enough data and research on the topic and wanted to fast-track its proposed changes to the HOS rule. The public comment period on the potential changes closed in October 2019. FMCSA has not indicated when proposed regulations may be published. <8.2. ELD Exemption for Livestock Haulers> One of the industry segments that has objected most strenuously to being subjected to more stringent compliance with the HOS rule due to the ELD mandate is livestock hauling. These drivers transport living creatures that require food and water and that are subjected to increased stress and risk of injury by the process of being loaded onto and unloaded from a vehicle as well as by the experience of transport. Also, federal law provides that livestock being transported across state lines can be confined in a vehicle for a maximum of 28 consecutive hours, after which they must be unloaded for feeding, watering, and rest. The law, however, is apparently frequently ignored and not rigorously enforced by the U.S. Department of Agriculture. The livestock hauling industry already had several HOS exemptions prior to the ELD mandate: The private transportation of agricultural commodities (including livestock, bees, and horses) to or from a farm or ranch by the owner or operator of the farm or ranch, family members, or employees is exempt from the HOS rule. During agricultural planting and harvesting seasons (as determined by each state), haulers of agricultural commodities, including livestock, bees, and horses, who operate within a 150 air-mile radius of the source of the commodities, are exempted from the HOS rule. This area within which this exemption can be claimed was expanded from a radius of 100 air miles to 150 air miles in 2012, more than doubling the exempted area. HOS regulations do not apply to drivers transporting agricultural commodities (including livestock) who operate completely within a 150 air-mile radius of the source of the commodities. When a driver who is using one of those exemptions drives beyond the 150 air-mile radius, the HOS regulations start to apply and the driver must record driving time and on-duty time. The time spent working and driving within the 150 air-mile radius does not count toward the HOS limits, so a driver could have been driving for several hours before officially recording the first hour of driving time. Over the past few decades the declining cost of transportation and other factors have led the livestock industry, particularly the cattle sector, to adopt a business model that emphasizes hauling livestock from around the lower 48 states to feedlots and slaughterhouses concentrated in the center of the country. By making it harder for drivers to evade the HOS limits without detection, the ELD mandate effectively reduces the distance that livestock can be transported within the 28-hour limit set in law before they must be unloaded and fed, watered, and given a chance to rest. The livestock hauling industry contends that abiding by the HOS limits may force drivers who reach the driving time limit of 11 hours to either unload the livestock for the period of the off-duty rest time and then reload them, putting them under additional stress and risk of injury, or else leave the livestock on the vehicle during the off-duty period. Data are lacking on whether stricter compliance with the HOS rule increases the cost of shipping livestock and to what extent it reduces the number of crashes involving livestock haulers. Congress has barred FMCSA from using any of its funding to enforce the ELD mandate on livestock haulers through September 30, 2020.

In response to the COVID-19 outbreak, on March 13, 2020, the Department of Transportation (DOT) issued a national emergency declaration to exempt from the Hours of Service (HOS) rule through April 12, 2020, commercial drivers providing direct assistance in support of relief efforts related to the virus. This includes transport of certain supplies and equipment, as well as personnel. Drivers are still required to have at least 10 consecutive hours off duty (eight hours if transporting passengers) before returning to duty. It has been estimated that up to 20% of bus and large truck crashes in the United States involve fatigued drivers. In order to promote safety by reducing the incidence of fatigue among commercial drivers, federal law limits the number of hours a driver can drive through the HOS rule. Currently the HOS rule allows truck drivers to work up to 14 hours a day, during which time they can drive up to 11 hours, followed by at least 10 hours off duty before coming on duty again; also, within the first 8 hours on duty drivers must take a 30-minute break in order to continue driving beyond 8 hours. Bus drivers transporting passengers have slightly different limits. Approximately 3 million drivers are subject to the federal HOS rule. For decades, drivers recorded their service hours in paper log books. This method made violations of the HOS rule easy to hide. Since many drivers are paid by the mile, some drivers violated the HOS rule in order to drive longer and make more money. Some drivers said they had to violate the rule to meet the schedules imposed on them by dispatchers. There were concerns about the safety impacts of having drivers become even more fatigued by driving longer than the maximum times allowed by the HOS rule. In an effort to improve compliance with the HOS rule, in 2012 Congress mandated that trucks be equipped with electronic logging devices (ELDs), hardware devices that are connected to the truck engine to record driving time and transmit it during roadside inspections. In 2015, the Federal Motor Carrier Safety Administration (FMCSA) finalized regulations to implement that mandate. The mandate took effect in December 2017. FMCSA determined that the mandatory use of ELDs would improve highway safety, and could improve driver health if drivers take advantage of the rest periods mandated under the regulations to get adequate sleep. Since the ELD mandate went into effect, certain sectors of the commercial trucking industry have raised concerns about its impact. Since the ELD mandate did not change the HOS rule, but made it harder to evade the HOS limits without being detected, those concerns suggest that some operators may have routinely been out of compliance with the HOS rule. One sector that has been particularly critical of the improved enforcement of the HOS limits is the livestock hauling industry. The industry's business model has evolved to depend on hauling livestock long distances from around the nation to feedlots and slaughterhouses located mostly in the central states, and each stop along the way poses hazards to the livestock. Congress has repeatedly provided temporary waivers from the ELD mandate for livestock haulers, pending proposed revisions of the HOS rule by FMCSA. Currently the agency is prohibited from using federal funding to enforce the HOS rule against livestock haulers until September 30, 2020. The use of ELDs may help to quantify a challenge faced by drivers: inroads into their driving time caused by delays in loading and unloading their cargo by shippers and receivers. Drivers are typically paid by the mile, and by one estimate this unpaid "driver detention time" costs drivers $1.1 billion to $1.3 billion a year (an average of $1,300 to $1,500 per driver). This detention time is also estimated to increase the risk of crashes due in part to encouraging drivers to speed to make up for mileage that otherwise could not be driven during the allowable work time because of detention time. As the ELD mandate has been in effect for two years now, some impacts are starting to come into focus. An array of ELDs are now offered, some at prices below FMCSA's initial estimates. The impact of improved enforcement on industry activity and truck safety is not yet clear. Legislation is being proposed to help address the shortage of parking spots for truck drivers that can make it difficult to find a safe place to stop when they reach their HOS time limit. FMCSA has proposed a set of relatively minor changes to the HOS rule to, in the agency's words, increase safety while providing flexibility to drivers.

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<1. Background> The Department of Defense (DOD) operates a Military Health System (MHS) that delivers certain health entitlements under Chapter 55 of Title 10, U.S. Code. The Defense Health Agency (DHA) a component of the MHS administers the TRICARE program, which offers health care services to approximately 9.5 million beneficiaries, composed of military personnel, retirees, and their families. Beneficiaries may receive health care services in DOD-operated hospitals and clinics known as military treatment facilities (MTFs) or through participating civilian health care providers. DOD operates 723 MTFs in the United States and in overseas locations. Each MTF provides a range of clinical services depending on its size, mission, and level of capabilities. Only active duty servicemembers are entitled to care in any MTF. Dependents and retirees may receive care on a space-available basis that takes into account patient capacity, beneficiary category (e.g., servicemember, family member, retiree), and enrollment status. When care is not available at an MTF, beneficiaries may receive care from a civilian health care provider who participates in TRICARE. The three main health plan options offered to eligible beneficiaries include TRICARE Prime, TRICARE Select, and TRICARE for Life. TRICARE also offers premium-based health plan options for certain beneficiaries, such as qualified members of the Selected Reserve, retired reservists, young adults, and transitioning servicemembers. Other TRICARE benefits include a pharmacy program, optional dental plans, and a vision plan for certain beneficiaries. This report answers frequently asked questions about TRICARE health plan options tailored for certain reservists, retired reservists, and their families (i.e., TRICARE Reserve Select and TRICARE Retired Reserve) and certain statutory prohibitions that limit their participation in the plans. <2. Questions and Answers> <2.1. 1. What is TRICARE Reserve Select and TRICARE Retired Reserve?> TRICARE Reserve Select (TRS) is a premium-based health plan available worldwide for some members of the Selected Reserve and their families. TRS was established by Section 701 of the Ronald W. Reagan National Defense Authorization Act (NDAA) of Fiscal Year 2005 ( P.L. 108-375 ). TRICARE Retired Reserve (TRR) is a premium-based health plan available worldwide for qualified retired members of the reserve components. TRR was established by Section 705 of the NDAA for FY2010 ( P.L. 111-84 ) as a TRICARE coverage option for so-called gray area reservists, defined as those who have retired but are too young to draw retired pay. The plans are similar to TRICARE Select (i.e., preferred provider option), which feature monthly premiums, annual deductibles, and fixed co-pays when receiving care from a network provider or paying a percentage of the allowable charge when receiving care from a TRICARE-authorized, nonnetwork provider. Eligible beneficiaries residing outside of the United States are also eligible for TRS and TRR; however, the availability of network providers may be limited based on geographic location. By law, the Department of Defense (DOD) is required to subsidize the cost of TRS. Servicemembers pay 28% of the cost of the program in the form of premiums. For TRR, enrollees pay the full cost of the calculated premium as determined by the Secretary of Defense. DOD does not subsidize the program costs for TRR. DOD annually updates the premiums for each program on an "appropriate actuarial basis." Monthly TRS and TRR premiums for calendar years 2019 and 2020 are listed in Table 1 . DOD reports that at the end of FY2018, 383,683 beneficiaries were covered by TRS and 9,019 beneficiaries were covered by TRR. <2.2. 2. Who qualifies for TRS, and what are the statutory prohibitions on TRICARE Reserve Select eligibility for certain members of the reserve components?> Members of the Selected Reserve (i.e., drilling reservists) and their families qualify for TRS if the following criteria are met: the reservist is not on active duty orders; the reservist or their family members are not covered under the Transitional Assistance Management Program; and the reservist or their family members are not eligible for the Federal Employee Health Benefits (FEHB) program. Prior to 2006, TRS availability was limited to members of the Selected Reserve (including family members) after serving on continuous active duty in support of a contingency operation for 90 or more days and signing an agreement to continue serving in the Selected Reserve for one or more years. TRS coverage was also limited to the lesser of: one year (in cases where an activated reservist does not continuously serve on active duty for at least 90 days due to an "injury, illness, or disease incurred or aggravated while deployed"); one year for each consecutive period of 90 days of continuous active duty service; or the number of years agreed upon in the military service obligation agreement. Section 706 of the John Warner NDAA for FY2007 ( P.L. 109-364 ) amended 10 U.S.C. 1076d to expand TRS eligibility, including removal of the military service obligation agreement, active duty service length, and period of coverage requirements. In revising TRS, the law also added a prohibition on members of the Selected Reserve and their family members from being eligible for TRS if they are also eligible for, or enrolled in, "a health benefits plan under Chapter 89 of Title 5," U.S. Code. This health benefit plan is known as the FEHB program. <2.3. 3. Who is eligible for TRR, and what are the statutory prohibitions on TRICARE Retired Reserve eligibility for qualified retired reservists?> Retired members of the reserve components and their family members qualify for TRR if the following criteria are met: the retiree is qualified for non-regular retirement under chapter 1223 of Title 10, U.S. Code; the retiree is under age 60; and the retiree or their family members are not eligible for the FEHB program. P.L. 111-84 , which established TRR, incorporated a similar prohibition on qualified retired members of the reserve components and their family members from being eligible for TRR if they are eligible for the FEHB program. For example, a reservist or qualified retired reservist who is also a civil service or U.S. Postal Service (USPS) employee, annuitant, or family member that is eligible for the FEHB program is barred from enrolling in TRS or TRR. This restriction does not apply to other TRICARE programs for which reservists or retired reservists may also be eligible under other criteria (e.g., TRICARE Prime, TRICARE Select, TRICARE for Life, TRICARE Dental Program, or the Transition Assistance Management Program). <2.4. 4. How many beneficiaries do the TRS eligibility restrictions affect?> In 2019, the Congressional Budget Office (CBO) estimated approximately 110,000 members of the Selected Reserve are prohibited from enrolling in TRS because they are eligible for FEHB. This represents approximately 13.7% of the total Selected Reserve force. CBO also estimated that about "one third would enroll in TRS if given the opportunity." Neither DOD nor CBO has published any similar estimates for TRR. <2.5. 5. Why did Congress enact these statutory prohibitions?> The congressional record, the committee and conference reports accompanying the enacting and amending legislation for TRS and TRR, do not articulate why the prohibitions are in place. Nevertheless, observers have speculated that the prohibition may be related to potential increases in mandatory or discretionary costs associated with certain risk-pool adjustments to FEHB and expansion of the TRICARE program. As the House of Representatives considered the FY2007 NDAA, as reported by the House Armed Services Committee, the Office of Management and Budget issued a Statement of Administration Policy (SAP) that expressed cost concerns with the proposal to expand to TRS. The SAP noted: the Administration strongly opposes Section 709, which expands TRICARE eligibility to all Selected Reserve members and their families and dramatically worsens the fiscal situation by increasing the government subsidy for non-mobilized reservists and their families at an estimated cost of $400 million in FY 2007 and $3.6 billion from FY 2007 through FY 2011. By FY 2011, it is estimated that the annual cost for this expanded benefit will reach $1.2 billion. It is critical for Congress to eliminate these unfunded expansions and work with the Administration to place the system on a sound fiscal foundation. <2.6. 6. What health insurance options are available to those prohibited from enrolling in TRS or TRR?> Reservists, qualified retired reservists, or their family members subject to the statutory prohibitions may obtain health insurance coverage, if eligible, through any of the following health insurance options: FEHB; Medicaid; private individual health insurance; or employer-sponsored insurance (e.g., personally or as offered through a spouse's employer). Reservists serving in a federal active duty status for greater than 30 days are eligible to participate in TRICARE programs for active duty servicemembers, including TRICARE Prime. <2.7. 7. What are the premium rates for the FEHB program?> The FEHB program establishes several premium rates based on geographic location, coverage option, and federal employee category. The monthly average premium rates (non-USPS employee and annuitant) for calendar year 2019 are listed in Table 2 . <2.8. 8. What are the potential implications of extending TRS or TRR eligibility to all members of the Selected Reserve and qualified retired reservists?> <2.8.1. Parity in TRS or TRR Eligibility for Reservists> Reservists who are eligible for FEHB, for any reason, are disqualified from participation in TRS or TRR. Reservists not employed by the federal government (and not eligible for FEHB) may participate in TRS or TRR. Certain military service organizations (MSOs) perceive and advocate that the removal of the statutory prohibition for TRS or TRR would create equality among all members of the Selected Reserves or qualified retired reservists. These advocacy groups also note that in doing so, all members of the Selected Reserves would be able to access TRS as a "more affordable option" than FEHB, which has higher premiums and cost shares. In a 2018 report to Congress on reserve component health care, DOD states that reservists have "expressed strong feelings of discontent with the law that disqualifies Selected Reserve members from purchasing TRICARE Reserve Select (TRS) for themselves or for family members if they are eligible for, or enrolled in, the FEHB program." DOD also noted in its report that reservists "would like Congress to repeal the FEHB exclusion and DOD fully supports its repeal;" however, DOD made no recommendation concerning this issue at the time it produced the report nor has it any time since. <2.8.2. Cost Implications> While expanding TRS or TRR eligibility would have certain cost implications for DOD, there are also cost considerations for other federal agencies that fund FEHB benefits for their respective federal employees. In June 2019, CBO published a cost estimate of a proposal to remove the TRS prohibition starting in 2030 Section 703 of the FY2020 NDAA ( H.R. 2500 ; as reported by the House Armed Services Committee). Overall, there would be an estimated savings to the federal government. However, given certain statutory or House pay-as-you-go (PAYGO) rules, increases in mandatory spending must be offset by "direct spending cuts, revenue increases, or a combination of the two," rather than by savings in discretionary spending. CBO estimates that expanding TRS eligibility would produce an increase in mandatory costs, noting that: Because members of the Selected Reserve are younger and healthier than the average federal employee, reservists and their family members who discontinue FEHB coverage would cause an increase in premiums for all remaining FEHB beneficiaries, including federal retirees and active postal employees, whose premiums are paid from mandatory accounts. When implemented, CBO estimates this section would increase direct spending by about $40 million each year beginning in 2030. Concurrently, CBO also estimates there would also be savings in discretionary spending, greater than the increase in mandatory costs: On net, CBO estimates section 703 would eventually reduce discretionary costs to the government by about $250 million per year beginning in 2030 because the cost of TRS is less than the government's share of the premium for FEHB. Section 703 would also affect spending for other FEHB beneficiaries. <2.8.3. Beneficiary Satisfaction> DOD asserts that reservists and their spouses "show satisfaction with the TRICARE program in general, and TRS in particular." Beneficiaries enrolled in TRS are reportedly satisfied with their TRICARE plan and the quality of health care provided. For example, DOD observed in the 2014 Survey of Reserve Component Spouse s that 48% found "no difference" between TRS and civilian health insurance plans. DOD also observed that 32% of survey participants believed that TRS provides "better" or "much better" health care than civilian health plans. Similar results can be found in certain MSO-conducted surveys of beneficiaries. While many TRS enrollees express a general satisfaction with their TRICARE plan, some beneficiaries have described certain challenges, such as: difficulty in finding health care providers and facilities that accept TRICARE; maintaining continuity of care for a family member when a reservist is activated and ordered to active duty; and having to reenroll in TRS after a reservist transitions from active duty to the Selected Reserve. <2.9. 9. Has Congress previously considered extending TRS or TRR eligibility?> Since the creation of TRS and TRR, Congress has considered a number of proposals to eliminate the statutory prohibitions described above (see Table 3 ). To date, none of the proposals have been enacted.

Between 2001 and 2007, more than 575,000 members of the reserve components were ordered to active duty in support of ongoing military operations, including major combat operations in Afghanistan (Operation Enduring Freedom), Iraq (Operation Iraqi Freedom). While on active duty, reservists and their family members have access to a wide range of health care services administered by the Department of Defense's (DOD) Military Health System (MHS). However, prior to 2005, chapter 55 of Title 10, U.S. Code, authorized little to no DOD health care services to nonactivated reservists or their family members. In 2005, Congress began examining initial impacts of frequent mobilizations on reservists, their families, and their employers. Soon after, Congress enacted a series of new or expanded health care, transitional, and other personnel benefits to mitigate certain effects associated with reserve mobilizations. Two health care programs tailored for reservists were established: TRICARE Reserve Select (TRS)—a premium-based health plan option available to qualified members of the Selected Reserve and their family members; and TRICARE Retired Reserve (TRR)—a premium-based health plan option available to so-called gray area reservists—those who have retired but are too young to draw retired pay—and their family members. Section 701 of the Ronald W. Reagan National Defense Authorization (NDAA) Act of Fiscal Year 2005 ( P.L. 108-375 ) established TRS. Initially, TRS eligibility was limited to certain reservists who had served on continuous active duty in support of a contingency operation and signed a military service obligation agreement. Section 706 of the John Warner NDAA for FY2007 ( P.L. 109-364 ) revised TRS by removing certain restrictions and expanding eligibility. The law also added a prohibition on members of the Selected Reserve and their family members from being eligible for TRS if they are also eligible for the Federal Employee Health Benefits (FEHB) program. Section 705 of the NDAA for FY2010 ( P.L. 111-84 ) established TRR, which also prohibits retired reservists and their families from participating, if they are also eligible for the FEHB program. Both reserve plans mirror the benefits and cost sharing requirements established for TRICARE Select, a health plan option available to family members of active duty servicemembers and certain military retirees. Congress has not explicitly addressed why the prohibition on TRS or TRR for FEHB-eligible reservists and their family members was established. Nevertheless, observers have noted several considerations in removing the statutory prohibition, including: potential impacts to the FEHB health insurance risk-pools; potential cost implications to federal mandatory and discretionary spending; and continuity of care for reservists transitioning between active and reserve status. While Congress has considered various proposals to remove the statutory prohibitions on TRS or TRR eligibility, none have been enacted.

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<1. Background> In an Executive Order (E.O. 13767) released during President Donald Trump's first week in office, on January 25, 2017, he declared, "It is the policy of the executive branch to secure the southern border of the United States through the immediate construction of a physical wall on the southern border [and] 'Wall' shall mean a contiguous, physical or other similarly secure, contiguous, and impassable physical barrier." The Trump Administration has consistently pursued the deployment of fencing, walls, and other barriers along the U.S.-Mexico border as a high priority. On April 4, 2018, the President, citing "a drastic surge of activity on the southern border," directed the Secretary of Defense, the Attorney General, and the Secretary of Homeland Security to coordinate action on securing the U.S. southern border "to stop the flow of deadly drugs and other contraband, gang members and other criminals, and illegal aliens into this country." The President further directed DOD to mobilize the National Guard to support DHS at the border and to develop a plan for tapping additional military resources using executive authorities. Later that year, as part of budget negotiations over a FY2019 appropriations package, the Administration submitted a supplemental request of $5.7 billion for "construction of a steel barrier for the Southwest border." The new funding request became the focal point of a partial government shutdown that began on December 22, 2018, and lasted 35 days, the longest on record. Unsatisfied with the negotiated agreement which provided $1.375 billion of the Administration's supplemental $5.7 billion request President Trump declared a national state of emergency and undertook a series of executive actions that redirected $6.1 billion in DOD funds for border barrier construction using a combination of authorities. The Administration's plans were described in a fact sheet entitled, President Donald J. Trump 's Border Security Victory (hereinafter referred to as the factsheet ), and included $2.5 billion in defense funds authorized under (nonemergency authority of) 10 U.S.C. 284 Support for counterdrug activities and activities to counter transnational organized crime . $3.6 billion in defense funds authorized under (emergency authority of) Title 10 U.S.C. 2808 Construction authority in the event of a declaration of war or national emergency . This report is intended to provide a chronological summary of internal and interagency communication related to DOD's execution of President Trump's border wall funding plan. The information provided here has been drawn chiefly from court exhibits and declarations in ongoing legal proceedings. CRS has not independently authenticated the sworn declarations and accompanying documents submitted by litigants as part of legal proceedings. <2. Summary of 10 U.S.C. 284 Internal and Interagency Correspondence> A declaration in court records describing communications with DOD suggests that DOD anticipated the use of 10 U.S.C. 284 to fund border barrier projects in early 2018 when the Under Secretary of Defense (Comptroller) temporarily froze $947 million in unobligated funds from the defense Drug Interdiction and Counter-Drug Activities account for possible construction of barriers on the Southwest Border. The frozen FY2018 appropriations were released beginning in July 2018, the final quarter of FY2018. In April 2018, DOD created a new office within the Department called the b order s ecurity s upport c ell with responsibility for coordinating and managing all border related issues. Assistant Secretary of Defense for Homeland Defense and Global Security, (ASD[HD&GS]) Kenneth Rapuano led the effort. In a letter to DOD dated February 25, 2019, following the release of the Administration's factsheet plan, DHS formally requested that the Defense Department support its ability to impede and deny illegal entry and drug smuggling activities along the southwest U.S.-Mexico border by assisting with the construction (or replacement) of fences, roads, and lighting. DHS specifically requested that DOD fund a total of 11 border barrier projects on federal lands. In a written reply dated March 25, 2019, to Acting Secretary of Homeland Security Kirstjen Nielsen, Acting Secretary of Defense Patrick Shanahan affirmed that the U.S. Army Corps of Engineers (USACE) would undertake the planning and construction of approved projects and, upon completion, hand over custody of all new infrastructure to DHS. Between March and April 2019, DOD approved $2.5 billion for seven of the border barrier projects requested by DHS and funded them in two tranches drawn from reprogrammed defense program savings. DOD completed a transfer of $1 billion for three projects (El Paso Sector Project 1 and Yuma Sector Projects 1-2) on March 26, 2019. On May 9, 2019, the Department completed a second transfer of $1.5 billion for four additional projects (El Centro Sector Project 1 and Tucson Sector Projects 1-3). The obligation of these funds was temporarily suspended by court injunctions between May and July 2019 issued in a lawsuit that challenged the legal basis of DOD's reprogramming actions. On July 26, 2019, the U.S. Supreme Court lifted the lower court's injunction, allowing work to once again proceed. Litigation in this case (and related) lawsuits remains ongoing. In August 2019, DHS notified DOD that new estimates indicated construction costs would be lower than first projected, resulting in an overall funding surplus. DHS requested the anticipated savings be applied to the execution of three additional projects. DOD approved the request but later terminated the plan after savings proved insufficient. On September 30, 2019, DOD announced the transfer of an additional $129 million in expiring FY2019 appropriations drawn from counternarcotics accounts that Military Departments determined were excess to need. The Department also stated USACE would require an additional $90 million in FY2020 funds for the management and oversight of border barrier projects underway. Unlike the Administration's use of the previous $2.5 billion in transfers, which derived largely from defense program savings drawn from non -drug related appropriations, the Administration plans to fund the anticipated costs in FY2020 from appropriations made directly to the counternarcotic account. On January 14, 2020, DHS requested DOD provide additional assistance, pursuant to 10 U.S.C. 284, with the construction of 38 new border barrier projects (and project segments) along drug smuggling corridors. On February 13, 2020, DOD approved 31 of these items and reprogrammed $3.8 billion in FY2020 military procurement funds for their execution. All $3.8 billion in reprogrammed funds were drawn from congressional special interest items included in the final FY2020 defense appropriation, P.L. 116-93 . <3. Summary of 10 U.S.C. 2808 Internal and Interagency Correspondence> Unlike DOD's use of 10 U.S.C. 284 transfer authority, which the Department began executing almost immediately following the release of the President's factsheet , its determination to exercise emergency statute 10 U.S.C. 2808 was the result of approximately eight months of additional deliberations. These deliberations included two assessments by the Chairman of the Joint Chiefs of Staff (CJCS) to determine whether the construction of border barriers qualified as a legitimate use under the requirements of 10 U.S.C. 2808. The statute specifies that new construction must support the use of armed forces mobilized to address a national emergency declared by the President. On February 11, 2019, CJCS provided a preliminary assessment to the Acting Secretary of Defense that broadly assessed the utility of physical barriers on DHS operations, as well as ongoing demand for DOD support. The report acknowledged empirical challenges associated with quantifying the effectiveness of physical barriers on migration flows "because reliable data is scarce and opinions are divergent," but pointed to anecdotal and historical evidence to suggest that barriers might reasonably be expected to reduce the demand for DOD resources over time: Although military construction projects along the southern border may not alleviate all DHS requirements for DoD support, the construction of physical barriers should reduce the challenges to CBP and, therefore, can be reasonably expected to reduce DHS requirements for DoD support. On February 18, 2019, following the release of the Administration's factsheet plan, DOD requested that DHS provide a prioritized list of projects along with a supplemental analysis explaining how the construction would support military personnel pursuant to 10 U.S.C. 2808. DHS responded in March with the detailed information, characterizing the projects as force multipliers for mobilized DOD personnel: Because the requested projects will serve as force multiplier, it will also likely reduce DHS's reliance on DoD for force protection, surveillance support, engineering support, air support, logistical support, and strategic communications assistance. In other words, providing border barriers and the accompanies [sic] roads and technology will allow DoD to focus its efforts on a smaller, more focused area. In April 2019, having received the list of DHS projects, the Secretary of Defense requested the CJCS conduct a second, more detailed analysis of proposed construction and return with a recommendation on how to proceed. Concurrently, the Secretary directed the Under Secretary of Defense (Comptroller) to begin identifying $3.6 billion in existing military construction projects that might be deferred by use of the emergency authority under the statute. In a memorandum report dated May 2019, CJCS General Joseph Dunford delivered his final assessment to Acting Secretary of Defense Shanahan. The report's methodology was based on the presumption that while any barrier construction along the border could reasonably be expected to create "ripple effects" that would support the use of the armed forces, projects more beneficial than others should be prioritized, based on factors identified by DOD. The analysis assessed border barrier projects DHS had requested under 10 U.S.C. 2808, as well as those projects not funded by previous transfers under 10 U.S.C. 284. Though the CJCS team considered the type of land associated with each project area (federal or private), it developed a prioritization scheme that was missing key details related to land jurisdiction. As a consequence, the CJCS' final recommendations were later revised and included in an action memorandum to the Secretary of Defense on August 21, 2019. On September 3, 2019, Secretary of Defense Mark Esper, having determined that border barrier construction would serve as a "force multiplier" for reducing DHS's demand for DOD personnel and assets, directed the Acting Secretary of the Army to proceed with the construction of 11 DHS border barrier projects, and the deferral of approximately 127 existing military construction projects ($3.6 billion). In a public briefing later that day, DOD officials described a plan for deferring in stages, otherwise authorized military construction projects under 10 U.S.C. 2808 authority. Those military construction projects located at non-U.S. locations ($1.8 billion) would be deferred first, followed later by projects within the United States. ($1.8 billion). Officials stated The intent is prioritizing funds in this manner is to provide time to work with Congress to determine opportunities to restore funds, as well as work with our allies and partners on improving burden sharing for overseas construction projects. USACE has noted that the pace for obligating military construction (MILCON) funds for border barrier construction projects will be highly dependent on project location, since land must first be administratively transferred to the Department of the Army before work can proceed. Construction on land that currently falls under the jurisdiction of DOD can be undertaken relatively quickly, since the military effectively manages the parcels. Projects in locations that fall under one or more other federal jurisdictions may be delayed while transfers are negotiated. Projects on private land are expected to take the longest to complete, since the government must first obtain administrative jurisdiction of the land by either purchase or condemnation. On September 18, 2019, Department of the Interior (DOI) issued Public Land Orders that transferred jurisdiction of land required for five of projects for a period of three years to DOD. <4. Detailed Chronologies and Selected Documents> This section provides a detailed overview of key documents related to the Administration's use of 10 U.S.C. 284 and 10 U.S.C. 2808 to fund border barriers. The tables that follow each include a summary of source documents, citations, and links that allow readers to access the associated materials directly. (Due to technical considerations, documents are only made available to congressional users.) Table 1 , CRS Document Compilations , contains a collection of reference documents that CRS has compiled for the convenience of users. These include court declarations that do not fit neatly into a chronological framework and documents that describe activities that may be grouped as a single action (e.g., multiple reprogramming actions on the same date for an identical purpose). Where Table 1 documents are cited elsewhere in this report, they are identified by the record's "Short Title" shown in the indicated column. Table 2 , Chronology of 10 U.S.C. 284 Decisionm aking , and Table 3 , Chronology of 10 U.S.C. 2808 Decisionmaking, summarize actions related to each respective authority. The separate tables reflect the fact that interagency decisionmaking has generally operated along separate tracks; deliberations related to 10 U.S.C. 2808 were kept separate from correspondence related to 10 U.S.C. 284.

The Department of Defense (DOD, or the Department) has contributed $6.1 billion to the construction of new and replacement barriers along the U.S.-Mexico border in support of the Department of Homeland Security (DHS) by invoking a mixture of statutory and nonstatutory authorities. Congressional concerns surrounding the use of these authorities and the further possibility that DOD's actions may jeopardize legislative control of appropriations has generated interest about the decisionmaking process that drove the Department's funding decisions. DOD has not generally made internal and interagency communications related to these processes directly available to congressional staff. However, various letters, memoranda, and explanatory declarations from key decisionmakers have been released into the public record (primarily as the result of ongoing litigation) that provide a more complete picture of the issues the Department considered, along with its final determinations on border barrier funding. This report provides a chronological summary of internal and interagency communications related to DOD's border wall funding processes since approximately April 2018 as described chiefly through court exhibits and declarations in legal proceedings. Due to the technical difficulty of accessing legal records, CRS has made all relevant open source materials accessible to congressional staff via hyperlinks. A comprehensive set of legal citations has also been provided in the accompanying tables.

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President Trump has long advocated for the construction of additional fencing, walls, and other barriers along the U.S.-Mexico border to deter unlawful border crossings. Less than a week after taking office, the President issued an executive order directing the Secretary of Homeland Security to "take all appropriate steps to immediately plan, design, and construct a physical wall along the southern border." This policy has engendered a robust debate in the public sphere, and a conflict has also made its way to federal court, with various plaintiffs challenging the lawfulness of the Trump Administration's initiatives to pay for the construction of border barriers by reprogramming funds from existing appropriations. At their core, these lawsuits concern whether the Administration's funding initiatives exceed existing statutory authorization and conflict with Congress's constitutionally conferred power over federal funds. Article I of the Constitution provides that "[n]o money shall be drawn from the Treasury but in Consequence of Appropriations made by Law." As Justice Joseph Story noted in his Commentaries on the Constitution , the appropriations power was given to Congress to guard against arbitrary and unchecked expenditures by the executive branch and to "secure regularity, punctuality, and fidelity, in the disbursement of the public money." "In arbitrary governments," he expounded, "the prince levies what money he pleases from his subjects, disposes of it, as he thinks proper, and is beyond responsibility or reproof." To avoid giving the President such "unbounded power over the public purse of the nation," the Framers designated Congress "the guardian of [the national] treasure" giving to it "the power to decide, how and when any money should be applied[.]" This "power to control, and direct the appropriations," Justice Story explained, serves as "a most useful and salutary check upon profusion and extravagance, as well as upon corrupt influence and public speculation." Justice Story's sentiments echoed those of James Madison, who in The Federalist No. 58 described the legislature's "power over the purse" as "the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure." The Trump Administration's early efforts to secure funding for border barriers focused on negotiating with Congress to secure appropriations specifically designated for that task. In his FY2018 budget proposal, President Trump requested that Congress appropriate $1.57 billion for border barrier construction. Similarly, President Trump's FY2019 budget request sought $1.6 billion "to construct approximately 65 miles of border wall in south Texas." Congress did not appropriate the amounts requested for either fiscal year. For FY2018, Congress appropriated $1.375 billion for new or repaired fencing and other forms of barriers along the U.S.-Mexico border, as well as $196 million for border monitoring technology. As FY2019 began, Congress and the President negotiated, inter alia , the amount of funding to provide the Department of Homeland Security (DHS) for border barrier construction for FY2019. Ultimately, Congress and the President did not agree on funding levels, leading to a 35-day lapse of appropriations for DHS and other portions of the federal government. During the partial government shutdown, President Trump increased his request for border barrier funding from $1.6 billion to $5.7 billion. Congress did not grant this request. Instead, in the Consolidated Appropriations Act, 2019 (CAA 2019), Congress appropriated $1.375 billion $4.325 billion less than was ultimately requested for "the construction of primary pedestrian fencing . . . in the Rio Grande Valley Sector." President Trump signed the CAA 2019 on February 15, 2019, that same day announcing that his Administration would "take Executive action" to "secure additional resources" to construct barriers along the southern border. In particular, President Trump announced that his Administration had identified "up to $8.1 billion" from three additional funding sources "to build the border wall." It remains to be seen whether the Administration will identify further funding sources from the FY2020 budget cycle. Several plaintiffs filed lawsuits in federal courts in California, the District of Columbia, and Texas to prevent the Trump Administration from taking this action. These plaintiffs assert that the Administration's funding initiatives are not authorized under existing law and thus violate the constitutional and statutory provisions requiring that federal money be spent only for the purposes, and in the amounts, specified by Congress. In May 2019, a federal district court in California concluded that one of the Administration's funding initiatives was unlawful and prohibited the Administration from using that authority to repurpose funds for border barrier construction. Though the U.S. Court of Appeals for the Ninth Circuit denied the Administration's request to stay the injunction, the Supreme Court granted that request, thus allowing the Administration to begin contracting for construction of border barriers while litigation in the case continues. A second federal district court in Texas has separately enjoined the use of military construction funds for border barrier construction. Meanwhile, the federal district court in the District of Columbia ruled that the plaintiff in that case the U.S. House of Representatives did not have standing to sue and dismissed the suit. The U.S. House of Representatives has appealed the decision. According to DHS's U.S. Customs and Border Protection (CBP), there had been roughly 654 miles of primary barriers deployed along the U.S.-Mexico border as of January 2017. In May 2019, CBP declared that "approximately 205 miles of new and updated border barriers" had been funded (though not necessarily constructed) "through the traditional appropriations process and via Treasury Forfeiture Funding" since January 2017. In addition to this mileage, CBP described DOD as funding in FY2019 "up to approximately 131 miles of new border barriers in place of dilapidated or outdated designs, in addition to road construction and lighting installation." In total, CBP stated that some 336 total miles of barriers (including both replacement barriers and barriers deployed in new locations) would be deployed using funds from FY2017 through FY2019. This report addresses the litigation surrounding the Trump Administration's initiatives to repurpose existing appropriations for the construction of border barriers along the U.S.-Mexico border. It begins by providing an overview of the authorities cited by the Trump Administration to obtain border barrier funding and the steps the Administration has taken to utilize those authorities. It then discusses DHS's existing authority to construct border barriers and the various authorities on which the Trump Administration has relied to secure additional border barrier funding. Finally, this report discusses the ongoing litigation regarding the Administration's funding initiatives, with a focus on the parties' arguments and judicial decisions. <1. Legal Authorities Cited by the Trump Administration> The Trump Administration has cited several statutory authorities as giving it both the power and the necessary funds to construct additional border barriers. Some of these authorities belong to DHS, the agency with primary responsibility for securing the U.S. borders. Other authorities permit the Department of Defense (DOD) or the Department of the Treasury to transfer funds for specified military, law enforcement, or other emergency purposes. These authorities are described in more detail below. First , Section 102 of the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) as amended generally authorizes DHS to construct barriers and roads along the international borders in order to deter illegal crossings at locations of high illegal entry, and further directs the agency to construct fencing along no less than 700 miles of the U.S.-Mexico border. This law also authorizes the Secretary of Homeland Security to waive "all legal requirements . . . necessary to ensure expeditious construction of . . . [the] barriers." Second , the Secretary of Defense is authorized by 10 U.S.C. 2808 to "undertake military construction projects . . . not otherwise authorized by law that are necessary to support such use of the armed forces." President Trump stated that he would invoke his authority under this provision to repurpose $3.6 billion allocated to "military construction projects" for border barrier construction. This authority becomes available upon a "declaration by the President of a national emergency" as authorized by the National Emergencies Act (NEA). Third , DOD has authority under 10 U.S.C. 284 ("Section 284") to support other departments' or agencies' counterdrug activities, including through the construction of fencing to block drug smuggling corridors. President Trump proposed to direct the DOD to use its authority under Section 284 to support DHS's "counterdrug activities" through the construction of fencing across drug trafficking corridors at the southern border. These support activities would be funded by $2.5 billion in DOD's Drug Interdiction and Counter-Drug Activities Account (Drug Interdiction Account), which would be transferred to that account using the transfer authority in Sections 8005 and 9002 of the 2019 DOD Appropriations Act. These authorities authorize the transfer of up to $6 billion of DOD funds for "unforeseen military requirements" but only "where the item for which funds are requested has been denied by Congress." Fourth , the Treasury Forfeiture Fund contains funds that are confiscated by, or forfeited to, the federal government pursuant to laws enforced or administered by certain law enforcement agencies, and unobligated money in this fund may be used for obligation or expenditure in connection with "law enforcement activities of any Federal agency." The President proposed to withdraw $601 million in unobligated funds from the Treasury Forfeiture Fund ( TFF) to pay for border barrier construction. The Trump Administration has taken steps to make these funds available to construct border barriers along the U.S.-Mexico border. On February 15, the President declared a national emergency under the NEA, and has subsequently vetoed two congressional resolutions disapproving that declaration (which Congress did not override). On September 3, 2019, the Secretary of Defense directed the Acting Secretary of the Army to "expeditiously undertake" 11 border barrier military construction projects pursuant to Section 2808. In addition, on February 25, DHS requested that DOD use its authority under 10 U.S.C. 284 to assist in constructing border barriers. DOD granted this request on March 25 and invoked the transfer authority in Section 8005 of the FY2019 DOD Appropriations Act to move $1 billion of Army personnel funds into DOD's Drug Interdiction Account for DOD to help DHS construct border barriers. A few months later, DOD again invoked Section 8005 (along with the related transfer authority in Section 9002 of the FY2019 DOD Appropriations Act) to transfer another $1.5 billion of personnel, procurement, and overseas contingency operation funds into the Drug Interdiction Account for use in constructing border barriers. The Trump Administration proposed to construct "approximately 131 miles of new border barriers . . . in addition to road construction and lighting installation" with these funds. For each of the proposed projects, the Acting Secretary of Homeland Security utilized IIRIRA 102's waiver authority to waive the application of several federal environmental, conservation, and historic preservation statutes, including the National Environmental Policy Act (NEPA), the Endangered Species Act, the Safe Drinking Water Act, and the Antiquities Act, to the "fence[s], roads, and lighting" that DOD will be "assist[ing]" in "constructing" under Section 284. <1.1. Department of Homeland Security Authority> DHS's authority to construct barriers along the southern border derives from IIRIRA 102, as amended. This law provides that "[t]he Secretary of Homeland Security shall take such actions as may be necessary to install additional physical barriers and roads . . . in the vicinity of the United States border to deter illegal crossings in areas of high illegal entry into the United States." IIRIRA 102 directs that "the Secretary of Homeland Security shall construct reinforced fencing along not less than 700 miles of the southwest border," while also "identify[ing] the 370 miles . . . along the southwest border where fencing would be most practical and effective in deterring smugglers and aliens attempting to gain illegal entry into the United States." Finally, IIRIRA 102 gives the Secretary of Homeland Security flexibility on where to construct barriers, allowing the Secretary to decline to build a border barrier in a particular location if "[the Secretary] determines that the use or placement of such resources is not the most appropriate means to achieve and maintain operational control over the international border. . . ." To expedite the construction of border barriers, IIRIRA 102 authorizes the Secretary of Homeland Security to, "in [the] Secretary's sole discretion," "waive all legal requirements" that the Secretary "determines necessary to ensure expeditious construction of the barriers and roads under this section." And to limit potential legal challenges to this waiver authority, IIRIRA 102 cabins the jurisdiction of federal district courts to claims "alleging a violation of the Constitution" and forecloses appellate review of district court decisions, except by seeking discretionary review in the U.S. Supreme Court. IIRIRA 102's waiver authority has been challenged on constitutional grounds in cases involving waivers of NEPA and other federal environmental statutes. Those challenging the waiver authority have contended that it violates the nondelegation doctrine, the Presentment Clause, and the Take Care Clause. Courts, however, have uniformly rejected these challenges and concluded that "a valid waiver of the . . . laws under [IIRIRA 102] is an affirmative defense" to all claims arising from the waived laws. <1.2. The National Emergencies Act and Military Construction Funds> The President invoked 10 U.S.C. 2808 and announced that his Administration would seek to reallocate $3.6 billion from DOD's military construction budget for border barrier construction. The authority to take this action hinges on the President declaring a national emergency under the NEA, which President Trump did on February 15. On September 3, 2019, DOD identified 127 military construction projects that it would delay or suspend in order to reallocate $3.6 billion toward 11 barrier construction projects using this authority. The NEA provides general requirements governing the declaration of a national emergency, while Section 2808 contains additional requirements for its exercise. <1.2.1. The National Emergencies Act> The Supreme Court has explained that the President's authority "must stem either from an act of Congress or from the Constitution itself." Because Article II of the Constitution does not grant the Executive general emergency powers, the President generally must rely on Congress for such authority. Congress has historically given the President robust powers to act in times of crisis. By 1973, Congress had enacted more than 470 statutes granting the President special authorities upon the declaration of a "national emergency," but these statutes imposed no limitations on either the President's discretion to declare an emergency or the duration of such an emergency. The Senate Special Committee on National Emergencies and Delegated Emergency Powers (previously named the Senate Special Committee on the Termination of the National Emergency) ("Special Committee") was apparently concerned that four presidentially declared national emergencies remained extant in the mid-1970s, the earliest dating to 1933. In 1973, the Special Committee concluded that the President's crisis powers "confer[red] enough authority to rule the country without reference to normal constitutional process," and so Congress enacted the NEA in 1976 to pare back the President's emergency authorities. The NEA does not define "national emergency." Rather, the NEA established a framework to provide enhanced congressional oversight and prevent emergency declarations from continuing in perpetuity. To accomplish these goals, the NEA terminated all then-existing presidentially declared emergencies. The NEA also established procedures for future declarations of national emergencies, requiring the President to specify which statutory emergency authorities he intends to invoke upon a declaration of a national emergency (unlike the pre-NEA regime, under which the declaration of an emergency operated as an invocation of all of the President's emergency authorities); publish the proclamation of a national emergency in the Federal Register and transmit it to Congress; maintain records and transmit to Congress all rules and regulations promulgated to carry out such authorities; and provide an accounting of expenditures directly attributable to the exercise of such authorities for every six-month period following the declaration. The NEA further provides that a national emergency will end (1) automatically after one year unless the President publishes a notice of renewal in the Federal Register , (2) upon a presidential declaration ending the national emergency, or (3) if Congress enacts a joint resolution terminating the emergency (which would likely require the votes of two-thirds majorities in each house of Congress to override a presidential veto). While the NEA directs each house of Congress to meet every six months to consider whether to end a national emergency by joint resolution, Congress has never met to consider such a vote under that deadline prior to this year. The statute does not appear to prevent Congress from considering a resolution to terminate a national emergency at any time before or after a six-month interval. Although a purpose of the NEA was to end perpetual states of emergency, the law does grant the President authority to renew an emergency declaration. As a result, there are currently 34 national emergency declarations in effect, some of which have been renewed for decades. The declaration of a national emergency under the NEA enables the President to invoke a wide array of emergency authorities conferred by statute. The most often invoked is the International Emergency Economic Powers Act (IEEPA), which gives the President broad authority to impose sanctions on foreign countries and entities. Besides Section 2808, another authority that could provide for the reprogramming of funds for construction purposes is 33 U.S.C. 2293, which, in the event of a national emergency or declaration of war, authorizes the Secretary of the Army to end or defer Army Corps of Engineers civil works projects that are "not essential to the national defense." The Secretary of the Army can then use the funds otherwise allocated to those projects for "authorized civil works, military construction, and civil defense projects that are essential to the national defense." No President has ever invoked this authority, but it could potentially be used in connection with President Trump's declaration of a national emergency at the southern border. <1.2.2. Military Construction Funds> A declaration of a national emergency triggers Section 2808, which provides emergency authority for unauthorized military construction in the event of a declaration of war or national emergency. President Trump invoked this statutory authority to reallocate $3.6 billion from DOD military construction funds to border barrier construction, stating in his emergency declaration that "this emergency requires use of the Armed Forces and . . . that the construction authority provided in section 2808 of title 10, United States Code, is invoked and made available, according to its terms, to the Secretary of Defense and, at the discretion of the Secretary of Defense, to the Secretaries of the military departments." The President did not describe in his proclamation the tasks the Armed Forces would undertake with respect to the emergency at the southern border. Originally enacted in 1982, Section 2808 provides that upon the President's declaration of a national emergency "that requires use of the armed forces," the Secretary of Defense may "without regard to any other provision of law . . . undertake military construction projects . . . not otherwise authorized by law that are necessary to support such use of the armed forces." The term "military construction project" is defined to include "military construction work," and "military construction" is, in turn, defined to "include any construction, development, conversion, or extension of any kind carried out with respect to a military installation . . . or any acquisition of land or construction of a defense access road." The term "military installation" means a "base, camp, post, station, yard, center, or other activity under the jurisdiction of the Secretary of a military department." Finally, Section 2808 limits the funds available for emergency military construction to "the total amount of funds that have been appropriated for military construction" but which have not been obligated. Section 2808's legislative history provides limited guidance on the types of emergencies and military construction projects envisioned. A House Armed Services Committee report accompanying the original 1982 legislation indicated that while "[i]t is impossible to provide in advance for all conceivable emergency situations," Section 2808 was intended to address contingencies "ranging from relocation of forces to meet geographical threats to continuity of efforts after a direct attack on the United States during which the Congress may be unable to convene." With certain limited exceptions, prior Presidents have generally invoked this authority for construction at military bases in foreign countries. <1.3. Department of Defense Authorities> To obtain additional funds to construct border barriers, the Trump Administration has invoked DOD's authority under 10 U.S.C. 284 to support DHS in constructing border fencing. This support would be funded by money transferred to DOD's Drug Interdiction Account pursuant to Sections 8005 and 9002 of the 2019 DOD Appropriations Act. These authorities are not contingent on the declaration of a national emergency. <1.3.1. Section 284> In general, U.S. military involvement in civilian law enforcement is permitted only when specifically authorized by Congress. For example, the Secretary of Defense can "make available any equipment . . . base facility, or research facility" to any "civilian law enforcement official . . . for law enforcement purposes." Section 284 is another of these authorities. It authorizes the Secretary of Defense to "provide support for the counterdrug activities or activities to counter transnational organized crime of any other department or agency of the Federal Government or of any State, local, tribal, or foreign law enforcement agency." DOD may provide support under Section 284 only after it has been "requested" by the appropriate official from the governmental agency or department, and then only for "the purposes set forth" in Section 284. Those purposes include "the maintenance and repair" of certain equipment, the "training of law enforcement personnel" related to "[c]ounterdrug or counter-transnational organized crime," and "[a]erial and ground reconnaissance." Section 284 also authorizes DOD to provide support for the "[c]onstruction of roads and fences and installation of lighting to block drug smuggling corridors across international boundaries of the United States." And to ensure that DOD can provide this support expeditiously, support under Section 284 is generally not subject to the requirements that govern DOD's other authority to support civil law enforcement agencies. Section 284 also provides for congressional oversight of DOD's support activities. At least 15 days prior to providing support to another agency under Section 284, the Secretary of Defense must submit "a description of any small scale construction project for which support is provided" to the appropriate congressional committees. "Small scale construction project" is, in turn, defined to encompass projects that cost no more than $750,000. Section 284 does not include a reporting requirement for any projects exceeding $750,000. Historically, DOD's activities under Section 284 have been funded by the "Drug Interdiction and Counter-Drug Activities" line item in its annual appropriations bill. For FY2019 Congress appropriated $1,034,625,000 to this line item, with $517,171,000 of that amount being allocated for "counter-narcotics support." <1.3.2. Sections 8005 and 9002 of the 2019 DOD Appropriations Act> On February 25, 2019, DHS submitted a request to DOD to provide assistance pursuant to Section 284 in constructing border barriers in three locations along the U.S.-Mexico border, and DOD then approved the use of funds from the Drug Interdiction Account for these projects. However, much of the FY2019 funds appropriated for "counter-narcotics support" had been obligated by the time DOD made its request. As a result, DOD sought to use its authority under Section 8005 of the 2019 DOD Appropriations Act to transfer other funds into the Drug Interdiction Account. Section 8005 authorizes the Secretary of Defense "[u]pon a determination by the Secretary of Defense that such action is necessary in the national interest" and with "approval of the Office of Management and Budget" to "transfer not to exceed [$4 billion] of working capital funds of the [DOD] or funds made available in [the 2019 DOD Appropriations Act] for military functions (except military construction)." Section 8005 further provides that funds may be transferred only "for higher priority items, based on unforeseen military requirements, than those for which originally appropriated," and may not be transferred "where the item for which funds are requested has been denied by Congress." Finally, Section 8005 requires the Secretary of Defense to "notify the Congress promptly of all transfers made pursuant to this authority." This transfer authority, in its current form, originated with the FY1974 DOD Appropriations Act. The 1974 act appears to be the first instance when Congress expressly prohibited the transfer of DOD funds for purposes for which Congress had denied funding. The House committee report for this legislation explained that this language was added "to tighten congressional control of the reprogramming process." Before that time, DOD had "on . . . occasion[]" reprogrammed funds "which ha[d] been specifically deleted in the legislative process" after obtaining the consent of the authorizing and appropriations committees in the House and Senate. The House committee report explained that this practice "place[d] committees in the position of undoing the work of the Congress." Characterizing this practice as "untenable," the House report declared that "henceforth no such requests will be entertained." Invoking Section 8005's transfer authority, DOD in February 2019 authorized the transfer of an initial $1 billion of Army personnel funds to the Drug Interdiction Account. And on May 9, DOD authorized the transfer of an additional $1.5 billion to that fund using Sections 8005 and 9002 of the 2019 DOD Appropriations Act. Section 9002 authorizes the Secretary of Defense to "transfer up to [$2 billion] between the appropriations or funds made available to [DOD] in this title." This authority is "in addition to any other transfer authority available to [DOD]" including Section 8005 and is also "subject to the same terms and conditions as the authority provided in section 8005." The Acting Secretary of Defense informed Congress of these transfers. <1.4. Treasury Forfeiture Fund> In various federal statutes, Congress has authorized the confiscation, or forfeiture to the federal government, of any property used to facilitate a crime as well as the profits and proceeds of such crimes. None of these statutes is contingent on the declaration of a national emergency. Congress established the TFF to hold proceeds of property forfeited under most laws enforced or administered by a law enforcement organization within the Department of the Treasury or by the Coast Guard. Funds in the TFF may be used by the Secretary of the Treasury for a variety of law enforcement purposes. Some of these purposes are mandatory, such as making "equitable sharing payments" to other federal, state, and local law enforcement agencies that participate in the seizure or forfeiture of property. Others, such as awards for information leading to forfeited property covered by the TFF, are subject to the discretion of the Secretary of the Treasury. At the end of each fiscal year, the Secretary of the Treasury must reserve a sufficient amount in the TFF to cover mandatory and discretionary expenditures. Unobligated balances in the fund over the reserved amount may be used "for obligation or expenditure in connection with the law enforcement activities of any Federal agency or of a Department of the Treasury law enforcement organization." This unobligated amount is known as "Strategic Support." At the end of 2018, DHS requested $681 million of Strategic Support from the TFF for "border security." In response to that request, the Secretary of the Treasury transferred roughly $601 million to CBP for "border barrier construction." <2. The Border Barrier Litigation> Following the Trump Administration's announcement of its initiatives to fund border barrier construction, citizens groups, states, and the U.S. House of Representatives filed lawsuits in federal district courts in California, the District of Columbia, and Texas. The plaintiffs in these lawsuits have argued that the Trump Administration's funding initiatives are not authorized by (or are inconsistent with) the relevant statutory authorities. As a result, they have also contended that the Administration's funding initiatives violate constitutional separation of powers principles and the Appropriations Clause's directive that money may be withdrawn from the Treasury only "in Consequence of Appropriations made by Law." Finally, some plaintiffs have asserted that IIRIRA 102 does not empower DHS to waive the requirements of NEPA for the border barrier projects being constructed with DOD's assistance because IIRIRA 102's waiver authority extends only to projects undertaken by DHS. After bringing suit, certain plaintiffs filed motions for a preliminary injunction, asking the courts to prohibit DOD from implementing its funding initiatives while the litigation was ongoing. On May 24, 2019, a judge on the U.S. District Court for the Northern District of California issued decisions in the two cases pending in that court Sierra Club v. Trump and California v. Trump resolving one of the issues presented by the plaintiffs' motion: whether Sections 8005 and 9002 of the 2019 DOD Appropriations Act authorized the transfer of funds for border barrier construction. The district court determined that it did not for two reasons. It first concluded that this would violate Section 8005's prohibition on transferring funds where "the item for which funds [were] requested ha[d] been denied by Congress." The court also ruled that the Administration's proposed use of Section 8005 was unlawful because DOD's purported need for additional border barrier funding was not an "unforeseen military requirement," as required by Section 8005. Based on this ruling, the court in Sierra Club issued a preliminary injunction barring the Administration from using Section 8005 to transfer funds for border barrier construction while litigation proceeded. The court declined to also issue a preliminary injunction in the California case because (with the Sierra Club injunction in place) the plaintiffs in California could not establish that they would be irreparably harmed by the denial of an injunction. Because the plaintiffs' lawsuit preceded DOD's May 9 decision to transfer $1.5 billion to the Drug Interdiction Account, the preliminary injunction applied only to the initial, February 25 transfer of $1 billion to fund projects in New Mexico and Arizona. But in a later decision, the district court applied the reasoning from its initial ruling to conclude that the $1.5 billion transfer, like the first, was not authorized by Section 8005 or Section 9002. The court then issued an order permanently prohibiting the Administration from using either of these provisions to transfer any of the $2.5 billion for border barrier construction. The Trump Administration appealed the district court's permanent injunction to the U.S. Court of Appeals for the Ninth Circuit and asked that court to stay the injunction pending appeal. The Ninth Circuit denied that request, agreeing with the district court that Section 8005 does not authorize the transfer of funds for border barrier construction. However, the Supreme Court subsequently issued an order staying the injunction during the pendency of the litigation. As a result of the Supreme Court's order, the Trump Administration may use Section 8005 to transfer funds for border barrier construction. The district court subsequently issued a permanent injunction against the use of military construction funds as well, but stayed the injunction pending appeal. The Texas lawsuit, El Paso County v. Trump , also resulted in a permanent injunction against the Trump Administration's funding scheme for border barrier construction using Section 2808. The district court determined that the use of those provisions to fund border barriers clashed with the Consolidated Appropriations Act, 2019 (CAA 2019), provision that prohibits the use of appropriated funds "to increase . . . funding for a program, project, or activity as proposed in the President's budget request for a fiscal year" unless it is made pursuant to the reprogramming or transfer provisions of an appropriations Act. This section discusses the various arguments raised in these lawsuits regarding the lawfulness of the Trump Administration's initiatives for funding border barrier construction. It also discusses the judicial decisions that have resolved, or otherwise opined on, the lawfulness of the Administration's funding initiatives. The federal court in the District of Columbia presiding over the U.S. House of Representatives' case dismissed that suit for lack of standing, and that decision is currently being appealed. <2.1. Legal Arguments and Judicial Decisions Regarding the Trump Administration's Efforts to Fund Additional Barrier Deployments> <2.1.1. Section 8005> <2.1.1.1. The Northern District of California's Sierra Club Decision166> As discussed earlier, Section 8005 authorizes the transfer of funds for "military functions," but provides that funds may be transferred only "for higher priority items, based on unforeseen military requirements, than those for which originally appropriated." Further, funds may not be transferred "where the item for which funds are requested has been denied by Congress." The district court in Sierra Club v. Trump concluded that Section 8005 does not authorize the transfer of funds for the construction of border barriers because the transfer was for an "item" for which funds had been denied by Congress and, in any event, because the asserted need for the construction of border barriers was not "unforeseen." The district court first addressed whether the proposed transfer was for an "item" for which Congress had denied funds. In its briefs, the Trump Administration had argued that the relevant "item for which funds [were] requested" was DOD's assistance to DHS under 10 U.S.C. 284 for "counterdrug activities," not (as the plaintiffs urged) the construction of border barriers generally. Thus, the Administration urged, because Congress had not "denied" a request for appropriations for DOD "counterdrug" assistance under Section 284, transferring funds for that purpose was not prohibited by Section 8005. The district court rejected that argument, concluding instead that the historical context leading up to the transfer including the previous disagreement between the Administration and Congress on the appropriate funding for border barriers that led to an extended lapse in appropriations showed that the "item for which funds [were] requested" was the construction of border barriers generally, regardless of which agency would undertake construction or the statutory authority on which it might rely. "[T]he reality is that Congress was presented with and declined to grant a $5.7 billion request for border barrier construction," the court explained. Thus, "[b]order barrier construction, expressly, is the item [the Administration] now seek[s] to fund via the Section 8005 transfer, and Congress denied the requested funds for that item." The court also relied on portions of Section 8005's legislative history to support this conclusion. In particular, the court cited portions of a House report from 1973, which explained that Congress originally adopted the "denied by Congress" language to "'tighten congressional control of the reprogramming process''' and to "'prevent the funding for programs which have been considered by Congress and for which funding has been denied.'" In the court's view, an interpretation of Section 8005 that would allow the Administration to transfer money for border barrier construction, despite Congress's refusal to appropriate the amount of money requested for that purpose, would undermine Section 8005's objective. The court also determined that Section 8005's transfer authority was unavailable because the Administration's proposed border barrier construction was not an " unforeseen military requirement[]." The Administration had argued that the proposed border barrier construction (i.e., the "military requirement") was "unforeseen" because the need for DOD to provide support to DHS through Section 284 was not known until DHS had requested that assistance which occurred after the President's budget request and after Congress had passed the DOD appropriations bill with less funding for barrier construction than the Administration had requested. The district court rejected this interpretation of Section 8005. On this theory, the court explained, " every request for Section 284 support" would be unforeseen because the need to rely on that particular statutory authority would only ever arise when another agency requests DOD's assistance under that provision. The district court also asserted that "[the Administration's] argument that the need for the requested border barrier construction funding was 'unforeseen' cannot logically be squared with the Administration's multiple requests for funding" for a border wall. Finally, the court invoked the canon of constitutional avoidance to support its reading of Section 8005. Under this rule of statutory interpretation, when there are two possible interpretations of a statute, one of which would raise serious constitutional concerns, courts should adopt the interpretation that avoids the constitutional difficulties. According to the district court, the Administration's interpretation of Section 8005 would "pose serious problems under the Constitution's separation of powers principles" because it would allow the executive branch to "render meaningless Congress's constitutionally-mandated power" to control federal expenditures by "ceding essentially boundless appropriations judgment" to the executive branch. Avoiding these potential pitfalls was, in the court's view, another reason to reject the Administration's broader interpretation of Section 8005. On these grounds, the court decided that the plaintiffs would likely succeed on their claim that the Administration could not lawfully use Section 8005 to transfer funds for border barrier construction. Thus, after finding the remaining preliminary injunction requirements satisfied, the court entered an order temporarily prohibiting the Administration from using the $1 billion of funds transferred under Section 8005 to construct the specified border barriers in New Mexico and Arizona. After issuing this decision, the parties submitted additional briefing on the lawfulness of the Administration's May 9 decision to use Sections 8005 and 9002 to transfer another $1.5 billion to the Drug Interdiction Account for the construction of border barriers in four additional locations in California and Arizona. On June 28, the district court issued a decision adopting the same reasoning as its earlier opinion. And having found both of the Administration's proposed uses of Section 8005's transfer authority unlawful, the court entered an injunction permanently prohibiting the Administration "from taking any action to construct a border barrier" using Section 8005. <2.1.1.2. The Ninth Circuit's Sierra Club Decision> The Trump Administration appealed the district court's permanent injunction to the U.S. Court of Appeals for the Ninth Circuit and asked that court to stay the injunction pending appeal. On July 3, a divided panel of the Ninth Circuit denied the Administration's request for a stay, concluding that the Administration had not shown a likelihood of success on the merits. In reaching that conclusion, the Ninth Circuit first agreed with the district court that the construction of a border barrier was not an " unforeseen military requirement," as required by Section 8005. Like the district court, the Ninth Circuit declared that the relevant "requirement" was the construction of border barriers not, as the Administration contended, the need for DHS to request support from DOD under Section 284. The Ninth Circuit also concluded that Congress had "denied" funds for construction of the border barrier. The Administration had argued to that court that the "item for which funds [were] requested" referred to "'a particular budget item' for section 8005 purposes" which Congress had not denied and did not encompass other requests for DHS funding for border barriers. The court of appeals rejected this reading, concluding that the "item for which funds [were] requested" was "a wall along the southern border," and that Congress had denied the Administration's request to fund that "item." "In sum," the court reasoned, "Congress considered the 'item' at issue here a physical barrier along the entire southern border" and it "decided in a transparent process subject to great public scrutiny to appropriate less than the total amount the President had sought for that item. To call that anything but a 'denial' is not credible." However, as discussed in more detail below, the Supreme Court ultimately stayed the district court's injunction. The Court's stay order did not rule on the merits of Section 8005 or any of the other statutory authorities on which the Administration has relied to secure additional border barrier funding. Instead, the Court stayed the injunction because it concluded that "the Government had made a sufficient showing at this stage that the plaintiffs have no cause of action to obtain review of the Acting [Secretary of Defense's] compliance with Section 8005." <2.1.2. Section 284> The plaintiffs in Sierra Club and California also argued that even if Section 8005 authorized the transfer of funds to the Drug Interdiction Account, Section 284 does not empower DOD to assist another agency in constructing border barriers. The plaintiffs in these cases raised several points to support this conclusion. First , they observed that Section 284 requires DOD to provide to Congress "a description of the small scale construction project for which support is provided," and defines "small scale construction" to mean "construction at a cost not to exceed $75,000 for any project." That Section 284 requires DOD to report to Congress on "small scale construction projects" and not larger projects, the plaintiffs argued, suggests that Section 284 should not be read to authorize assistance with larger-scale projects. "Congress would not have required a description of 'any small scale construction' projects if it was, at the same time, authorizing massive, multibillion-dollar expenditures under this provision," the plaintiffs argued. But even if Section 284 could be read otherwise, the plaintiffs contended that it should not be read broadly here given "the more specific and recent judgment by Congress" to appropriate only $1.375 billion for DHS border barrier construction. If there is a "specific policy embodied in a later statute," they argued, that later statute "should control judicial construction of the earlier broad statute, even though [the latter statute] has not been expressly amended." Second , the plaintiffs argued that Section 284 does not authorize DOD's proposed border barrier projects because the portion of Section 284 relied on by DOD applies solely to "block[ing] drug smuggling corridors." By contrast, the plaintiffs argued that DOD intended to use "Section 284 . . . as a tool to create a contiguous border wall, not to address specific corridors." Third , the plaintiffs pointed to a neighboring statutory provision requiring an agency receiving DOD support "to reimburse [DOD] for that support," though DOD may waive this requirement if its support (1) "is provided in the normal course of military training or operation," or (2) "results in a benefit . . . that is substantially equivalent to that which would otherwise obtain from military operations or training." The plaintiffs argued that DOD has breached this requirement thus rendering Section 284 unavailable because DHS had "requested support on a 'non-reimbursable basis,'" but neither of the two exceptions to the reimbursement requirement was met. Finally , the plaintiffs argued that DOD's reliance on Section 284 "violates the core principle that executive branch agencies may not mix and match funds from different accounts to exceed the funding limits Congress imposed." In particular, the plaintiffs noted the general rule of appropriations law that "specific appropriations preclude the use of general ones even when the two appropriations come from different accounts." Here, the plaintiffs contended, "Congress ha[d] allocated a specific amount of funding" for border barrier construction, precluding "the government [from] cobbl[ing] together other, more general sources of money to increase funding levels for that same goal." The Administration responded that the plaintiffs in Sierra Club and California had misconstrued Section 284. The Administration first argued that Section 284 contemplates that DOD may assist with projects other than "small scale construction," as certain provisions in Section 284 "refer to but are not limited to 'small scale' or 'minor' construction." As to the reimbursement requirement, the Administration asserted that Section 284 itself makes the reimbursement requirement inapplicable to DOD's counterdrug activities, providing that "[t]he authority provided in this [S]ection [284] for the support of counterdrug activities . . . by [DOD] is . . . not subject to the other requirements of this chapter." Next, the Administration contended that its proposed border barrier projects satisfied Section 284's "drug smuggling corridor" requirement, as the proposed project areas were "known to have high rates of drug smuggling between the ports of entry." Finally, the Administration rejected as "without merit" the plaintiffs' argument that its use of Section 284 violated the principle that agencies "must use the [most] specific appropriation to the exclusion of [a] general appropriation." This principle, the Administration contended, applies only when both sources of funding belong to a single agency, not where the appropriations at issue are to different agencies that is, Section 8005 and Section 284 to DOD and $1.375 billion to DHS in its appropriations bill. However, the district court in Sierra Club and California ultimately did not resolve this issue because it concluded that Section 8005 does not authorize the transfer of funds to be used by DOD under its Section 284 authority. And, with no district court ruling to review, the Ninth Circuit in Sierra Club also did not address this authority. The district court in El Paso County agreed with the plaintiffs on the basis that Congress's appropriation of funds for border barrier construction is a specific statute that should be given precedence over more general statutes. The court stated that "[a]n appropriation for a specific purpose is exclusive of other appropriations in general terms which might be applicable in the absence of the specific appropriation." Moreover, the court held the use of Section 284 funds for border barrier construction was precluded by Section 739 of the CAA 2019, which prohibits the use of appropriated funds to increase funding for a program, project, or activity proposed in the President's budget request beyond what Congress had provided except through reprogramming or transfer actions pursuant to an appropriations act. Because the President had requested $5.7 billion for FY2019 "for construction of a steel barrier for the Southwest border" but Congress had appropriated $1.375 billion to be made on "construction . . . in the Rio Grande Valley Sector" alone, the court found that the use of Section 284 funds for the border project amounted to an unlawful increase in funding for that activity using appropriated funds. The court noted that Section 284 is not an appropriations statute and its use was thus not eligible for the exception in Section 739 of the CAA 2019 for reprogramming provisions. Nevertheless, because of the Supreme Court's stay of the injunction issued in the Sierra Club case, the court in El Paso declined to enjoin the use of Section 284. <2.1.3. Department of Homeland Security Waiver Authority> The plaintiffs in Sierra Club and California also argued that the Administration's proposed construction of a border barrier was subject to the environmental assessment requirements of NEPA, and that DHS's waiver authority under IIRIRA 102 is ineffective to waive NEPA's application for projects funded and undertaken by any other department or agency. The plaintiffs noted that IIRIRA 102's waiver authority may be used only for the "construction of the barriers and roads under this section ." Because the Administration was relying on DOD authority and appropriations (i.e., Section 284 and the Drug Interdiction Account) to construct the border barriers, the plaintiffs contended that those projects did not meet the statutory requirement and thus were not covered by an IIRIRA 102 waiver. By contrast, the Administration argued that by requiring DHS to take "such actions as may be necessary" to construct additional border barriers, IIRIRA 102 authorized DHS to request DOD's assistance, and thus the waiver authority applied. Ruling for the Administration, the district court in Sierra Club and California held that IIRIRA 102's waiver authority extends to border projects undertaken by another agency on behalf of DHS, and thus DHS's waivers rendered NEPA inapplicable to the challenged border barrier projects. "DOD's authority under Section 284 is derivative," the court explained, as it may invoke "its authority [under Section 284] only in response to a request from [another] agency." "Plaintiffs' argument would require the court to conclude that even though it is undisputed that DHS could waive NEPA's requirements if it were paying for the projects out of its own budget, that waiver is inoperative when DOD provides support in response to a request from DHS." The court rejected this approach because it found it "unlikely that Congress intended to impose different NEPA requirements on DOD when it acts in support of DHS's IIRIRA 102 authority in response to a direct request under Section 284 than would apply to DHS itself." The court thus ruled that DHS's waivers applied to the challenged border projects and all parties agreed that "the waivers, if applicable, would be dispositive of the NEPA claims." <2.1.4. Treasury Forfeiture Fund> The state plaintiffs in California v. Trump also argued that the Administration's allocation of $601 million from the TFF was not authorized by 31 U.S.C. 9705, specifically because the construction of border barriers is not an expenditure for "law enforcement activities." In response, the Administration argued that the allocation of payments from the TFF is not reviewable, citing Supreme Court and Ninth Circuit decisions establishing that an agency's determination of how to allocate funds from a lump-sum appropriation is committed to the agency's discretion. The district court determined that, while the statute provided some discretion for the Secretary of the Treasury to decide what payments should be made from the TFF, the statute provided a "comprehensive list of payments for which TFF" payments must be made. There were therefore sufficient standards for determining whether the Administration had transferred funds in a "statutorily impermissible manner." Despite finding that the use of the TFF was reviewable, the district court declined to address the merits of the state plaintiffs' arguments because the plaintiffs did not meet the other requirements for a preliminary injunction. Specifically, a preliminary injunction requires the court to find that the moving party will suffer irreparable injury if the injunction is not issued. But the TFF statute requires equitable sharing payments for the current and next fiscal years to be reserved before any unobligated balances were available for Strategic Support expenditures. Because the Secretary of the Treasury had reserved such amounts before the requested transfer to DHS, there was no justification for the "extraordinary" remedy of a preliminary injunction against the TFF transfer. Subsequently, on August 2, the parties in California stipulated to the voluntary dismissal of the plaintiffs' TFF claim. According to the parties, this dismissal was based on representations by the Administration that (1) its proposed use of $601 million from the TFF would not cause state and local law enforcement agencies to lose any funds they would otherwise receive from the TFF, and (2) "funds from the TFF will not be used to fund or support the construction of border barriers in any areas other than within the Rio Grande Valley and/or Laredo Sectors" that is, areas within Texas. The plaintiffs in Sierra Club have not dismissed their TFF claim. <2.1.5. Reprogramming of Funds During National Emergency> Two types of challenges have arisen to the reprogramming of military construction funds for use in border barrier construction. The first challenges the declaration of the national emergency itself, while the second challenges the invocation of authority pursuant to Section 2808. <2.1.5.1. The El Paso County Challenge to the President's Declaration of a National Emergency> Though the plaintiffs in Sierra Club and California did not challenge the lawfulness of President Trump's declaration of a national emergency under the NEA, the plaintiffs in El Paso County v. Trump did. They have charged that the President's declaration of a national emergency to make use of military construction funds for border barrier construction is unlawful because the situation at the border does not constitute an emergency within the meaning of the NEA. They argue that "emergency" in the NEA must be construed in accordance with its ordinary meaning "an unforeseen combination of circumstances requiring immediate action" or the NEA is an unconstitutional violation of the nondelegation doctrine. Under the nondelegation doctrine, they argue, Congress cannot delegate legislative authority to the executive branch without providing an intelligible principle to guide implementation of a law. Plaintiffs assert that an interpretation of the NEA that leaves unfettered discretion to the President to decide what constitutes a national emergency would be an unconstitutional delegation of congressional authority. The government responded with its own interpretation of the NEA, one that views Congress's failure to provide a definition for "national emergency" as an indication that Congress intended to avoid constricting presidential power. The government also cites historical examples to demonstrate that national emergency declarations need not address circumstances that are unforeseen. Moreover, it argues that courts have uniformly concluded that presidential declarations of national emergencies present a nonjusticiable political question. The Supreme Court set forth the factors courts must consider in determining whether a matter raises nonjusticiable political questions in Baker v. Carr . These factors are a textually demonstrable constitutional commitment of the issue to a coordinate political department; a lack of judicially discoverable and manageable standards for resolving it; the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; the impossibility of a court's undertaking independent resolution without expressing lack of the respect due coordinate branches of government; an unusual need for unquestioning adherence to a political decision already made; or the potentiality of embarrassment from multifarious pronouncements by various departments on one question. The Administration argues that the President's national emergency declaration fulfills "most, if not all of these factors." First, the executive branch claims that Congress intentionally chose to leave the determination of a national emergency to the President with oversight by Congress, without setting forth criteria from which a court could judge the President's action. Second, the Administration contends that how to combat illegal immigration is quintessentially "the sort of policy determination of a kind clearly for nonjudicial discretion." Third, it argues that the policy questions regarding the exclusion of aliens are entrusted to the political branches. The district court did not address the constitutionality of the NEA or the proclamation, but entered summary judgment in favor of the plaintiffs on the basis that the Administration's funding plan for the border, in the court's view, violates the CAA 2019, in particular Section 739. <2.1.5.2. The Challenge to the Use of Section 2808 Considered in Sierra Club> The Sierra Club plaintiffs did not challenge the lawfulness of President Trump's declaration of a national emergency under the NEA, but they did argue that the Administration's plan to reallocate $3.6 billion in military construction funds was unlawful because 10 U.S.C. 2808 does not authorize the construction of border barriers. Though the district court declined to grant a preliminary injunction because the plaintiffs had not demonstrated irreparable harm from the Administration's as-yet undetermined plans to divert the funds, the court did express doubt that the definition of "military construction" in Section 2808 encompassed border barriers. As noted previously, Section 2808 permits reprogramming of funds for "military construction" necessary to support the use of the Armed Forces in a national emergency. Military construction is defined to "include any construction, development, conversion, or extension of any kind carried out with respect to a military installation," which means a "base, camp, post, station, yard, center, or other activity " under the jurisdiction of the Secretary of a military department. The Administration relied on the term "other activity" and the nonexhaustive word "includes" in the definitions related to "military construction" to argue that Congress had meant the term "military construction" in Section 2808 to be construed broadly. In other words, the government interpreted the definition of military construction to include any sort of construction related to a military installation. This would include any "other activity under the jurisdiction of the Secretary of a military department," which could conceivably include border barriers constructed by DOD. The court in Sierra Club rejected that view, explaining that "the critical language of Section 2801(a) is not the word 'includes,' it is the condition 'with respect to a military installation.'" Further, the court rebuffed the Administration's reliance on the term "other activity." That language, the court explained, is not unbounded but should be interpreted in context of the words that immediately precede it "a base, camp, post, station, yard, [and] center." Applying the rule of statutory interpretation that "a word is known by the company it keeps," the court concluded that "other activity" refers to similar discrete and traditional military locations. The court did "not readily see how the U.S.-Mexico border could fit this bill." The court likewise employed the rule of interpretation that "[w]here general words follow specific words in a statutory enumeration, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words." The court explained that if Congress "had . . . intended for 'other activity' . . . to be so broad as to transform literally any activity conducted by a Secretary of a military department into a 'military installation,' there would have been no reason to include a list of specific, discrete military locations." Thus, viewing the term "in context and with an eye toward the overall statutory scheme," the court could not conclude that "Congress ever contemplated that 'other activity' has such an unbounded reading that it would authorize Defendants to invoke Section 2808 to build a barrier on the southern border." However, because the issue was not yet ripe for decision, the district court did not enjoin the use of military construction funds for border barrier construction. And because the district court did not rule on this issue the Ninth Circuit did not address it either. On December 11, 2019, however, the district court determined that the government's formulation of plans to allocate the military construction funds for 11 border barrier projects made the issue ripe for decision in both the California and Sierra Club cases. Although the court declined to take on the question of whether an emergency requiring the use of troops in fact exists, it found the question of whether the specific projects are "military construction projects" that are "necessary to support such use of the armed forces" to be suitable for adjudication. With respect to the first issue, the court reaffirmed its earlier assessment based on the statutory definitions that such projects have insufficient connection with any military installation to be permissible military construction projects, notwithstanding the government's argument that its taking of administrative jurisdiction over the land for them and assigning it to Fort Bliss in Texas created such a connection. The court was not persuaded that Congress intended "military construction" to have no stronger connection to a military installation than Defendants' own administrative convenience. If this were true, Defendants could redirect billions of dollars from projects to which Congress appropriated funds to projects of Defendants' own choosing, all without congressional approval (and in fact directly contrary to Congress' decision not to fund these projects). Elevating form over substance in this way risks "the Executive [] aggrandizing its power at the expense of [Congress]." Addressing the government's contention that "installation" was meant to be read broadly in the emergency context, the court pointed out that the aim of the NEA was to narrow executive emergency power, and that "Section 2808 has rarely been used, and never to fund projects for which Congress withheld appropriations." The court therefore found that the border barrier construction projects, with the exception of two projects on the Barry M. Goldwater range, are not "'carried out with respect to a military installation' within the meaning of Section 2808." The court next addressed whether the 11 barrier projects are "necessary to support the use of the armed forces," and found the government's arguments unconvincing. In the government's view, these projects will support the armed forces because they "allow DoD to provide support to DHS more efficiently and effectively," and could "ultimately reduce the demand for DoD support at the southern border over time." The court rejoined: Defendants do not explain how the projects are necessary to support the use of the armed forces while simultaneously obviating the need for those forces. This appears to defy the purpose of Section 2808, which specifically refers to construction that is necessary to support the use of the armed forces, not to construction that the armed forces will not use once constructed. Again, Defendants' argument proves too much. Under their theory, any construction could be converted into military construction and funded through Section 2808 simply by sending armed forces temporarily to provide logistical support to a civilian agency during construction. The court concluded that there was "simply nothing in the record . . . indicating that the eleven border barrier projects however helpful are necessary to support the use of the armed forces." The court entered a permanent injunction against the 11 proposed border construction projects, but stayed the injunction pending appeal. The government has appealed. The district court in El Paso County rejected the use of Section 2808 for border barrier construction not because of the definitions at issue, but because the court concluded the provision is not an appropriations measure and therefore cannot be used to circumvent Section 739 of the CAA 2019, for the same reasons that the judge rejected the use of Section 284. <2.2. Procedural Barriers to Lawsuits Challenging Border Barrier Funding> Aside from the merits of the Trump Administration's funding initiatives, the various legal challenges brought by states, private individuals, and the House of Representatives also involve two threshold requirements that must be satisfied by any party seeking to maintain a lawsuit in federal court. A plaintiff must first show that he has suffered a "concrete" and "particularized" injury that was caused by the challenged government action the so-called "standing" requirement. A plaintiff must also have a legal right (i.e., a "cause of action") to enforce whatever provision of federal law is at issue, and he must also fall within the "zone of interests" meant to be protected by that law. These procedural requirements have presented obstacles to those opposing the Trump Administration's funding initiatives. In U.S. House of Representatives v. Mnuchin , the U.S. District Court for the District of Columbia held that the House of Representatives lacked standing to challenge the Trump Administration's actions. And though the district court in Sierra Club and California (and the Ninth Circuit in Sierra Club ) concluded that the plaintiffs in those cases nonprofit organizations and state plaintiffs satisfied these procedural requirements, the Supreme Court ultimately stayed the district court's injunction because "the Government ha[d] made a sufficient showing at this stage that the plaintiffs have no cause of action to obtain review of the Acting [Secretary of Defense's] compliance with Section 8005." In staying the permanent injunction in the Sierra Club litigation, the Supreme Court cleared the way for the Trump Administration to use funds transferred under Section 8005 to construct border barriers while the Ninth Circuit considers the Administration's appeal of the permanent injunction. However, the Court's order did not address the merits of Section 8005 or any of the other statutory authorities at issue in that litigation. <2.2.1. Standing> Article III of the U.S. Constitution "limits federal courts' jurisdiction to certain 'Cases' and 'Controversies.'" This limitation has been interpreted to require that every person or entity bringing a claim in federal court must establish "standing" to sue that is, establish that he has suffered an injury that (1) is "concrete, particularized, and actual or imminent"; (2) "fairly traceable to the challenged action"; and (3) would be "redressable by a favorable ruling." The Supreme Court has explained that this standing requirement "is built on separation-of-powers principles" and "serves to prevent the judicial process from being used to usurp the powers of the political branches." Separation-of-powers concerns are heightened where a court is being asked to deem the actions of one of the other two branches of government unconstitutional, and especially so when a suit involves a dispute between the other two branches of the federal government. The plaintiffs challenging the Trump Administration's funding initiatives argued that they satisfied Article III's standing requirement. In Sierra Club and California , the Trump Administration conceded that constructing border barriers would cause a sufficient injury for Article III purposes, but it argued that this injury did not confer standing to challenge the Administration's use of Section 8005 to transfer funds. Rejecting that argument, the district court in Sierra Club and California held that the plaintiffs had established an "actual or imminent" injury that was "fairly traceable" to the Trump Administration's proposed transfer of money. The court explained that the supposedly distinct actions of (1) transferring funds and (2) using those transferred funds to construct border barriers were both part of a single objective the construction of border barriers. And because a sufficiently concrete injury followed from the attainment of that objective, the plaintiffs had standing to challenge government action that was part of the chain of events leading to the injury. Similarly, in El Paso County , the court held that the plaintiffs' reputational and economic injuries resulting directly from the border barrier construction were sufficient for Article III purposes. By contrast, the federal district court presiding over the U.S. House of Representatives' lawsuit held that the House of Representatives lacks standing because the House's asserted injury "an institutional injury to [Congress's] Appropriations power" was not the kind of injury that supports Article III standing. The district court relied on the Supreme Court's decision in Raines v. Byrd , which held that Members of Congress lacked standing to challenge the constitutionality of the Line Item Veto Act. While Article III requires a "particularized" injury that is, an injury that "affect[s] the plaintiff in a personal . . . way" the Court in Raines determined that the Members of Congress had asserted "a type of institutional injury (the diminution of legislative power)" that did not belong to the Members individually. As a result, those Members were unable to show "a sufficient[ly] 'personal stake' in th[e] dispute." Similarly, the district court in Mnuchin noted that the appropriations power is held by Congress as a whole , not by each chamber of Congress separately. Moreover, as had the Court in Raines , the Mnuchin court supported its conclusion by noting the absence of historical examples of federal courts being asked to adjudicate lawsuits "brought on the basis of claimed injury of official authority or power." The U.S. House of Representatives appealed the district court's decision to the D.C. Circuit, but the court of appeals has not yet issued a decision. <2.2.2. Cause of Action and Zone of Interests> Even if a plaintiff establishes standing, the party must also be able to identify a source of law that authorizes the party to sue also known as a "cause of action." In some instances, Congress has included a cause of action within a federal law to enable those injured by a violation of that law to obtain judicial relief. Separately, the Administrative Procedure Act contains a more general cause of action, authorizing "person[s] suffering legal wrong because of agency action" to challenge that action in federal court. Finally, even absent a statutory cause of action, a plaintiff may still be authorized to sue based on "[t]he power of federal courts of equity to enjoin unlawful executive action." Moreover, in order to show that a particular cause of action applies to him, a plaintiff must (generally) show that "[t]he interest he asserts [is] 'arguably within the zone of interests to be protected or regulated by the statute' that he says was violated." This "zone of interests" requirement "applies to all statutorily created causes of action," and its purpose is to "foreclose[] suit . . . when a plaintiff's 'interests are so marginally related to or inconsistent with the purposes implicit within the statute that it cannot reasonably be assumed that Congress intended to permit the suit.'" Before concluding that the Trump Administration cannot use Section 8005 to transfer funds for border barrier construction, the district court in Sierra Club and California (and the Ninth Circuit on appeal in Sierra Club ) concluded that the plaintiffs in these cases had satisfied these threshold procedural requirements. The court ruled that the plaintiffs' ability to bring their suits was based on the federal courts' equitable power to enjoin unlawful executive action. In so doing, the district court also determined that the "zone of interests" requirement does not apply to claims resting on an equitable (as opposed to a statutory) cause of action. Reviewing the district court's ruling in Sierra Club , the Ninth Circuit agreed that the plaintiffs had an equitable cause of action to challenge the lawfulness of executive action, and determined that they also had a cause of action under the Administrative Procedure Act. The Ninth Circuit expressed "doubt[s]" that the zone-of-interests test applied to equity-based claims, but determined that the plaintiffs satisfied any zone-of-interest requirement that might apply to either of these causes of action. <2.2.3. The Supreme Court's Order> Though the district court and the Ninth Circuit concluded that the plaintiffs in Sierra Club and California were proper parties to challenge the Trump Administration's intended use of Section 8005, the Supreme Court issued an order staying the district court's injunction. After the Ninth Circuit declined to stay the district court's permanent injunction, the Trump Administration asked the Supreme Court to do so, and on July 26, 2019, the Supreme Court issued an order staying the permanent injunction. Chief Justice Roberts and Justices Thomas, Alito, Gorsuch, and Kavanaugh voted to grant the stay in full, while Justice Breyer indicated that he would have granted the stay in part. The Court's order stated that "[a]mong the reasons" for staying the injunction, "the Government ha[d] made a sufficient showing at this stage that the plaintiffs have no cause of action to obtain review of the Acting [Secretary of Defense's] compliance with Section 8005." The Court's order further stated that the stay would continue "pending disposition of the [Administration's] appeal in the [Ninth Circuit] and disposition of the Government's petition for a writ of certiorari," and will "terminate automatically" upon the Court's denial of a petition for certiorari submitted by the Administration. Justices Ginsburg, Sotomayor, and Kagan voted to deny the request for a stay. Justice Breyer explained that he would have "grant[ed] the Government's application to stay the injunction only to the extent that the injunction prevents the Government from finalizing the contracts [for border barrier construction] or taking other preparatory administrative action," but would have left the injunction "in place insofar as it precludes the Government from disbursing funds or beginning construction." Justice Breyer explained that granting a stay of the injunction in full would irreparably harm the plaintiffs, while denying a stay of the injunction would irreparably harm the government because all funds not obligated by the end of the fiscal year would become unavailable. According to Justice Breyer, staying the injunction to allow the Trump Administration to "finaliz[e] contracts or tak[e] other preparatory administration action" for constructing border barriers would "avoid harm to both the Government and [the plaintiffs] while allowing the litigation to proceed." By staying the district court's permanent injunction, the Supreme Court enabled the Trump Administration to use funds transferred under Section 8005 to construct border barriers, at least during the pendency of the litigation in the Sierra Club and California cases. However, the Court's order did not address the merits of Section 8005 or any of the other statutory authorities at issue in that litigation. Moreover, the Court's order makes clear that it applies only at "this stage" of the litigation and therefore is not binding on the Ninth Circuit as it considers the Administration's appeal of the permanent injunction. As a result, the Court's order does not prevent the Ninth Circuit in Sierra Club which is currently considering the Trump Administration's appeal from the permanent injunction from concluding that the Sierra Club plaintiffs have a cause of action to enforce Section 8005. Nor does it prevent the district court in Sierra Club and California from ruling on the other funding authorities (including Section 284) and, perhaps, enjoining the Trump Administration from using those authorities to construct border barriers. <3. Considerations for Congress> <3.1. Subsequent Legislation> The Supreme Court has said that the Appropriation Clause's "fundamental and comprehensive purpose . . . is to assure that public funds will be spent according to the letter of the difficult judgments reached by Congress as to the common good and not according to the individual favor of Government agents or the individual pleas of litigants." Consequently, Congress has the power, subject to presidential veto, to enact legislation either appropriating more funds for border barrier construction, to limit the extent that the Administration's proposed funding sources may be used for border barrier construction, or to prohibit the Administration from obtaining additional funding through existing mechanisms. As part of the FY2020 appropriations process, the 116th Congress had considered provisions limiting the expenditure of annually appropriated funds for border barrier construction, though none have yet been enacted. For example, Section 8127 of Division C of H.R. 2740 , the DOD Appropriations Act for FY2020, as passed by the House on June 19, 2019, would generally have provided that "None of the funds appropriated or otherwise made available by this Act or any prior Department of Defense appropriations Acts may be used to construct a wall, fence, border barriers, or border security infrastructure along the southern land border of the United States." If this provision had been enacted it would likely have rendered the litigation over the Northern District of California's injunction moot, as the use of FY2019 funds for the purposes sought by the Administration would be expressly prohibited. Separately, the House-passed H.R. 2740 would also have limited the general transfer authority under either Sections 8005 or 9002 from being used to transfer funds into or out of the DOD Drug Interdiction Account, and the bill would reduce the overall amount of general transfer authority available under Section 8005 from $4 billion to $1 billion. The initial House-passed National Defense Authorization Act for FY2020 included similar limitations. None of these limitations were included as part of the enacted Consolidated Appropriations Act, 2020, or the enacted FY2020 National Defense Authorization Act. In February 2019, the Administration requested $5 billion in border barrier funding for FY2020 to support the construction of approximately 206 miles of border barrier system. The House Appropriations Committee responded to this by recommending no funding for border barriers in H.R. 3931 its FY2020 DHS Appropriations bill. In addition, the House Appropriations Committee-reported bill would have restricted the ability to transfer or reprogram funds for border barrier construction. That bill stated in Section 227 that, aside from appropriations provided for such purpose in the last three fiscal years, "no Federal funds may be used for the construction of physical barriers along the southern land border of the United States during fiscal year 2020." Furthermore, Section 536 of that bill proposed to rescind $601 million from funding appropriated for border barriers in FY2019 thus reducing the FY2019 funding available by the amount pledged from the Treasury Forfeiture Fund. On September 26, 2019, the Senate Appropriations Committee reported its annual appropriations act for DHS for FY2020, which would have provided $5 billion for additional new miles of pedestrian fencing. As part of the Consolidated Appropriations Act, 2020, Congress provided $1.375 billion for "construction of barrier system along the southwest border." <3.2. Comptroller General Opinion> Committees and Members of Congress have also requested legal opinions from the Comptroller General of the United States, head of the Government Accountability Office (GAO), regarding questions of appropriations law and executive agencies' compliance with such laws. Though GAO's decisions are not binding on federal courts, those decisions are sometimes given consideration by reviewing courts because of GAO's expertise in appropriations law and its role as the "auditing agent of Congress." On September 5, 2019, in response to such a request from Senate Appropriations Committee Vice Chairman Leahy, Subcommittee on Defense Vice Chairman Durbin, and Subcommittee on Military Construction, Veterans Affairs, and Related Agencies Ranking Member Schatz, the Comptroller General issued a legal opinion concluding that the Administration's use of Section 8005 of the 2019 DOD Appropriations Act and 10 U.S.C. 284 to fund border barrier construction is lawful. Like the Northern District of California and the Ninth Circuit decisions, GAO's analysis of the transfer authority focused primarily on (1) whether the use of the funds for border barrier construction was an unforeseen military requirement, and (2) whether Congress had denied funds for the item to which funds were being transferred. GAO agreed with the Administration's argument that the relevant "military requirement" for purposes of Section 8005 was the construction of border barriers by DOD pursuant to its Section 284 authority, not the construction of border barriers generally. According to GAO, this military requirement was "unforeseen" because it was not until DHS requested assistance from DOD to construct border barriers well after the President's budget requests that the need for DOD assistance became known. Consequently, GAO concluded that DHS's request for assistance constituted an unforeseen military requirement that made available the transfer authority under Section 8005. GAO next addressed whether the construction of border fencing had been "denied by the Congress." GAO began by noting that this language was not defined by Section 8005 or elsewhere in the FY2019 DOD Appropriations Act. Relying on the "ordinary meaning" of the term "deny" as well as previous decisions by the Comptroller General, GAO concluded that a denial of funds for purposes of Section 8005 required that Congress "actively refuse" funds for an item, rather than merely fail to appropriate the full amount requested for that item. Applying this standard, GAO asserted that it could not identify any statutory provision that prohibited DOD from using funds to build border barriers pursuant to its Section 284 authority. Accordingly, GAO agreed with the Administration that Congress had not denied funds for that purpose, within the meaning of Section 8005.

President Trump has prioritized the construction of border barriers along the U.S.-Mexico border. Over the course of negotiations for FY2019 appropriations, the Administration asked Congress to appropriate $5.7 billion to the Department of Homeland Security (DHS) for that purpose. When Congress appropriated $1.375 billion to DHS for border fencing, the President announced that his Administration would fund the construction of border barriers by repurposing funds appropriated to the Department of Defense (DOD) and transferring funds from the Department of the Treasury. The Administration asserted that these funding transfers were authorized by a combination of the following federal laws: National Emergenc ies Act (NEA) . The NEA establishes a framework for the President to declare national emergencies. The NEA does not itself appropriate or authorize the transfer of funds, but the declaration of a national emergency triggers other statutory provisions that allow certain executive departments to repurpose existing appropriations. 10 U.S.C. § 2808 . Section 2808 becomes available upon the President's declaration of a national emergency under the NEA. This provision authorizes the Secretary of Defense to use unobligated military construction funds for the construction of otherwise unauthorized military construction projects. Section s 8005 and 9002 of the 2019 D OD Appropriations Act . Sections 8005 and 9002 of the 2019 DOD Appropriations Act authorize the transfer of up to $6 billion appropriated in that act for "military functions" arising from "unforeseen military requirements." Funds may be transferred under these authorities only for "unforeseen military requirements" where the item for which funds will be transferred "has [not] been denied by the Congress." 10 U.S.C. § 284 . The 2019 DOD Appropriations Act also appropriated funds to a Drug Interdiction Account. Pursuant to 10 U.S.C. § 284, money in this fund may be spent by DOD in support of other agencies' counterdrug activities, including by constructing "roads and fencing . . . to block drug smuggling corridors across international borders of the United States." The Trump Administration proposed to use Sections 8005 and 9002 of the 2019 DOD Appropriations Act to transfer additional funds into the Drug Interdiction Account, which would then be used to construct border barriers. 31 U.S.C. § 9705 . This provision establishes a Treasury Forfeiture Fund (TFF) in the Department of the Treasury and authorizes the Secretary of the Treasury to make payments from unobligated sums in the TFF to federal, state, and local law enforcement agencies for various law enforcement purposes. Several plaintiffs filed lawsuits in federal courts in California, the District of Columbia, and Texas to prevent the Administration from using these authorities to repurpose appropriations for border barrier construction, arguing that none of the Administration's funding initiatives were authorized by Congress. Some plaintiffs also argued that the construction of border barriers was subject to the environmental assessment requirements of the National Environmental Policy Act (NEPA). Though a federal court in California initially entered an injunction prohibiting the Trump Administration from using the funds to initiate construction of border fencing, the U.S. Supreme Court ultimately stayed that injunction. The California federal district court's injunction would have prohibited the Administration from using Sections 8005 and 9002 to transfer funds for border barrier construction. The court did not rule on the lawfulness of the Administration's other proposed funding sources, though it did determine that waivers issued by DHS under Section 102 of the Illegal Immigration Reform and Immigrant Responsibility Act rendered NEPA inapplicable to the proposed border projects. But following the Supreme Court's stay of the district court's injunction, DOD was able to use funds transferred under Sections 8005 and 9002 for barrier construction purposes while litigation in the case continues. A second federal district court in Texas has enjoined the use of Section 2808 for border barrier construction purposes. A third lawsuit challenging the Trump Administration's funding initiatives is ongoing in the District of Columbia, though that court has not ruled on the merits. Meanwhile, both houses of Congress have continued to move through the annual appropriations process. Although the House of Representatives initially passed a version of the DOD Appropriations Act for FY2020 that would have expressly prohibited the use of funds for the construction of border barriers, these limitations were not included as part of the Consolidated Appropriations Act, 2020 (which included DOD appropriations and $1.375 billion for construction of a barrier system along the southwest border), or the FY2020 National Defense Authorization Act as they were passed by both chambers of Congress and signed into law.

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<1. Overview of 2019 Leaders' Meeting1> Heads of state and government from NATO's 30 member states met in London, United Kingdom (UK), on December 3-4, 2019. NATO and U.S. officials highlighted the following key deliverables from the London Leaders' Meeting: Completion of a new Readiness Initiative, under which the alliance would have at its disposal 30 mechanized battalions, 30 air squadrons, and 30 naval combat vessels ready to use within 30 days. Declaration of space as a new operational domain for NATO and advances in combatting cyber and hybrid threats, including establishing new baseline requirements for telecommunications infrastructure. Increased defense spending by European allies and Canada. Renewed commitment to NATO's mission in Afghanistan and counterterrorism efforts in the Middle East and North Africa. Agreement to assess China's impact on NATO and transatlantic security. Initiation of a new "forward-looking reflection process to further strengthen NATO's political dimension including consultation." More broadly, NATO officials sought to highlight NATO's achievements and the importance of strong U.S.-European relations to these efforts. The United States was the driving proponent of NATO's creation in 1949 and has been the unquestioned leader of the alliance as it has evolved from a collective defense organization of 12 members focused on deterring the Soviet Union to a globally engaged security organization of 30 members. Successive U.S. Administrations have viewed U.S. leadership of NATO as a cornerstone of U.S. national security strategy that brings benefits ranging from peace and stability in Europe to the political and military support of 28 allies, including many of the world's most advanced militaries. The London meeting came at a tense time for NATO, however. Some European allies question the Trump Administration's commitment to NATO and have criticized the Administration for a perceived unilateral approach to foreign policy issues, including the October 2019 drawdown of U.S. forces from Syria. Many allies also have criticized fellow NATO member Turkey for its military operations in Syria and its acquisition of a Russian-made air defense system. NATO Secretary General Jens Stoltenberg acknowledges ongoing tensions within the alliance but stresses that continued transatlantic cooperation has enabled NATO to be more active today than it has been in decades. Trump Administration officials maintain that the United States remains committed to NATO, and in London, President Trump stressed that NATO "has a great purpose." U.S. officials also highlight the Administration's successful efforts in 2017 and 2018 to substantially increase funding for the U.S. force presence in Europe and note that Secretary General Stoltenberg has credited President Trump with playing a role in securing defense spending increases across the alliance in recent years. Critics of the Trump Administration's NATO policy maintain that renewed Russian aggression has been a key factor behind such increases. <2. Key Issues> At the London meeting, NATO leaders stressed their commitment to advancing existing readiness and deterrence initiatives and to confronting emerging security challenges, including by declaring space as an operational domain for NATO. The allies also reinforced their commitment to NATO's ongoing mission in Afghanistan and other counterterrorism efforts and discussed the implications for NATO of China's growing investment in, and engagement with, Europe. <2.1. Deterrence Through Increased Readiness> In the five years since Russia occupied Crimea and invaded Eastern Ukraine, the United States has supported efforts to renew NATO's focus on territorial defense and deterring Russian aggression. Among other measures, NATO member states have deployed an Enhanced Forward Presence (EFP) totaling about 4,500 troops to the three Baltic States (Estonia, Latvia, and Lithuania) and Poland; increased military exercises and training activities in Central and Eastern Europe; and established new NATO command structures in six Central and Eastern European countries. In London, the allies announced progress on several new initiatives intended to enhance NATO's readiness to respond swiftly to an attack on a NATO member, including by reinforcing the aforementioned EFP battlegroups. A cornerstone of these efforts is full implementation by the end of 2019 of the so-called Four-Thirties Readiness Initiative, proposed by the United States in 2018, under which NATO would have 30 mechanized battalions, 30 air squadrons, and 30 naval combat vessels ready to use within 30 days. Although the allies have continued to support and contribute to NATO deterrence initiatives, some analysts question the effectiveness and sustainability of these efforts. For example, the authors of a February 2016 report by the RAND Corporation contend that "as presently postured, NATO cannot successfully defend the territory of its most exposed members." Some allies, including Poland and the Baltic States, have urged other NATO members to deploy more forces to the region to reinforce that alliance's deterrence posture. Other allies, including leaders in Western European countries such as Germany, Italy, and France, have stressed the importance of a dual-track approach to Russia that complements deterrence with dialogue. These allies contend that efforts to rebuild cooperative relations with Moscow should receive as much attention as efforts to deter Russia. Accordingly, these allies are reluctant to endorse permanently deploying troops in countries that joined NATO after the collapse of the Soviet Union due to concerns that this would violate the terms of the 1997 NATO-Russia Founding Act; in consideration of these terms, NATO's EFP has been referred to as "continuous" but rotational rather than "permanent." <2.2. Addressing New Security Challenges: Cyber, Hybrid, and Space> In London, the allies highlighted progress in responding to cyber and hybrid threats and formally declared space as a new operational domain for the alliance. Since naming cyber defense a core NATO competence in 2014, the alliance has adopted measures to protect NATO networks from cyberattacks and to assist member states in bolstering national cyber defense capabilities. NATO has made available Cyber Rapid Reaction Teams to help allies respond to cyberattacks, and in 2018 it announced plans to establish a new NATO Cyberspace Operations Center in Brussels. The new cyber center will focus on integrating allies' national cyber capabilities into NATO missions and operations. Although NATO member states maintain full ownership of these capabilities as they do with other military capabilities deployed to NATO missions the new operations center is tasked with incorporating cyber defense into all levels of NATO planning and operations. NATO also has sought to bolster capabilities to counter heightened hybrid warfare threats, including propaganda, deception, sabotage, and other nonmilitary tactics. NATO's focus has been on enhancing strategic communications, developing appropriate exercise scenarios, and strengthening coordination with the European Union (EU) to respond to hybrid threats. At their meeting in 2018, NATO leaders agreed to establish counter-hybrid support teams to provide tailored assistance to allies in preparing against and responding to hybrid activities. NATO deployed the first of these teams to Montenegro in November 2019. As discussed in more detail below (see " Assessing China's Impact on NATO and Transatlantic Security "), in London, NATO leaders endorsed new baseline requirements for allies with respect to the resilience of telecommunications infrastructure, including 5G systems. In London, NATO leaders formally declared space as an operational domain for NATO, alongside air, land, sea, and cyber. Secretary General Stoltenberg stated that the declaration reflects a consensus desire within NATO to strengthen defense and deterrence in all areas, including space, where NATO allies reportedly own about half of the approximately 2,000 satellites estimated to be in orbit currently. Stoltenberg has stressed that NATO has no intention of deploying weapons in space and that NATO's approach will remain defensive and in line with international law. Others have questioned whether China, which has a growing presence in space, might view the NATO declaration as a provocation. <2.3. Defense Spending and Burden-Sharing> A primary focus of the Trump Administration's policy toward NATO has been to urge allies to increase their national defense budgets in line with past agreements intended to ensure an equitable distribution of defense responsibilities within the alliance. In London, President Trump continued these calls but also welcomed substantial increases in European allies' defense spending over the past five years. Secretary General Stoltenberg has credited President Trump with playing a key role in spurring increases in European allied defense spending over the past five years. However, critics of the U.S. President express concern that his strident criticism of what he considers insufficient defense spending by some allies could damage NATO cohesion and credibility. In 2006, NATO members informally agreed to aim to allocate at least 2% of gross domestic product (GDP) to their national defense budgets annually and to devote at least 20% of national defense expenditure to procurement and related research and development. These targets were formalized at NATO's 2014 Wales Summit, when the allies pledged to halt declines in defense expenditures and "move towards the 2% guideline within a decade." U.S. and NATO officials say they are encouraged that defense spending by European allies and Canada has grown for five consecutive years (see Figure 1 ). According to Secretary General Stoltenberg, European allies and Canada have added $130 billion in defense spending since 2014; the figure is expected to rise to $400 billion by the end of 2024. In 2014, three allies met the 2% guideline; in 2019, 9 allies are expected to have met the 2% guideline, and 16 allies are expected to have met the 20% benchmark for spending on major equipment. President Trump and others continue to criticize those NATO members perceived to be reluctant to achieve defense-spending targets, however. One such member is Europe's largest economy, Germany, which currently spends about 1.38% of GDP on defense and has plans to reach 1.5% of GDP by 2024. Although all allied governments agreed to the Wales commitments, many, including Germany, emphasize that allied contributions to ongoing NATO missions and the effectiveness of allied military capabilities should be considered as important as total defense spending levels. For example, an ally spending less than 2% of GDP on defense could have more modern, effective military capabilities than an ally that meets the 2% target but allocates most of that funding to personnel costs and relatively little to ongoing missions and modernization. Analysts on both sides of the Atlantic also have argued that a relatively narrow focus on defense inputs (i.e., the size of defense budgets) should be accompanied by an equal, if not greater, focus on defense outputs (i.e., military capabilities and the effectiveness of contributions to NATO missions and activities). The alliance's target to devote at least 20% of each member's national defense expenditure to new equipment and related research and development reflects this goal. Secretary General Stoltenberg has emphasized a broad approach to measuring contributions to the alliance, using a metric of "cash, capabilities, and contributions." Proponents of this approach argue that a broad assessment of allied contributions that takes into account factors beyond the 2% of GDP defense spending metric would be more appropriate given NATO's wide-ranging strategic objectives, some of which may require capabilities beyond the military sphere. In London, allied leaders approved a U.S. proposal to reduce assessed U.S. contributions, and increase German contributions, to NATO's relatively small pot of common funds . National contributions to NATO's common funds about $2.6 billion total in 2019 pay for the day-to-day operations of NATO headquarters, as well as some collective NATO military assets and infrastructure. According to NATO, in 2018, the U.S. share of NATO's common-funded budgets was about 22% , or about $570 million, followed by Germany (15%), France (11%), and the UK (10%). The U.S. proposal approved in London would bring both the U.S. and German contributions to about 16% each. <2.4. Afghanistan and Counterterrorism> In London, the allies renewed their commitment to NATO's ongoing training mission in Afghanistan, despite speculation about a possible drawdown of U.S. forces in the country. In January 2015, following the end of its 11-year-long combat mission in Afghanistan, NATO launched the Resolute Support Mission (RSM) to train, advise, and assist Afghan security forces. Between 2015 and late 2018, NATO allies and partners steadily matched U.S. increases in troop levels to RSM. As of February 2020, about 8,500 of the 16,551 troops contributing to RSM were from NATO members and partner countries other than the United States. After the United States (8,000 troops), the top contributors to the mission were Germany (1,300), the UK (1,100), Italy (895), non-NATO-member Georgia (871), and Romania (797). NATO leaders welcomed the February 29, 2020, Joint Declaration between the United States and Afghanistan and agreement between the United States and the Taliban in pursuit of a peaceful settlement to the conflict in Afghanistan. Secretary General Stoltenberg said that NATO would implement adjustments, including troop reductions, to its mission as outlined in the agreements; he stressed, however, that such actions would be "conditions-based." NATO continues to "reaffirm its longstanding commitment to Afghanistan and ongoing support for the Afghan National Defense and Security Forces." In the past, European allies have expressed concern that they were not consulted on possible drawdown plans and stressed that any such plans be carried out in close coordination with the allies. President Trump consistently has called on NATO to expand its counterterrorism efforts beyond Afghanistan, and terrorist threats emanating from the Middle East and North Africa (MENA) region are key European concerns as well. Over the past several years, NATO leaders have launched several new initiatives aimed at countering terrorism and addressing instability in the MENA region. These initiatives include the noncombat NATO Training Mission in Iraq, carried out by between 300 and 500 allied military trainers; the Package on the South, an initiative that includes a range of partnership activities to enhance cooperation initiatives with MENA countries such as Tunisia and Jordan; and establishment of a NATO Regional Hub for the South in Naples, Italy, to coordinate NATO responses to crises emanating from the South. NATO also has deployed aerial surveillance aircraft (AWACS) to assist the global coalition fighting the Islamic State terrorist organization. Several factors have limited enhanced NATO engagement on security challenges emanating from the MENA region. These factors include a belief among some allies that the EU is the appropriate institution to lead Europe's response to terrorism and migration issues and a related reluctance to cede leadership on these issues to NATO. France, for example, has advocated strong European responses to terrorism and conflict in the Middle East but has generally opposed a larger role for NATO. Some allies also disagree on what the appropriate response should be to some of the security challenges in the MENA region, with some appearing hesitant to involve NATO in a way that could be seen as endorsing military action. <2.5. Assessing China's Impact on NATO and Transatlantic Security> The Trump Administration and some Members of Congress have urged NATO to assess the security implications of growing Chinese investment in Europe and to work to counter potential negative impacts on transatlantic security. As expressed in the December 2017 U.S. National Security Strategy , U.S. officials have grown increasingly concerned that "China is gaining a strategic foothold in Europe by expanding its unfair trade practices and investing in key industries, sensitive technologies, and infrastructure." U.S. officials express particular concern about Chinese investment in critical infrastructure and telecommunications systems, such as 5G networks. Some U.S. defense officials have suggested that the United States might limit military cooperation and intelligence sharing with allies that allow Chinese investment in 5G networks. In London, NATO formally adopted an October 2019 plan by NATO defense ministers to update the alliance's baseline requirements for civilian telecommunications to reflect emerging concerns about 5G technology. The allies agreed to assess the risks to communications systems associated with cyber threats, and the consequences of foreign ownership, control, or direct investment. Although the EU is attempting to develop common guidelines to govern contracting decisions on 5G networks, these decisions would remain the prerogative of individual national governments. As noted above, U.S. officials have warned European allies and partners that using Huawei or other Chinese 5G equipment could impede intelligence sharing with the United States due to fears of compromised network security. Although some allies, such as the UK and Germany, have said they would not prevent Chinese companies from bidding on 5G contracts, these allies have stressed that they would not contract with any companies that do not meet their national security requirements. On January 28, 2020, the UK government announced that "high-risk vendors" including, but not limited to, Huawei, would be excluded from sensitive "core" parts of 5G networks and locations deemed critical national infrastructure, and that such vendors' access to nonsensitive parts of networks would be limited to 35%. Other countries, such as Poland, have considered formally excluding Huawei from their telecommunications sector, and Czech Republic intelligence officials publicly labeled Huawei a national security risk. Despite U.S. concerns about China's growing footprint in Europe, Administration officials have expressed optimism that the United States and Europe can work together to meet the various security and economic issues posed by a rising China. Analysts, too, cite numerous concerns shared on both sides of the Atlantic and contend that joint U.S.-European pressure on China would be more effective than either partner's individual dealings with China. <2.6. Enlargement to North Macedonia25> On March 27, 2020, North Macedonia became NATO's 30 th member (see Figure 2 for a map of NATO members and accession dates). NATO officials had hoped North Macedonia's accession would be complete in time for the London Leaders' Meeting, but elections in some member states delayed the accession ratification process. The U.S. Senate approved U.S. ratification on October 22, 2019. <3. Political Tensions and Divergent Views> Deliberations in London drew attention to heightened tension and divergent views within the alliance on a range of issues, including U.S. policy toward NATO and Europe, Turkey's standing as a member of the alliance, EU security and defense policy, and NATO's relations with Russia. Disagreement within the alliance on whether and how to respond to these and other issues has prompted some, including French President Emmanuel Macron, to question NATO's strategic direction and future. Many officials and analysts on both sides of the Atlantic also have suggested that President Trump's vocal criticism of NATO and the lack of transatlantic coordination on policies related to Syria and Afghanistan have seriously undermined the alliance. Secretary General Stoltenberg and others maintain that disagreement among allies is not a new phenomenon and stress that "Europe and North American are doing more together in NATO today than we have for decades." In an apparent effort to address diverging views within NATO, in London, the allies agreed to initiate a "forward-looking reflection process to further strengthen NATO's political dimension including consultation." On March 31, 2020, Secretary General Stoltenberg announced the appointment of a group of 10 experts tasked with recommending ways to "reinforce Alliance unity, increase political consultation and coordination between Allies, and strengthen NATO's political role. The group will be cochaired by former U.S. Assistant Secretary of State Wess Mitchell and former German Interior and Defense Minister Thomas De Mazi re. <3.1. Allied Concerns Regarding the U.S. Commitment to NATO> Some analysts and allied leaders question the Trump Administration's level of commitment to NATO and express concern that President Trump's criticisms of the alliance could cause lasting damage to NATO cohesion and credibility. In addition to admonishing European allies for failing to meet agreed NATO defense spending targets President Trump has repeatedly questioned NATO's value to the United States. Although he is not the first U.S. President to press the allies to increase defense spending, none has done so as stridently and none has called into question the U.S. commitment to NATO as openly or to the same extent as President Trump. In London, President Trump expressed that his Administration remains committed to NATO and to upholding European security, including through increased funding for U.S. defense activities in Europe such as the European Deterrence Initiative (EDI). Some NATO member state governments argue that growing divergence between the United States and many European allies on a range of key foreign and security policy issues, from Iran's nuclear program to fighting the Islamic State terrorist organization in Syria, has impeded cooperation in NATO and exposed strategic rifts within the alliance. Some European allies have expressed particular concern about what they portray as a lack of U.S. coordination on policy in Syria, where many European countries have been fighting alongside the United States to counter the Islamic State. Some maintain that the U.S. drawdown of forces in Syria in October 2019 enabled Turkey's subsequent military operations against Kurdish forces in the country. In a widely reported November 2019 interview, French President Macron cited these divergences when he proclaimed that, "we are currently experiencing the brain death of NATO." Referring to concerns about the drawdown of U.S. forces from Syria in October 2019 and subsequent military operations by Turkey, he lamented, "You have partners together in the same part of the world, and you have no coordination whatsoever of strategic decision-making between the United States and its NATO allies. None. You have an uncoordinated aggressive action by another NATO ally, Turkey, in an area where our interests are at stake. There has been no NATO planning, nor any coordination." In London, President Trump characterized Macron's criticism as "very, very nasty" and stressed that "NATO serves a great purpose"; Macron said he stood by his earlier criticism of the alliance. <3.2. Tensions with Turkey36> Some of Turkey's fellow NATO members have sharply criticized Turkey's October 2019 military operations against Kurdish forces in northern Syria as well as its planned deployment of a Russian S-400 air defense system, with some policymakers calling into question Turkey's qualification for continued membership in the alliance. Turkey has been a NATO member since 1952 and has participated in numerous NATO missions, including ongoing operations in Afghanistan, Iraq, and the Western Balkans. NATO, in turn, has invested substantially in military facilities in Turkey, including naval bases and radar sites. Since 2013, NATO members have provided Turkey with air defense support through the deployment of defensive missile systems along its southern border. During an October 11, 2019, visit to Turkey, Secretary General Stoltenberg acknowledged Turkey's "legitimate" security concerns but urged Turkey to "act with restraint" and do everything it can to preserve the gains that have been made against the Islamic State. Since 2012, Turkey has on three separate occasions invoked Article 4 of NATO's founding treaty to prompt high-level NATO consultations on a perceived threat from Syria to Turkey's territorial integrity or security. On February 28, 2020, the allies met and expressed full solidarity with Turkey in response to "indiscriminate air strikes by the Syrian regime and Russia in Idlib province." Secretary General Stoltenberg stressed that NATO allies were providing Turkey with air defense support along its border with Syria and aerial surveillance over Syria. NATO has deployed up to three air defense systems along the Turkish-Syrian border since early 2013 in response to a Turkish request for support following shelling by Syrian forces and the shooting down of a Turkish fighter jet in 2012. Although the air defense mission continues, some allies cast doubts on the deployment after Turkey's military incursion into northern Syria in October 2019. Italy withdrew its air defense system from Turkey in December 2019, though it said the decision was not a response to Turkey's actions; Spain continues to deploy a Patriot missile battery along Turkey's border. Secretary General Stoltenberg has said that Turkey's acquisition of the S-400 air defense system is "not good" for NATO, but he stressed that Turkey could continue to participate in NATO's integrated air and missile defense systems if the S-400 is excluded from these systems. Some allied leaders have argued that NATO should exclude Turkey from NATO's defense systems if it deploys the S-400. The North Atlantic Treaty does not contain provisions explicitly authorizing NATO allies to take action against another NATO member without its consent. However, the United States and other NATO members could take measures to affect the character of allied cooperation with Turkey for example, by changing their contributions of equipment or personnel, or their participation in specific activities in Turkey. On October 14, 2019, U.S. Defense Secretary Mark Esper stated that he would "press our other NATO allies to take collective and individual diplomatic and economic measures in response to these egregious Turkish actions." <3.3. EU Security and Defense Policy> Some European leaders, including French President Macron, have argued that uncertainty about the future U.S. role in European security should add urgency to long-standing efforts to develop coordinated European defense capabilities and policies, independent of but complementary to NATO. For two decades, the EU has sought to develop its Common Security and Defense Policy to bolster its common foreign policy, strengthen the EU's ability to respond to security crises, and enhance European military capabilities. Improving European military capabilities has been difficult, however, especially given many years of flat or declining European defense budgets. In recent years, the EU has announced several new defense initiatives, including a European Defense Fund (EDF) to support joint defense research and development activities and a new EU defense pact (known as Permanent Structured Cooperation, or PESCO) aimed at spending defense funds more efficiently. Secretary General Stoltenberg has expressed support for further EU defense integration and cooperation but emphasizes that these efforts should strengthen the European pillar within NATO 22 NATO members are also members of the EU rather than replace or supplant NATO. Stoltenberg also has stressed that EU defense initiatives should be careful not to duplicate NATO capacities and should complement NATO initiatives. In addition, the Trump Administration has expressed concern that the EDF and PESCO could restrict U.S. defense companies from participating in the development of pan-European military projects. Supporters of EU defense integration highlight that PESCO's initial priority projects were identified in consultation with NATO and that several of these projects focus on enhancing military mobility across Europe, a key NATO priority. <4. Issues for Congress> Congress was instrumental in creating NATO in 1949 and has played a critical role in shaping U.S. policy toward the alliance ever since. Although many Members of Congress have criticized specific developments within NATO regarding burden-sharing, for example Congress as a whole has consistently demonstrated strong support for active U.S. leadership of and support for NATO. Congressional support for NATO traditionally has buttressed broader U.S. policy toward the alliance. During the Trump Administration, however, demonstrations of congressional support for NATO have at times been viewed primarily as an effort to reassure allies about the U.S. commitment to NATO after President Trump's criticisms of the alliance. For example, during the Trump Administration, both chambers of Congress have passed legislation expressly reaffirming U.S. support for NATO at times when some allies have questioned the President's commitment. Some analysts portrayed House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell's joint invitation to Secretary General Stoltenberg to address a joint session of Congress on April 3, 2019, in commemoration of NATO's 70 th anniversary as an additional demonstration of NATO's importance to Congress. Although Congress has expressed consistent support for NATO and its cornerstone Article 5 mutual defense commitment, congressional hearings on NATO in the 115 th and 116 th Congresses have reflected disagreement regarding President Trump's impact on the alliance. Some in Congress argue that President Trump's criticism of allied defense spending levels has spurred recent defense spending increases by NATO members that were not forthcoming under prior Administrations, despite long-standing U.S. concern. Other Members of Congress counter that President Trump's admonition of U.S. allies and his questioning of NATO's utility have damaged essential relationships and undermined NATO's credibility and cohesion. They contend that doubts about the U.S. commitment to the alliance could embolden adversaries, including Russia, and ultimately weaken other allies' commitment to NATO. Critics also have lamented the Administration's reported lack of coordination with its allies on policies that have significant security ramifications for Europe, such as countering the Islamic State in Syria. Despite disagreement over President Trump's impact on the alliance, most Members of Congress continue to express support for robust U.S. leadership of NATO, in particular to address potential threats posed by Russia. Many Members have called for enhanced NATO and U.S. military responses to Russian aggression in Ukraine, and others have advocated stronger European contributions to collective defense measures in Europe. Increasingly, some Members of Congress have questioned whether NATO should take formal action against an ally, such as Turkey, which pursues foreign and defense policies that they believe could threaten alliance security. In light of these considerations, Members of Congress could focus on several key questions regarding NATO's future, including the following: addressing the strategic value of NATO to the United States and the United States' leadership role within NATO; examining whether the alliance should adopt a new strategic concept that better reflects views of the security threat posed by Russia and new and emerging threats in the cyber and hybrid warfare domains (NATO's current strategic concept was adopted in 2010); examining NATO's capacity and willingness to address other security threats to the Euro-Atlantic region, including from the MENA region, posed by challenges such as terrorism and migration; examining the possible consequences of member states' failure to meet agreed defense spending targets; assessing U.S. force posture in Europe and the willingness of European allies to contribute to NATO deterrence efforts and U.S. defense initiatives in Europe, such as the ballistic missile defense program and EDI; examining options to sanction allies that act in ways that jeopardize allied security; revisiting the allies' commitment to NATO's stated "open door" policy on enlargement, especially with respect to the membership aspirations of Georgia and Ukraine; and developing a NATO strategy toward China, particularly given U.S. and other allies' concerns about the security ramifications of increased Chinese investment in Europe.

Heads of state and government from NATO's 30 member states met in London, United Kingdom (UK), on December 3-4, 2019. Two key goals for the meeting were to commemorate the alliance's past achievements—2019 marks NATO's 70 th anniversary—and to advance efforts to address new and emerging security challenges, including Russian aggression, terrorism and instability in the Middle East and North Africa, and cyber and hybrid threats. The meeting also exposed heightened political tension within the alliance and divergent views on a range of issues, including U.S. policy toward NATO and Europe, relations with NATO member Turkey, and relations with Russia. In the six years since Russia occupied Crimea and invaded Eastern Ukraine, the United States has played a key role in renewing NATO's focus on territorial defense and deterring Russian aggression. Among other measures, NATO member states have deployed an Enhanced Forward Presence (EFP), totaling about 4,500 troops to the three Baltic States and Poland and including increased military exercises and training activities in Central and Eastern Europe. At the behest of the United States, the alliance also has sought to bolster its response to security threats posed by growing instability in the Middle East and North Africa, primarily through partnerships and training activities. NATO continues to lead a "train and assist" mission of about 16,500 troops in Afghanistan. In February 2020, NATO defense ministers agreed to expand NATO's training mission in Iraq, which currently consists of between 300 and 500 military trainers. The London meeting came at a tense time for NATO. Some allied governments argue that growing divergence between the United States and many European allies on a range of key foreign and security policy issues, from Iran's nuclear program to fighting the Islamic State terrorist organization in Syria, has impeded cooperation in NATO and exposed strategic rifts within the alliance. Some European allies have expressed particular concern about what they portray as a lack of U.S. coordination on policy in Syria, where many European countries have been assisting U.S.-led efforts to counter the Islamic State. Many allies also have criticized fellow NATO member Turkey for its military operations in Syria and its acquisition of a Russian-made air defense system. Although many Members of Congress have criticized specific developments within NATO—regarding burden sharing, for example—Congress as a whole has demonstrated consistent support for NATO. During the Trump Administration, congressional support at times has been viewed by some as an effort to reassure allies troubled by President Trump's criticisms of the alliance. Over the past several years, both chambers of Congress have passed legislation reaffirming U.S. support for NATO (e.g., H.Res. 397, H.R. 676 , H.R. 5515 / P.L. 115-232 , and H.Res. 256 in the 115 th Congress; S. 1790 / P.L. 116-92 in the 116 th Congress) and in some cases have sought to limit the President's ability to withdraw from NATO unilaterally ( H.R. 676 ; S. 1790 / P.L. 116-92 ). At the same time, Congress continues to assess NATO's utility and value to the United States, and some Members are concerned about key challenges facing NATO, including burden sharing, managing relations with Russia and China, and divergent threat perceptions within the alliance.

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<1. Introduction> The National Security Space Launch (NSSL) program aims to acquire launch services and ensure continued access to space for critical national security missions. The U.S. Air Force implemented the original program in 1995 Evolved Expendable Launch Vehicle (EELV) and awarded four companies contracts to design a cost-effective launch vehicle system. The DOD acquisition strategy was to select one company and ensure that NSS launches were affordable and reliable. The EELV effort was prompted by significant increases in launch costs, procurement concerns, and the lack of competition among U.S. companies. A major challenge and long-standing undercurrent of concern over U.S. reliance on a Russian rocket engine (RD-180), used on one of the primary national security rockets for critical national security space launches, was exacerbated by the Russian backlash over the 2014 U.S. sanctions against its actions in Ukraine. Moreover, significant overall NSSL program cost increases and unresolved questions over individual launch costs, along with legal challenges to the Air Force contract awards by space launch companies, prompted legislative action. In the John S. McCain National Defense Authorization Act (NDAA) for FY2019, Congress renamed the EELV to the NSSL program to reflect a wider mission that would consider both reusable and expendable launch vehicles. The origins of the NSSL program date back to 1995, after years of concerns within the Air Force and space launch community over increasing cost and decreasing confidence in the continued reliability of national access to space. The purpose of EELV was to provide the United States affordable, reliable, and assured access to space with two families of space launch vehicles. Initially only two companies were in competition: Boeing produced the Delta IV launch vehicle, and Lockheed Martin developed the Atlas V. Overall, the program provided critical space lift capability to support DOD and intelligence community satellites, together known as National Security Space (NSS) missions. The EELV program evolved modestly in response to changing circumstances, and the Air Force approved an EELV acquisition strategy in November 2011, further revising it in 2013. That strategy was designed to (1) sustain two major independent rocket-powered launch vehicle families to reduce the chance of launch interruptions and to ensure reliable access to space; (2) license and stockpile the Russian-made RD-180 heavy-lift rocket engine, a critical component of the Atlas V; (3) pursue a block-buy commitment to a number of launches through the end of the decade to reduce launch costs; and (4) increase competition to reduce overall launch costs. The Air Force and others viewed the overall EELV acquisition strategy as having successfully reduced launch costs while demonstrating highly reliable access to space for DOD and the intelligence community. Others in Congress and elsewhere, however, argued that the program remained far too costly and was not as competitive as it should be. The NSSL program is managed by the Launch Enterprise Systems Directorate of the Space and Missile Systems Center, Los Angeles Air Force Base (El Segundo, CA). The NSSL program consists of four launch vehicles: Atlas V and Delta IV Heavy (both provided by United Launch Alliance [ULA] of Denver, CO) and Falcon 9 and Falcon Heavy (both provided by Space Exploration Technologies Corporation [SpaceX] of Hawthorne, CA). NSS launches support the Air Force, Navy, and National Reconnaissance Office (NRO). More specifically, the Atlas V has launched commercial, civil, and NSS satellites into orbit, including commercial and military communications satellites, lunar and other planetary orbiters and probes, earth observation, military research, and weather satellites, missile warning and NRO reconnaissance satellites, a tracking and data relay satellite, and the X-37B space plane (a military orbital test vehicle). The Delta IV has launched commercial and military communications and weather satellites, and missile warning and NRO satellites. The Atlas V and Delta IV Heavy launch vehicles are produced by ULA, which was formed in 2006 as a joint venture of The Boeing Company (of Chicago, IL) and Lockheed Martin (of Bethesda, MD). In addition to the launch vehicles themselves, the NSSL program consists of an extensive array of support capabilities and infrastructure to permit safe operations of U.S. launch ranges. ULA operates five space launch complexes, two at Cape Canaveral Air Force Station, FL (Space Launch Complex-37 and Space Launch Complex-41), and three at Vandenberg Air Force Base, CA (Space Launch Complex-2, Space Launch Complex-3F, and Space Launch Complex-6). A large number of key suppliers for ULA are spread throughout 46 states. DOD certified SpaceX to compete for NSS launches in 2015. The Falcon 9 flew its first NSSL mission on December 23, 2018, which delivered the Global Positioning System (GPS) III to orbit. SpaceX developed a more capable launch capability in the Falcon Heavy, which DOD certified in June 2018 and later awarded NSS missions under Phase 1A of the NSSL program. SpaceX maintains three launch sites, one at Cape Canaveral Air Force Station, FL (Space Launch Complex 40); one at Kennedy Space Center (Launch Complex 39A); and one at Vandenberg Air Force Base, CA (Space Launch Complex 4E). On October 10, 2018, the Air Force awarded three Launch Service Agreement (LSA) Other Transaction Authority (OTA) agreements to space launch companies. The LSA OTA agreements are "public-private partnerships [that] leverage industry's commercial launch solutions to ensure those systems meet NSS requirements." They also "facilitate development of three NSSL launch system prototypes and maturing those launch systems prior to selecting two NSS launch service providers for launch service procurements beginning in FY2020." The Air Force released request for proposals (RFP) in May 2019 for Phase 2 of the NSSL program, with plans to award two separate Launch Service Procurement (LSP) contracts in the summer of 2020. The selected companies will be responsible for launching national security satellites through 2027. However, the Air Force acquisition strategy of down-selecting no more than two launch providers may mitigate short-term risk but could have second- and third-order effects for resiliency in the future. Congress may consider whether the strategy's cost-benefit analysis warrants further research. Should no more than two launch providers be chosen for LSP contracts in Phase 2, the companies not selected would lose the LSA funds received from the Air Force and could potentially be faced with (1) the choice of abandoning NSSL development to focus on competing in the commercial launch sector or (2) investing vast company reserves to continue development on its own. Furthermore, DOD investment in only two launch providers could mean fewer options for an increasingly diverse range of national space security missions and possibly limit competition, once again, in the launch market. <2. Evolution of the EELV> <2.1. 1990s-2011> By the early 1990s, the U.S. space industrial base supported the production of a number of launch vehicles (i.e., Titan II, Delta II, Atlas I/II/IIAS, and Titan IV) and their associated infrastructure. Although launch costs were increasing and operational and procurement deficiencies were noted by many decisionmakers, no clear consensus formed over how best to proceed. Congress took the initiative in the National Defense Authorization Act for Fiscal Year 1994 (NDAA; P.L. 103-160 , 213) by directing DOD to develop a Space Launch Modernization Plan (SLMP) that would "establish and clearly define priorities, goals, and milestones regarding modernization of space launch capabilities for the Department of Defense or, if appropriate, for the Government as a whole." The recommendations of the SLMP led DOD to implement the EELV program as the preferred alternative. The primary objective of the EELV program was to reduce costs by 25%. The program also sought to ensure 98% launch vehicle design reliability and to standardize EELV system launch pads and the interface between satellites and their launch vehicles. Congress supported these recommendations through the FY1995 NDAA ( P.L. 103-337 , 211), directing DOD to develop an integrated space launch vehicle strategy to replace or consolidate the then-current fleet of medium and heavy launch vehicles and to devise a plan to develop new or upgraded expendable launch vehicles. Congress recommended spending $30 million for a competitive reusable rocket technology program and $60 million for expendable launch vehicle development and acquisition. The original EELV acquisition strategy, initiated in 1994, called for a competitive down-select to a single launch provider and development of a system that could handle the entire NSS launch manifest. In 1995, the Air Force selected four launch providers for the initial competition: Lockheed Martin, Boeing, McDonnell Douglas, and Alliant Techsystems. After the first round of competition, the Air Force selected Lockheed Martin and McDonnell Douglas to continue. When Boeing acquired McDonnell Douglas in 1997, Boeing took over the contract to develop an EELV. Soon thereafter, however, the Air Force revised the EELV acquisition strategy, concluding that there was now a sufficient space launch market to sustain two EELV providers. Throughout the acquisition process, DOD maintained that competition between Lockheed Martin and Boeing was essential. At the time, the Government Accountability Office (GAO) reported that sufficient growth in the commercial launch business would sustain both companies, a premise that, in turn, would lead to lower launch prices for the government. But "the robust commercial market upon which DOD based its acquisition strategy of maintaining two launch companies [throughout the life-cycle of the program] never materialized, and estimated prices for future contracts, along with total program costs, increased." Retaining two launch providers, however, did provide DOD with some confidence in its ability to maintain "assured access to space." This confidence soon collapsed, when in the late 1990s, the United States suffered six space launch failures in less than a year. These failures included the loss of three national security satellites in 1998-1999, at a cost of over $3 billion. One, a critical national security communications satellite (MILSTAR Military Strategic and Tactical Relay), was lost on a failed Titan IV launch in 1999. That satellite capability was not replaced until 2010 with an AEHF (Advanced Extremely High Frequency) satellite, which experienced substantial acquisition challenges and frequent changes in both design and requirements. The other two losses were an NRO reconnaissance satellite and a DSP (Defense Support Program) satellite. In addition to the cost, schedule, and operational impacts of these lost missions, including a classified national security loss in coverage with MILSTAR, these failures significantly influenced the transition to the EELV program, which had an initial goal to make national security space launches more affordable and reliable. President Clinton directed a review of these failures and sought recommendations for any necessary changes. The subsequent Broad Area Review (BAR) essentially concluded that the U.S. government should no longer rely on commercial launch suppliers alone to provide confidence and reliability in the EELV program. Instead, the BAR recommended more contractor and government oversight through increasing the number of independent reviews, pursuing performance guarantees from the launch providers, and greater government involvement in the mission assurance process. Although these additional oversight activities eventually proved to significantly increase EELV costs, they also eventually led to notable improvements in launch successes. The early 2000s saw considerable turmoil within the Air Force space community and among the EELV launch service providers due to competition in the shrinking space launch industrial base, cost increases, and the growing need for reliable access to space. During this time, the poor business prospects in the space launch market drove Lockheed and Boeing to consider leaving the market altogether. Therefore, to protect its objective of assured access to space, the U.S. government began to shoulder much of the EELV program's fixed costs. To further protect the United States' ability to deliver NSS satellites into orbit, the George W. Bush Administration conducted a number of internal reviews that culminated in the 2004 National Security Policy Directive (NSPD)-40. This directive established the requirement for "assured access to space" and obliged DOD to fund the annual fixed launch costs for both Lockheed and Boeing until such time as DOD could certify that assured access to space could be maintained without two launch providers. DOD thus revised its EELV acquisition strategy because of the collapse of the commercial launch market and the ongoing erosion of the space industrial base. GAO wrote that "in acknowledging the government's role as the primary EELV customer, the new strategy maintained assured access to space by funding two product lines of launch vehicles." In 2006, The Boeing Company and Lockheed Martin announced plans to consolidate their launch operations into a joint venture ULA. The companies argued that by combining their resources, infrastructure, expertise, and capabilities, they could assure access to space at lower cost. DOD believed that having two launch vehicle families (Atlas V and Delta IV) under one entity (i.e., ULA) provided significant benefits that outweighed the loss of competition. In October 2006, the Federal Trade Commission granted ULA antitrust clearance allowing the new company to form on December 1, 2006. As a result, "unparalleled EELV mission success" ensued, and the tradeoff over increased costs and reduced competition outside ULA was largely deemed acceptable. <2.2. 2011-Current Status> Since 2006, the Air Force has procured space launches from ULA on a sole-source basis. The former EELV program focused primarily on mission success not cost control. GAO reported, however, that by 2010 "DOD officials predicted EELV program costs would increase at an unsustainable rate" due to possible instabilities in the launch industrial base and the inefficient buying practice of purchasing one launch vehicle at a time. In 2009, SpaceX, a new entrant to the space launch industrial base, became the first private company to successfully develop a liquid fuel rocket that delivered a commercial satellite to orbit. However, SpaceX was not certified to compete for national security missions until 2005. In response, DOD recognized a need to again reorganize the way it acquired launch services. Additional studies and internal reviews evaluated alternatives to the EELV business model, which in turn led to a new EELV acquisition strategy adopted in November 2011. The new acquisition strategy advocated a steady launch vehicle production rate. This production rate was designed to provide economic benefits to the government through larger buys, or block-buys, of launch vehicles, providing a predictable production schedule to stabilize the space launch industrial base. The new EELV acquisition strategy also announced the government's intent to renew competition in the program. In addition to revising its acquisition strategy, DOD undertook significant efforts to obtain greater insight into ULA program costs in advance of contract negotiations. In May 2011, DOD solicited a Request for Information to prospective launch providers. In March 2012, DOD issued a sole-source solicitation for the block-buy to ULA, and in April 2012, the EELV program incurred a critical Nunn-McCurdy cost breach. In December 2013, DOD followed through on its new EELV strategy, signing a contract modification with ULA committing the government to buy 35 launch vehicle booster cores over a five-year period, along with the associated infrastructure capability to launch them. DOD viewed this contract modification as a significant effort on its part to negotiate better launch prices through improved knowledge of ULA contractor costs. DOD officials expected the new contract to realize significant savings, primarily through stable unit pricing for all launch vehicles. However, some in Congress, and some analysts outside government, strongly disputed the DOD estimates of cost savings. DOD announced that it would add up to 14 additional NSS launches to broader competition. However, in the FY2015 budget request, the Air Force announced that the number of EELV launches open to broader competition through FY2017 would be reduced from 14 to 7. Some Members of Congress, and SpaceX officials, raised questions about how many launches would ultimately be openly competed. Perhaps resulting from turmoil associated with the Nunn-McCurdy cost breach, as well as the perceived instabilities mentioned above, the EELV acquisition strategy proceeded to a three-phased approach: Phase 1 (FY2013-FY2019) would consist of the sole-source block-buy awarded to ULA to procure up to 36 cores and to provide 7 years of NSS launch infrastructure capability. Phase 1A (FY2015-FY2017) emerged as a modification to Phase 1 that would consist of opening up competition for NSS launches to new space launch entrants (such as SpaceX). The Air Force said it could award up to 14 cores to a new entrant over 3 years, if a new entrant became certified. Phase 2 (FY2018-FY2022) envisioned full competition among all launch service providers. The operational requirements, budget, and potential for competition are currently being worked on. Phase 3 (FY2023-FY2030) envisioned full competition with the award of any or all required launch services to any certified provider. The Air Force's strategy appeared to fulfill the mandates to maintain assured access to space and introduce competition into the space launch market. To date, the NSSL program has launched more than 70 successful missions in support of the Air Force, the National Reconnaissance Office, and the U.S. Navy. ULA's Delta IV and Atlas V launch vehicles (which are older than the NNSL program) have performed over 90 consecutive successful missions, whereas SpaceX has performed five successful NSS launches. <3. Factors That Complicated EELV Acquisition Strategy> Several interrelated factors created uncertainty over the Air Force's ability to continue with the three-phased EELV acquisition strategy. These included ongoing concerns over program and launch costs, U.S. national security vulnerability from dependence on a Russian component in the EELV program (the RD-180 main engine), legal challenges to the acquisition strategy, and legislation that could change the EELV program. <3.1. Cost Growth in the EELV> In March 2012, the EELV program reported two critical Nunn-McCurdy unit cost breaches, which resulted in a reassessment of the program. The cost of the newly restructured program was estimated by GAO in March 2013 at $69.6 billion. This amount represented an increase of $34.6 billion, or about 100%, over the program's estimated cost of $35 billion from a year earlier. GAO identified several causes for this cost growth, including an extension of the program's life cycle from 2020 to 2030, an increase of the planned number of launch vehicles to be procured from 91 to 150 (an increase of 59%), the inherently unstable nature of demand for launch services, and instability in the industrial base. These causes related to changes in the scope of the program and reflected the industrial-base conditions under which the program was being undertaken; they did not appear to imply poor performance by the Air Force or the industry in executing the program. Even so, the overall increase in estimated program costs complicated the Air Force's challenge in funding the program within available resources without reducing funding for other program priorities. It also contributed to focusing attention on modifying their EELV acquisition strategy. In addition, the costs of individual launches themselves came under renewed scrutiny. SpaceX and others asserted that the launch costs charged by ULA were significantly higher than what SpaceX would charge the U.S. government once it was certified by the Air Force to conduct NSS launches. Part of the challenge in verifying these claims, however, is that much of the detailed cost data are proprietary, not readily comparable, and some are speculative to the extent that there is little empirical data on which those costs are provided. Although the Air Force, GAO, ULA, and SpaceX have provided some launch cost data, it is not apparent the data are directly comparable or are calculated using the same cost model assumptions. In addition, because SpaceX has limited data directly related to NSS launches, its cost figures are not likely based on a long history of actual cost, performance, and reliability. Thus, the issue of reliable and consistent cost data for comparative purposes has been a source of frustration for many in Congress. <3.2. Reliance on the Russian RD-180 Main Engine> The original impetus for licensing the Russian RD-180 as the main engine for the Atlas V launch vehicle grew out of concerns associated with the 1991 collapse of the Soviet Union. At the time, the CIA and others expressed serious concern about the potential export and proliferation of Russian scientific and missile expertise to countries hostile to U.S. interests. These concerns in turn spurred a U.S.-Russian partnership to acquire some of Russia's heavy lift rocket engine capabilities, thus expanding upon existing Cold War civil space cooperation. Initially, this took the form of a license agreement between Energomash NPO and RD Amross (of Palm Beach, FL) for the coproduction of the RD-180 engine as part of the EELV acquisition strategy. This later changed in an acquisition revision to simply purchase and stockpile roughly two years' worth of the engines for the Atlas V, an approach that was then viewed as highly cost-competitive. The existing license agreement for purchasing RD-180 engines extends to 2022. In subsequent years, some Members of Congress and policy experts occasionally expressed concern over the potential vulnerability of the EELV program based on reliance on a single critical Russian component. For instance, the FY2005 defense authorization act ( P.L. 108-375 , 912) directed DOD to examine future space launch requirements. The resulting 2006 RAND study concluded that "the use of the Russian-manufactured RD-180 engines in the Atlas V common core is a major policy issue that must be addressed in the near term." Similar concern was noted by GAO in 2011: "the EELV program is dependent on Russian RD-180 engines for its Atlas line of launch vehicles, which according to the Launch Enterprise Transformation Study, is a significant concern for policymakers." In the FY2013 defense authorization act ( P.L. 112-239 , 916), Congress directed DOD to undertake an "independent assessment of the national security implications of continuing to use foreign component and propulsion systems for the launch vehicles under the evolved expendable launch vehicle program." None of these concerns, however, led the Air Force to change its EELV acquisition strategy or to seek a change in legislation governing that strategy. After Russian incursions in Ukraine triggered U.S. sanctions in 2014, Russian backlash against those sanctions heightened alarm over the potential vulnerability of the EELV program and catalyzed the desire for change. In March 2014, the United States imposed sanctions on various Russian entities and persons, including Deputy Prime Minister Dimitry Rogozin, the official overseeing export licenses for the RD-180 rocket engine. In retaliation, Rogozin announced that "we can no longer deliver these engines to the United States unless we receive guarantees that our engines are used only for launching civilian payloads." Precise details of what Rogozin meant, and whether any changes would be implemented, were unclear. Many observers in the United States were increasingly concerned, however, that Russia could suddenly ban all exports of the engine to the United States, or ban exports for military use to some degree. To many outside of the Air Force and ULA, that uncertainty raised serious questions about the longer-term viability of the EELV program, and pointed to a need to completely shed U.S. reliance on the RD-180 as soon as practicable. Congress has since taken steps in each of the past several defense authorization bills (described below) to end this reliance and develop an alternative, domestic-produced U.S. main engine. Although the Air Force committed in principle to this ultimate outcome, some in Congress questioned if Air Force efforts were proceeding at an acceptable pace. As the Air Force pursues the congressional mandates to eliminate dependence on the RD-180 engine and continue to transition to a truly competitive launch market, it foresees major challenges. These include ULA's recent retirement of the Delta IV Medium in August 2019, the fact that SpaceX is currently the only other space launch provider awarded NSS mission requirements, and restrictions on acquisition of the RD-180 engine during this interim period that affect the Atlas V launch schedules. <3.3. Legislative and Industry Options to Replace the RD-180> In spring 2014, DOD formed a commission to bring together various experts to examine the risks, costs, and options for dealing with the potential loss of the Russian RD-180 rocket engine in the EELV program. The 2014 Mitchell Commission recommended accelerating purchases of the RD-180 under the existing licensing agreement to preserve the EELV Phase 1 block-buy schedule and to facilitate competition in Phases 1A and Phase 2. The commission did not recommend coproducing the RD-180 in the United States, but instead recommended spending $141 million to begin development of a new U.S. liquid rocket engine to be available by 2022, to coincide with the end of Phase 2 in the EELV acquisition strategy. Congress has remained supportive of sustaining current space access capabilities while working toward developing a U.S.-made main rocket engine to replace the RD-180. The FY2015 NDAA permitted ULA to use RD-180 Russian engines purchased before Russia's intervention in Ukraine for continued national security space launch missions if the Secretary of Defense determined it was in the national security interest of the United States to do so. The FY2016 NDAA increased this number to nine RD-180s in order to help maintain competitors in the NSS launch market for a longer period, while the market transitions away from the RD-180 and toward a new domestic-produced rocket engine. The FY2017 NDAA increased the number of the Russian RD-180 rocket engines authorized to be used to a total of 18 rocket engines, beginning with the enactment of the FY2017 NDAA and ending on December 31, 2022. The defense bills since the FY2017 NDAA have not amended the total number of Russian RD-180 rocket engines authorized to be used. <3.4. The NSSL Program Today> The Air Force identified four main priorities in NSSL: mission success, innovative mission assurance, transitioning to new launch vehicles, and assured access for future space architectures. DOD expects to achieve cost saving through acquisitions and operability improvements that consist of the use of common components and infrastructure, standard payload interfaces, standardized launch pads, and reducing on-pad processing. To improve acquisitions, the program offers block buys of launch vehicles and competition between certified providers. The competitions are accomplished through two contract vehicles: Launch Service Agreements (LSA) and Launch Service Procurement (LSP) awards: Launch Service Agreement (LSA) awards are a set of three Air Force RDT&E awards intended to facilitate the development of three domestic launch system prototypes. DOD awarded LSA's to ULA, Northrop Grumman, and Blue Origin in October 2018. Launch Service Procurement (LSP) is an ongoing procurement competition that is currently in Phase 2. The second phase is a 5-year procurement of approximately 34 launches starting in 2022. The Air Force plans to select two space launch providers in 2020. United Launch Alliance, Northrop Grumman, SpaceX, and Blue Origin have submitted bids for phase two, with each company proposing their rocket designs: Vulcan, OmegA, Falcon, and New Glenn, respectively. The two companies selected will share the NSSL notional manifest for the next five years. Phase 1 and Phase 1A awards were made to ULA and SpaceX. DOD has identified 18 active contracts for the NSSL program with obligations awarded to six companies (see Figure 1 ). ULA and SpaceX are currently the only space launch providers certified to launch NSS payloads into orbit. The main focus for ULA is on developing a next-generation launch vehicle called the Vulcan. In July 2014, ULA signed commercial contracts with multiple U.S. liquid rocket engine manufacturing companies to investigate next-generation engine concepts. ULA selected Blue Origin (Kent, WA) BE-4 engine to power its Vulcan launch vehicle. <4. Conclusion> Although there are important differences in how to achieve it, widespread support appears to exist across the space community and within Congress for the NSS requirement for robust competition and assured access to space. The recurring challenge since the start of the NSSL program has been how best to pursue this requirement while driving down costs through competition and ensuring launch reliability and performance. The Air Force decision of down-selecting no more than two launch providers and award two separate Launch Service Procurement (LSP) contracts in the summer of 2020 is not without potential implications and could have second- and third-order effects. Congress may consider the following: Directing the Air Force to provide a report on the cost-benefit analysis of selecting more than two launch providers. Drafting legislative in the NDAA for FY2021 authorizing additional funds that allows the Air Force to diversify its launch provider options by continuing to provide development funds through LSA awards to launch companies not selected for LSP contracts in Phase 2. Directing the Air Force to provide a report on the cost saving and associated risk using both reusable and expendable launch vehicles for future solicitations. Lastly, efforts to transition away from the RD-180 to a domestic U.S. alternative engine or launch vehicle are not without technical, program, or schedule risks. Even with a smooth, on-schedule transition away from the RD-180 to an alternative engine or launch vehicle, the performance and reliability record achieved with the RD-180 to date would likely not be replicated until well beyond 2030 because the RD-180 has approximately 81 consecutive successful civil, commercial, and NSS launches since 2000.

The United States is making significant efforts to pursue a strategy that ensures continued access to space for national security missions. The current strategy is embodied in the National Security Space Launch (NSSL) program. The NSSL supersedes the Evolved Expendable Launch Vehicle (EELV) program, which started in 1995 to ensure that National Security Space (NSS) launches were affordable and reliable. For the same reasons, policymakers provide oversight for the current NSSL program and encourage competition, as there was only one provider for launch services from 2006 to 2013. Moreover, Congress now requires DOD to consider both reusable and expendable launch vehicles for solicitations after March 1, 2019. To date, only expendable, or single-use, launch vehicles have been used for NSSL missions. The NSSL program is the primary provider for NSS launches. Factors that prompted the initial EELV effort in 1995 are still manifest—significant increases in launch costs and concerns over procurement and competition. In addition, the Russian backlash over the 2014 U.S. sanctions against Russian actions in Ukraine exacerbated a long-standing undercurrent of concern over U.S. reliance on a Russian rocket engine (RD-180) for critical national security space launches. Moreover, significant overall program cost increases and unresolved questions over individual launch costs, along with legal challenges to the Air Force rocket development and launch procurement contract awards, have resulted in legislative action. In 2015, the Air Force began taking steps to transition from reliance on the Russian made RD-180 engine used on the Atlas V rocket. Some in Congress pressed for a more flexible transition to replace the RD-180 that allowed for development of a new launch vehicle, while others in Congress sought legislation that would move the transition process forward more quickly with a focus on developing an alternative U.S. rocket engine. Transitioning away from the RD-180 to a domestic U.S. alternative provided opportunities for space launch companies that sought to compete for NSS space launches. Because of the technical, program, and schedule risk, as a worst-case scenario, the transition could leave the United States in a situation in which some of its national security space payloads lack an available certified launcher. The Space and Missile System Center (SMC), together with the National Reconnaissance Office (NRO), released a request for proposals in May 2019 to award two domestic launch service contracts. DOD plans to select two separate space launch companies in the summer of 2020 that will be responsible for launching U.S. military and intelligence satellites through 2027. NSS launch has been a leading legislative priority in the defense bills over the past few years and may continue to be so into the future.

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<1. Introduction> The Federal Bureau of Investigation (FBI) administers a computer system of systems that is used to query federal, state, local, tribal, and territorial criminal history record information (CHRI) and other records to determine if an indiv idual is eligible to receive and possess a firearm. This FBI-administered system is the National Instant Criminal Background Check System (NICS). This system, or parallel state systems, must be checked and the transfer approved by an FBI NICS examiner or state point of contact (POC) before a federally licensed gun dealer may transfer a firearm to any customer who is not similarly licensed federally as a gun dealer. Under current law, persons who buy and sell firearms repeatedly for profit and as a principal source of their livelihood must be licensed federally as gun dealers. Federally licensed gun dealers otherwise known as federal firearms licensees (FFLs) are permitted to engage in interstate and, by extension, intrastate (i.e., within a state) firearms commerce with certain restrictions. For example, they may not transfer a handgun to an unlicensed, out-of-state resident. Conversely, persons who occasionally buy and sell firearms for personal use, or to enhance a personal collection, are not required to be licensed federally as a gun dealer. Those unlicensed persons, however, are prohibited generally from making interstate firearms transactions that is, engaging in interstate firearms commerce without engaging the services of a federally licensed gun dealer. On the other hand, current law does not require background checks for intrastate, private-party firearms transactions between nondealing, unlicensed persons, though such checks might be required under several state laws. Nevertheless, it is unlawful for anybody, FFLs or private parties, to transfer a firearm or ammunition to any person they have reasonable cause to believe is a prohibited person (e.g., a convicted felon, a fugitive from justice, or an unlawfully present alien). In the 116 th Congress, the House of Representatives has passed three bills that would significantly expand the federal firearms background check requirements and the current prohibitions on the transfer or receipt and possession of firearms related to domestic violence. Those bills are the Bipartisan Background Checks Act of 2019 ( H.R. 8 ), a bill to expand federal firearms recordkeeping and background check requirements to include private-party, intrastate firearms transfers; Enhanced Background Checks Act of 2019 ( H.R. 1112 ), a bill to extend the amount of time allowed to delay a firearms transfer, pending a completed background check to determine an individual's eligibility; and Violence Against Women Reauthorization Act of 2019 ( H.R. 1585 ), a bill to expand firearms transfer or receipt and possession prohibitions to include dating partners with histories of domestic violence and stalking misdemeanors. In addition, several multiple-casualty shootings have highlighted possibly systemic vulnerabilities in the NICS-related federal background check procedures, particularly with regard to making records on prohibited persons accessible to federal data systems queried as part of the federal background check process. This report provides an overview of federal firearms statutes related to firearms transactions in interstate and intrastate commerce, dealer licensing, receipt and possession eligibility, NICS background check procedures, analysis of recent legislative action, and discussion about possible issues for Congress. <2. Federal Firearms Statutes> Two major federal statutes regulate firearms commerce and possession in the United States. The Gun Control Act of 1968 (GCA; 18 U.S.C. 921 et seq.) regulates all modern (nonantique) firearms. In addition, the National Firearms Act, enacted in 1934 (NFA; 26 U.S.C. 5801 et seq.), regulates certain other firearms and devices that Congress deemed to be particularly dangerous because they were often the weapons of choice of gangsters in the 1930s. Such weapons include machine guns, short-barreled rifles and shotguns, suppressors (silencers), a catch-all class of concealable firearms classified as "any other weapon," and destructive devices (e.g., grenades, rocket launchers, mortars, other big-bore weapons, and related ordnance). Congress passed both the NFA and GCA to reduce violent crimes committed with firearms. More specifically, the purpose of the GCA is to assist federal, state, local, tribal, and territorial law enforcement in the ongoing effort to reduce crime and violence. It is not intended to place any undue or unnecessary federal restrictions or burdens on citizens in regard to lawful acquisition, possession, or use of firearms for hunting, trapshooting, target shooting, personal protection, or any other lawful activity. Many observers have long noted that the assassinations of President John F. Kennedy and his brother, Senator Robert F. Kennedy, and civil rights leader Martin Luther King provided the impetus to pass the GCA. Perhaps equally compelling were the August 1, 1966, University of Texas tower mass shooting and social unrest that accompanied the 1960s. Under the Attorney General's delegation, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is the principal agency that administers and enforces these statutes. In addition, ATF administers several provisions of the Arms Export Control Act of 1976 (AECA) with regard to the importation of certain firearms, firearms parts, and ammunition that are also regulated under the GCA and NFA. For the most part, however, the FBI maintains NICS and administers the background check provisions of the GCA. Nonetheless, as discussed below, ATF is charged with investigating whether denied persons made false statements in connection with a firearms transfer; when filling out federal firearms transaction forms. In addition, ATF is also charged with firearms retrieval actions, whenever delayed transactions and incomplete background checks possibly result in prohibited persons acquiring firearms. <2.1. Firearms and Ammunition Ineligibility> The GCA sets firearms eligibility age restrictions under certain circumstances, as well as prohibits various categories of persons from firearms receipt and possession, among other factors. For example, as enacted, the GCA prohibits federally licensed gun dealers (i.e., FFLs) from transferring a long gun (shoulder-fired rifle or shotgun) or ammunition to anyone under 18 years of age; and a handgun or ammunition suitable for a handgun to anyone under 21 years of age. In 1994, Congress amended the GCA to prohibit anyone from transferring a handgun to a juvenile, or anyone under 18 years of age. Congress also made it unlawful for a juvenile to possess a handgun. Congress also provided exceptions to these juvenile transfer and possession prohibitions. Exceptions include temporary transfers in the course of employment in ranching or farming, in target practice, or hunting, all with the written consent of the parents or guardians and in accordance with federal and state laws; for self- or household-defense; or in other specified situations. Under the GCA, as amended, there are 10 categories of persons prohibited from receiving firearms. For 9 of those categories, those persons are also prohibited from possessing a firearm. More specifically, under 18 U.S.C. 922(g), there are nine categories of persons prohibited from shipping, transporting, receiving, or possessing a firearm or ammunition, which has been shipped or transported in interstate or foreign commerce: 1. persons convicted in any court of a felony crime punishable by imprisonment for a term exceeding one year and state misdemeanors punishable by imprisonment for a term exceeding two years; 2. fugitives from justice; 3. unlawful users or addicts of any controlled substance; 4. persons adjudicated as "a mental defective," found not guilty by reason of insanity, or committed to mental institutions; 5. unauthorized immigrants and nonimmigrant visa holders (with exceptions in the latter case); 6. persons dishonorably discharged from the U.S. Armed Forces; 7. persons who have renounced their U.S. citizenship; 8. persons under court-order restraints related to harassing, stalking, or threatening an intimate partner or child of such intimate partner; and 9. persons convicted of a misdemeanor crime of domestic violence. Under 18 U.S.C. 922(n), there is a 10 th class of persons prohibited from shipping or transporting firearms or ammunition, or from receiving (but not possessing) firearms or ammunition that had been shipped or transported in interstate or foreign commerce: 1. persons under indictment in any court of a crime punishable by imprisonment for a term exceeding one year. It is unlawful for any person under any circumstances to sell or otherwise dispose of a firearm or ammunition to any of the prohibited persons enumerated above, if the transferor (seller, federally licensed or unlicensed) has reasonable cause to believe that the transferee (buyer/recipient) is prohibited from receiving those items. <2.2. Firearms Commerce as a Business> Under the GCA as enacted, persons who, or firms that, are "engaged in the business" of importing, manufacturing, or selling firearms must be federally licensed. In 1986, Congress amended the GCA to define the term "engaged in the business." For dealers it means: a person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms, but such term shall not include a person who makes occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms. ATF issues federal firearms licenses to firearms importers, manufacturers, dealers, pawnbrokers, and collectors. As summarized by ATF in January 2016 guidance: A person engaged in the business of dealing in firearms is a person who "devotes time, attention and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms." Conducting business "with the principal objective of livelihood and profit" means that "the intent underlying the sale or disposition of firearms is predominantly one of obtaining livelihood and pecuniary gain, as opposed to other intents, such as improving or liquidating a personal firearms collection." Consistent with this approach, federal law explicitly exempts persons "who make occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms." Under the GCA, only FFLs are allowed to transfer firearms commercially from one state to another, that is, to engage in interstate (or foreign) firearms commerce. At the same time, it would be highly improbable for any firearms business to compete successfully in the U.S. civilian gun market by only selling firearms manufactured in the state in which it does business; that is, to engage exclusively in intrastate commerce. As a practical matter, any person who deals in firearms as a business, either in interstate or intrastate commerce, needs to be federally licensed firearms manufacturer, importer, or dealer. FFLs may transfer a long gun a shoulder-fired rifle or shotgun to unlicensed persons from another state as long as such transfers are legal in both states and they meet in person to make the transfer. However, FFLs may not transfer a handgun to any unlicensed resident of another state. Since 1986 there have been no similar restrictions on the interstate transfer of ammunition, because Congress repealed those restrictions at the request of ATF. Furthermore, a federal firearms license is not required to sell ammunition; however, such a license is required to either manufacture or import ammunition. In addition, FFLs are required to maintain bound logs of firearms acquisitions and dispositions to and from their business inventories by date, make, model, and serial number of individual firearms and transactions records for firearms sales to unlicensed, private persons. ATF periodically inspects these FFLs to monitor their compliance with federal and state law. Under current law, there are statutory prohibitions against ATF, or any other federal agency, maintaining a registry of firearms or firearms owners. Nevertheless, the system of recordkeeping described above allows ATF agents to trace, potentially, the origins of a firearm from manufacturer or importer to a first retail sale and buyer. ATF agents assist other federal agencies, as well as state and local law enforcement, with criminal investigations. The ATF also makes technical judgements about firearms, including the appropriateness of manufacturing and importing certain makes and models of firearms and firearms parts. As described in greater detail below, since November 30, 1998, all FFLs are required to initiate a background check for both handguns and long guns on any prospective firearms purchaser who is otherwise unlicensed federally to engage in firearms commerce as a business. The FBI facilitates these background checks nationwide through NICS. However, for some states, these FBI-facilitated background checks are routed to state or local authorities (points of contact, or POCs) for all firearms (handguns and long guns), or just for handgun transfers or permits for other states. <2.3. Private Party Transfers> For the most part, the GCA does not regulate firearms transactions between two unlicensed persons, who reside in the same state; that is, private-party, intrastate firearms transfers. Such transfers are not covered under current federal law as long as the parties are: not "engaged in the business" of dealing in firearms "as a regular course of trade or business with the principal objective of livelihood and profit"; residents of the same state, where the transfer is made; not prohibited from receiving or possessing firearms; and the recipients are of age (at least 18 years old). It follows, therefore, that private firearms transactions between persons who are not "engaged in the business" of firearms dealing and, thus, who are not required to be federally licensed, are not covered by the recordkeeping or the background check provisions of the GCA if those parties reside in the same state. The meaning of "state of residence" is not defined in the GCA, but ATF has defined the term to mean: The State in which an individual resides. An individual resides in a State if he or she is present in a State with the intention of making a home in that State. If an individual is on active duty as a Member of the Armed Forces, the individual's State of residence is the State in which his or her permanent duty station is located. An alien who is legally in the United States shall be considered to be a resident of a State only if the alien is residing in the State and has resided in the State for a period of at least 90 days prior to the date of sale or delivery of a firearm. However, these intrastate, private firearms transactions and other matters such as possession, registration, and the issuance of licenses to firearms owners may be covered by state laws or local ordinances. As noted above, unlicensed persons are prohibited generally from engaging in interstate and intrastate firearms commerce as a business; however, they are permitted to change state residences and take their privately owned non-NFA firearms with them under federal law, but they must comply with the laws of their new state of residence. The GCA generally prohibits an unlicensed person from directly transferring any firearm handgun or long gun to any other unlicensed person who resides in another state. Similarly, it is unlawful for an unlicensed person to receive a firearm from any unlicensed person who resides in another state. On the other hand, the GCA does not prohibit an unlicensed person from transferring a firearm to an out-of-state FFL, who may be willing to serve as a proxy for an unlicensed person to transfer a firearm or firearms to another unlicensed person who resides in the state where the FFL is licensed federally to do business. The facilitating, out-of-state FFL, in turn, must treat that firearm as if it were part of his business inventory, triggering the recordkeeping and background check provisions of the GCA. Generally, the facilitating FFL will charge a fee for such transactions conducted on behalf of an unlicensed person, which would likely be passed on to the unlicensed buyer/transferee in most cases. According to a 2015 survey, about one-in-five firearms transfers (22%) are conducted privately between unlicensed persons. In addition, a 2016 survey of state and federal prisoners conducted by the Department of Justice (DOJ), Bureau of Justice Statistics (BJS) who possessed a firearm during the offense for which they were serving time suggested that more than half (56%) had either stolen the firearm (6%), found it at the scene of the crime (7%), or obtained it off the street or from the underground market (43%); most of the remainder (25%) had obtained the firearm from a family member or friend, or as a gift; and seven percent had purchased the firearm under their own name from a licensed firearm dealer, or FFL. Based on this survey data, private firearms sales at gun shows or any similar venue did not appear to be a significant source of guns carried by these offenders, while private transfers among family members, friends, and acquaintances did appear to account for a significant source of such firearms. <2.4. ATF Form 4473, Firearms Transaction Record> The ATF Form 4473 and bound log of firearms acquisitions and dispositions are the essential federal documents underlying the recordkeeping process mandated by the GCA. Both FFLs and prospective, federally unlicensed purchasers must truthfully and completely fill out, and sign, an ATF Form 4473. Prospective purchasers attest to three things: 1. they are not prohibited persons, 2. they are who they say they are, and 3. they are the actual buyers. Straw purchases are a federal crime. It is illegal for anybody to pose as the actual buyer, when in fact he is buying the firearm for someone else. Making any materially false statement to an FFL is punishable by a fine and/or up to 10 years imprisonment. There is also a lesser penalty for making any false statement or representation in any record (e.g., the Form 4473) that an FFL is required to maintain. Some straw purchases are also prosecuted under this provision. Violations are punishable by a fine and up to five years imprisonment. For their part, FFLs must verify a prospective purchaser's name, date of birth, state residency, and other information by examining government-issued identification, which most often include a state-issued driver's license. FFLs must also file completed Form 4473s in their records. If a purchased firearm from FFLs should be recovered at any crime scene, ATF can trace a firearm from its original manufacturer or importer to the first-time FFL retail seller and the first-time private buyer (by the make, model, and serial number of the firearm). Successful firearms traces have generated leads in criminal investigations. In addition, aggregated firearms trace data provide criminal intelligence on illegal firearms trafficking patterns. <3. 1993 Brady Act and Background Checks> After six years of debate, Congress passed the Brady Handgun Violence Prevention Act, 1993 (Brady Act). Sponsors of the Brady Act initially proposed requiring a seven-day waiting period for handgun transfers. Instead, Congress amended the GCA with the Brady Act to require electronic background checks on any federally unlicensed individual seeking to acquire a firearm from an FFL. The Brady Act included both interim and permanent provisions. Under the interim provisions, FFLs were required to contact local chief law enforcement officers (CLEOs) to determine the eligibility of prospective customers to be transferred a handgun. CLEOs were given up to five business days to make such eligibility determinations. From February 28, 1994, to November 29, 1998, under the interim provisions, 12.7 million firearms background checks (for handguns) were completed, resulting in 312,000 denials. The permanent provisions of the Brady Act became effective when the FBI activated the National Instant Criminal Background Check System (NICS) on November 30, 1998. Under these provisions, FFLs are required to initiate a background check through NICS on any prospective unlicensed customer, who seeks to acquire a firearm from them through a sale, trade, or redemption of firearms exchanged for collateral. Failure to conduct a NICS check is punishable by a fine of up to $1,000 and one year imprisonment, or both. FFLs may engage in firearms transfers among themselves without conducting background checks. The Brady Act includes a provision that prohibits the establishment of a registration system of firearms, firearms owners, or firearms transactions or dispositions with NICS-generated records, except for records on NICS denials for persons who are prohibited from receiving or possessing firearms under the GCA. In addition, in the FY2012 Consolidated Appropriations Act, Congress included a permanent appropriations limitation that requires the FBI to destroy background check records within 24 hours on persons who are eligible to receive firearms. From November 30, 1998, through 2018, the FBI NICS Section facilitated nearly 305 million firearms-related background checks transactions. Corresponding data on individual background checks and denials under the permanent provisions of the Brady Act are given and discussed below for both the FBI and for point of contact states that have chosen to either fully or partially implement the Brady Act. <3.1. NICS Process Under Federal Law> Building on the GCA firearms transaction recordkeeping process, the completed and signed ATF Form 4473 serves as the authorization for an FFL to initiate a check through NICS. The FFL submits a prospective firearms transferee's name, sex, race (or ethnicity), complete date of birth, and state of residence to the FBI through NICS. Social security numbers and other numeric identifiers are optional, but the submission of these data could possibly increase the timeliness of the background check and reduce misidentifications. <3.1.1. NICS Responses> The NICS Section is to respond to an FFL or POC state official with a NICS Transaction Number (NTN) and one of four outcomes as follows, as described in greater detail below: 1. "proceed" with transfer or permit/license issuance, because a prohibiting record was not found; 2. "denied," indicating a prohibiting record was found; 3. "delayed proceed," indicating that the system produced information that suggested the prospective purchaser could be prohibited; or 4. "canceled" for insufficient information provided. In the case of a "proceed," the background check record is purged from NICS within 24 hours; "denied" requests are kept indefinitely. Under the third outcome, "delayed proceed," a firearms transfer may be "delayed" for up to three business days while NICS examiners or state designees (i.e., POCs) attempt to ascertain whether the person is prohibited. "Delayed proceeds" are often the result of partial, incomplete, and/or even ambiguous criminal history records. The FBI NICS Section often must contact state and local authorities to make final firearms eligibility determinations. Under federal law, at the end of the three-business-day period following a "delayed proceed," FFLs may proceed with the transfer at their discretion if they have not heard from the NICS Section about those matters. The NICS Section, meanwhile, will continue to work the NICS adjudications for up to 30 days, at which point the background checks will drop out of the NICS examiner's queue if unresolved. At 88 days, all pending background check records are purged from NICS, even when they remain unresolved. About two-thirds of FBI NICS Section-administered background checks are completed within hours, if not minutes. Nearly one-fifth are delayed, but are completed within the three-business-day delayed transfer period. If the FBI ascertains that the person is not in a prohibited status at any time within this 88-day period, then the FBI contacts the FFL through NICS with a "proceed" response. If the person is subsequently found to be prohibited, the FBI also contacts the FFL to ascertain whether a firearms transfer had been completed following the three-business-day "delayed transfer" period. If so, the FBI makes a referral to ATF. In turn, ATF initiates a firearms retrieval process. Such circumstances are referred as a "delayed denial," or more colloquially described as "lying and buying." By comparison, standard denials are known as "lying and trying," under the supposition that most persons knew they were prohibited before they filled out the ATF Form 4473 and underwent a background check. ATF is also responsible for investigating standard denials based on FBI NICS Section referrals. As noted above, making any false statement to an FFL in connection with a firearms transfer is punishable under two GCA provisions. As part of the NICS process, under no circumstances are FFLs informed about the prohibiting factor upon which denials are based. However, denied persons may challenge the accuracy of the underlying record(s) upon which their denials are based. They would initiate this process by requesting (usually in writing) the reason for their denial from the agency that initiated the NICS check (the FBI or POC). Under the Brady Act, the denying agency has five business days to respond to the request. Upon receipt of the reason and underlying record for their denials, the denied persons may challenge the accuracy of that record. If the records are found to be inaccurate, the denying agency is legally obligated under the Brady Act to correct that record. If the denials are overturned within 30 days, the transfers in question may proceed. Otherwise, FFLs must initiate another background check through NICS on the previously denied prospective purchaser. <3.1.2. NICS-Queried Computer Systems and Files> The feasibility of establishing NICS was largely founded upon the interstate sharing of federal, state, local, tribal, and territorial criminal history record information (CHRI) electronically through FBI computer systems and wide area network (WAN). Based on the prospective customer's name and other biographical descriptors, NICS queries four national data systems for records that could disqualify a customer from receiving and possessing a firearm under federal or state law. Those systems include the: Interstate Identification Index (III) for records on persons convicted or under indictment for felonies and serious misdemeanors; National Crime Information Center (NCIC) for files on persons subject to civil protection orders and arrest warrants, immigration law violators, and known and suspected terrorists; NICS Indices for federal and state record files on persons prohibited from possessing firearms, which would not be included in either III or NCIC; and Immigration-related databases maintained by the Department of Homeland Security's Immigration and Customs Enforcement (ICE) for non-U.S. citizens. An internal FBI inspections report found that access to N-DEx could have helped reveal that the individual, who later shot and killed nine people in a Charleston, SC, church, had an arrest record that was possibly sufficient grounds to deny him a firearms transfer. N-DEx is a repository of unclassified criminal justice files that can be shared, searched, and linked across jurisdictional boundaries. For more information about these computer systems and files see Appendix B . <3.1.3. NICS Participation: POCs and Non-POCs> As shown in Figure 1 , under the Brady Act, states may opt to conduct firearms-related background checks entirely or partially for themselves through state and local agencies serving as POCs, or they may opt to have such checks handled entirely by the FBI, through its NICS Section, which is part of the FBI's Criminal Justice Information Services (CJIS) Division. In 13 full POC states, an FFL initiates a firearms-related background check under the Brady Act by contacting a state or local agency serving as a POC for both long gun- and handgun-related transfers. These states are CA, CO, CT, FL, HI, IL, NJ, NV, OR, PA, TN, UT, and VA. In four partial POC states, an FFL initiates a firearms-related background check by contacting the state and local agencies serving as POCs for handgun transfers, and by contacting the NICS Section through a call center for long gun transfers. These states are MD, NH, WA, and WI. In three partial POC states, an FFL initiates a firearms-related background check under the Brady Act by contacting the state and local agencies serving as POCs for handgun permits, and contacts the NICS Section through a call center for long gun transfers. These states include IA, NC, and NE. In 36 jurisdictions (30 states, the District of Columbia, and the five U.S. territories), an FFL initiates a firearms-related background check by contacting the NICS Section through a call center for all firearms-related background checks, both long gun and handgun transfers. These thirty states are AK, AL, AR, AZ, DE, GA, ID, IN, KS, KY, LA, MA, ME, MI, MN, MO, MS, MT, ND, NM, NY, OH, OK, RI, SC, SD, TX, VT, WY, and WV. The five territories are AS, GU, MP, PR, and VI. Twenty-five states are "Brady exempt," meaning that certain valid, state-issued handgun and concealed carry weapons (CCW) permits may be presented to the FFL in lieu of a background check for firearms transfers through the NICS Section or state and local agencies serving as POCs. Those states are AK, AR, AZ, CA, GA, HI, IA, ID, KS, KY, LA, MI, MS, MT, NC, ND, NE, NV, OH, SC, SD, TX, UT, WV, and WY. For further information, see Appendix C . <3.2. NICS Transactions, November 30, 1998, Through 2018> Figure 2 shows annual NICS transactions from November 30, 1998, through 2018 (20 years and one month). FBI transactions are shown on the base of the columns and the state and local POC transactions are shown on the top of the columns. Over this period, the FBI NICS Section and state and local agencies serving as POCs made 304.6 million NICS transactions. The NICS Section handled 128.6 million of these transactions (42.2% of all NICS transactions), whereas POCs initiated 176 million transactions (57.8% of all NICS transactions). There is a one-to-one correspondence between FBI NICS transactions and individual background checks, and the 128.6 million FBI transactions that is, background checks resulted in 1.6 million denials (1.24%). Some of these FBI NICS Section-administered background checks were for firearms transactions involving multiple firearms; consequently, NICS transactions/background checks serve as an imperfect proxy for firearms sales. Unlike FBI NICS background checks, some state background checks involved more than one background check transaction. In some states, for example, there may be permitting or licensing processes that could take several weeks and administrators would run multiple NICS queries on a single applicant. In other cases, a background check administrator might be unclear about an applicant's first and last name and would run two NICS queries on the applicant, reversing both names as first and last names. More fundamentally, some states are running periodic NICS queries on concealed carry permit holders. These periodic rechecks are not considered individual background checks. The FBI does not have the state data to report on how many state and local background checks correspond with those transactions. Nor does the FBI report the total number of state and local firearms transfer or license denials. The Bureau of Justice Statistics (BJS), however, collects and analyzes the data as part of its Firearm Inquiry Statistics Program and reports annually on the total number of firearms-related background checks and related denials conducted under the Brady Handgun Violence Prevention Act ( P.L. 103-159 ). In June 2017, BJS reported that state and local POCs had conducted 81.7 million firearms-related background checks from November 30, 1998, through 2015. According to the FBI, these POC-conducted background checks corresponded with 123.3 million NICS transactions. About 54.9% of these state transactions involved background checks related to firearms permits/licenses, an unreported percentage of which were for concealed carry permits. It is also noteworthy that some state-issued concealed-carry permits exempt the holder from any further background checks for non-NFA firearms. Hence, state and local NICS transactions also serve as an imperfect proxy for firearms sales. See Appendix C for a list of state permits that have been certified by ATF as Brady exempt. From 2006 through 2018, total NICS transactions more than doubled from 10 million to 26 million or more, peaking in 2016 at 27.5 million and then dropping to 25.2 million in 2017, and rising again to 26.2 million in 2018. For the same years, total NICS transactions/checks handled entirely by the FBI NICS Section increased from 5.3 million to 9.4 million from 2006 to 2016, then dropped to 8.6 million in 2017, and dropped again to 8.2 million in 2018. In addition, NICS transactions handled by state and local agencies increased from 4.8 million to 18.2 million from 2006 to 2016, then dropped to 16.6 million in 2017, but rose again to 17.9 million in 2018. In Figure 2 POC transactions account for an increasing proportion of all NICS transactions, but as discussed above some POC background checks involve more than one NICS transaction, whereas each NICS Section transaction corresponds with a single background check. As shown in Figure 3 , for the years 1999 through 2015, the FBI CJIS Division's NICS Section conducted as many or more background checks than state or local POC agencies. Figure 3 also shows the number of annual denials made pursuant to federal or state law. As noted above, over the 20 years and one month, the FBI CJIS Division's NICS Section conducted 128.7 million background checks, resulting in nearly 1.6 million denials, for an overall initial denial rate of 1.2%. As discussed below, about 2.7% of those denials were appealed and eventually overturned. BJS reported that state and local POC agencies conducted nearly 81.7 million background checks from November 30, 1998, through 2015 for firearms transfers and permits. To date, BJS has not published any data for state and local POC agencies for 2016, 2017, and 2018. Nevertheless, for those 17 years and one month, POC checks resulted in nearly 1.46 million denials, for an overall denial rate of 1.8%, according to BJS. For the same years (and one month), the FBI NICS Section processed 102.4 million background checks, resulting in 1.27 million denials of firearms transfers, for an overall denial rate of 1.2%. See Appendix A for the data shown in Figure 3 , as well as FBI and POC denials by prohibiting categories. <3.2.1. FBI NICS Section Brady Denials Appealed and Overturned> As with other screening systems, particularly those that are largely name-based, false positives occur as part of the NICS process, but the frequency of these misidentifications is unreported. Nevertheless, the FBI has taken steps to mitigate false positives (i.e., denying a firearms transfer to an otherwise eligible person). In July 2004, DOJ issued a regulation that established the NICS Voluntary Appeal File (VAF), which is part of the NICS Indices (described above). DOJ was prompted to establish the VAF to minimize the inconvenience incurred by some prospective firearms transferees (purchasers) who have names or birth dates similar to those of prohibited persons. So as not to be misidentified in the future, these persons agree to authorize the FBI to maintain personally identifying information about them in the VAF as a means to avoid future delayed transfers. As noted above, current law requires that NICS records on approved firearm transfers, particularly information personally identifying the transferee, be destroyed within 24 hours. Figure 4 shows annual NICS Section denials, denials appealed but sustained, and denials overturned from November 30, 1998, through 2018. During this time, it appears that about one-fifth of NICS Section denials were appealed, and about one-tenth of those appealed denials were overturned, or an estimated 2.7% of NICS Section denials, according to the annual CJIS Division's NICS operations reports. The majority of these overturned denials were due to misidentifications. In any screening system, such as NICS, there is a balance between false positives and false negatives. Misidentifications and improperly interpreted criminal history and other records would constitute false positives. Allowing an otherwise prohibited person to acquire a firearm would constitute a false negative. Under the GCA, there is also a provision that allows the Attorney General (previously, the Secretary of the Treasury) to consider petitions from a prohibited person for "relief from disabilities" and to have his firearms transfer and possession eligibility restored. Since FY1993, however, a limitation (or "rider") on the ATF annual appropriations for salaries and expenses has prohibited the expenditure of any appropriated funding for ATF to process such petitions from individuals. Conversely, under the NICS Improvement Amendments Act of 2007 ( P.L. 110-180 ), any federal agency that submits any records on individuals considered to be too mentally incompetent to be trusted with a firearm under the GCA must provide an avenue of administrative relief to those individuals, so if their mental health or other related conditions improve, their firearms rights and privileges may be restored. As a condition of grant eligibility, as described below, states must provide similar administrative avenues of relief for those purposes, that is, "disability relief." See Appendix D for a list of states that have enacted and implemented ATF-certified relief from disability programs under P.L. 110-180 . <3.2.2. NICS Denials and Firearm Retrieval Actions> Figure 5 shows annual NICS denials and firearm retrieval action from November 30, 1998, through 2018. For the 20 years and one month, the NICS section made an average of 3,600 firearm retrieval action referrals to the ATF annually for follow-up. In many of these cases, an otherwise prohibited person had been transferred a firearm. According to the Government Accountability Office (GAO), following up on these possibly illegal firearms receipts or "delayed denial investigations" consumes an increasing and considerable amount of ATF resources. For example, such investigations accounted for 32% of ATF investigations opened in FY2003 and 53% in FY2013. It appears that in a relatively small percentage of cases the suspected offenders have been prosecuted federally for what is commonly known as either "lying and buying" or "lying and trying." According to the Government Accountability Office (GAO), ATF processed 3,933 delayed denials in FY2017. Of those denials, 38 cases were referred to U.S. Attorney's Offices for prosecution. Nine of those cases were federally prosecuted. Also in a relatively small percentage of cases, an FFL could potentially proceed with a firearms transfer after the three-business-day delayed transfer period has expired, but never receive a final NICS determination; or the FFL could potentially decline to transfer the firearm to an unlicensed customer until he received a definitive NICS Section response, which the FFL may not receive from the FBI. <3.3. NICS Section Budget> NICS is maintained and administered by the FBI Criminal Justice Information Services (CJIS) Division and its NICS Section, located in Clarksburg, WV. Recent increases in the volume of firearms-related commerce and attendant background checks have strained the NICS Section and additional staff and funding has been requested by the FBI, which Congress has provided through appropriated funding. For FY2016, the NICS Section program budget allocation was $81 million and 668 funded permanent positions. As described below, for FY2019, the FBI anticipated that the NICS Section program budget would be allocated $103 million and 679 positions, representing a $22 million and 11 position increase over FY2016. The Administration's FY2020 request would increase FY2020 NICS Section program budget to $115 million and 719 positions. For FY2017, the Obama Administration requested $121.1 million for the NICS program, including an additional $35 million. Of this budget increase $15 million was requested to sustain 75 professional support positions funded for FY2016; and another $20 million was requested to hire 160 contractors to support NICS firearms background checks and related activities. The remaining $5.1 million was requested to annualize operational costs associated with the NICS base budget. Report language accompanying both the Senate- and House-reported FY2017 Commerce, Justice, Science, and Related Agencies appropriations bills ( S. 2837 and H.R. 5393 ) indicated that those bills would have provided the requested $35 million for NICS. The Explanatory Statement accompanying H.R. 244 , submitted by the House Committee on Appropriations Chair, Representative Rodney Frelinghuysen, indicated that P.L. 115-31 included $511.3 million for CJIS, and that this amount would fully support CJIS programs, including NICS. For FY2018, the Trump Administration requested $79.2 million for the NICS program, including an additional $8.9 million to fund an additional 85 permanent positions. Such an increase would have brought the number of funded permanent positions for the NICS program to 676. According to the FBI, the enacted NICS budget allocation for FY2018 was $111.3 million and 679 positions. For FY2019, the Administration did not request any budget increases for the FBI or NICS. The FBI anticipated that the FY2019 NICS budget and staff allocation would be about $103 million and 679 positions. For FY2020, the Administration has requested a NICS budget increase of $4.23 million and 40 positions and $7.8 million in base budget increases, which would bring the total FY2020 NICS budget to $115 million and 719 positions. House-report language accompanying the FY2020 Commerce, Justice, Science, and Related Agencies Appropriations Act ( H.R. 3055 ) indicates that this bill would fully support the NICS Section operations and activities for the upcoming fiscal year. <3.4. Improving NICS Access to Prohibiting Records> The efficacy of NICS and firearms-related background checks is dependent in large part on state and local governments making criminal history record information (CHRI), as well as other disqualifying records (e.g., mental incompetency records), accessible electronically to several different national data sharing systems maintained by the FBI. As described above, those systems include principally the III, NCIC, and the NICS Indices. Congress, meanwhile, has authorized two grant programs to incentivize state and local governments to maintain CHRI and other disqualifying records and make them accessible to NICS in a timely manner. Under the Brady Act, Congress authorized a grant program known as the National Criminal History Improvement Program (NCHIP), the initial goal of which was to improve electronic access to firearms-related disqualifying records, felony indictment, and conviction records, for the purposes of both criminal and noncriminal background checks. Congress passed the NICS Improvement Amendments Act (NIAA) of 2007 ( P.L. 110-180 ) following the April 16, 2007, Virginia Tech tragedy. Along the lines of the Brady Act, the NIAA included provisions designed to encourage states, tribes, and territories to make available to the Attorney General certain records related to persons who are disqualified from acquiring a firearm, particularly records related to domestic violence misdemeanor convictions and restraining orders, as well as mental health adjudications. As a framework of incentives and disincentives, the Attorney General was authorized to make grants, waive grant match requirements, or reduce law enforcement grant assistance depending upon a state's compliance with the act's goals of bringing firearms-related disqualifying records online. The Attorney General was required to report annually to Congress on federal department and agency compliance with the act's provisions. The Attorney General, in turn, has delegated responsibility for grant-making and reporting to DOJ's Bureau of Justice Statistics (BJS). BJS designated the grant program under the act as the "NICS Act Record Improvement Program (NARIP)," although congressional appropriations documents generally referred to it as "NICS improvement" or the "NICS Initiative" program. Figure 6 shows annual congressional appropriations for NCHIP and NARIP for FY1995-FY2019. Over this 25-year period, Congress has appropriated nearly $859 million for NCHIP and $201 million for NARIP, for a total of $1.06 billion. During this time period, NCHIP grants were made available to states for purposes other than just identifying persons ineligible to receive firearms, such as identifying persons ineligible to hold positions involving vulnerable populations (e.g., children, disabled, and elderly). Nevertheless, the principal purpose of NCHIP was to improve the accuracy and timeliness of background checks, particularly those administered pursuant to the Brady Act. For FY2009 through FY2013, Congress authorized $1.3 billion in appropriations for NARIP. Actual appropriations, however, fell short of such authorizations. For those fiscal years, Congress appropriated $63.6 million for NARIP, although neither the House nor Senate Committee on Appropriations adopted "NARIP" as a grant program designation. Instead, the appropriations statute provided such funding for the grant-making activities authorized under P.L. 110-180 . For FY2014 through FY2019, Congress continued to appropriate funding for both NCHIP and the grant-making activities authorized under P.L. 110-180 (i.e., NARIP) under the "NICS Initiative," even though the authorization for appropriations under P.L. 110-180 had lapsed. For those years, Congress appropriated $429.5 million for NCHIP and NARIP, or the "NICS Initiative," of which $137 million was set aside for purposes authorized under NIAA, bringing total appropriated NARIP funding for FY2009 through FY2019 to $200.6 million. Under the NICS Initiative, BJS has awarded a total of $142 million in NARIP grants to 30 states and one Native American tribe from FY2009 through FY2018. To date, however, BJS has not levied any of the reward and penalty provisions of NIAA, possibly because of methodological difficulties in ascertaining state progress towards meeting the goals of this act. With NICS Initiative grants (NCHIP and NARIP) in part, state and local governments have increased the availability of mental health- and domestic violence-related records to NICS Indices and other data systems queried by NICS. For example, from CY2007 to CY2018, the number of mental health records in the NICS Indices increased from 518,499 to 5,419,894, a 9.5-fold increase. The number of misdemeanor crime of domestic violence (MCDV) records in the NICS Indices increased from 46,286 to 175,376, nearly tripling (a 278.9% increase). Many instances domestic violence misdemeanor crimes are serious enough in nature that the records are deposited in the III, meaning the offenders were fingerprinted. A Department of Justice-sponsored report found that in many cases such criminal records are not adequately flagged in the III for firearms eligibility determination purposes, leading to NICS delayed transfers in some cases. Inadequately flagged records in the III increase the possibility that a prohibited person might be transferred a firearm after the NICS three-business-day delayed transfer period expires. Similarly, it was reported that domestic violence protection orders are increasingly being placed in the NICS Indices, even though the authors of the report argued that it would probably be most appropriate to place such records in the National Crime Information Center (NCIC), so that such records would be available to law enforcement for purposes besides firearms-related background checks. Responding to these issues in part, Congress passed the Fix NICS Act of 2018 ( P.L. 115-141 ). The act reauthorized NARIP, as well as authorized appropriations of $125 million annually for FY2018 through FY2022. It also reauthorized NCHIP itself, as well as authorized appropriations of $250 million annually for FY2018 through FY2022. For FY2018, Congress appropriated $75 million for the "NICS Initiative," of which $25 million was set aside for purposes authorized under NIAA, as amended by the Fix NICS Act (or NARIP). For FY2019, Congress appropriated the same amount and set aside. For FY2020, the Administration has requested $65 million for NCHIP and $10 million for NARIP. The House-reported Commerce, Justice, Science, and Related Agencies Appropriations bill ( H.R. 3055 ; H.Rept. 116-101 ) would provide $80 million for these grant programs under the "NICS Initiative," of which $27.5 million would be set aside for purposes authorized under NIAA, as amended by the Fix NICS Act (or NARIP). <4. 116th Congress and NICS Operations-Related Legislation> This final section of the report briefly summarizes NICS-related legislative action to date in the 116 th Congress. It then provides a summary and some analysis of three bills that have passed the House and await Senate action. In the 116 th Congress, the House has passed three bills that would expand federal firearms-related background check requirements. On January 8, 2019, Representative Mike Thompson introduced the Bipartisan Background Checks Bill of 2019 ( H.R. 8 ), a bill that would require a background check for most private-party, intrastate firearms sale, or "universal" background checks. On February 6, 2019, the House Committee on the Judiciary held a hearing on "Preventing Gun Violence in America." On February 8, 2019, Representative James Clyburn introduced the Enhanced Background Checks Act of 2019 ( H.R. 1112 ), a bill to lengthen the number of days a firearms transfer could be delayed pending a final firearms eligibility determination. On February 13, 2019, the House Committee on the Judiciary amended and ordered reported both bills: H.R. 8 ( H.Rept. 116-11 ) and H.R. 1112 ( H.Rept. 116-12 ). On February 27 and 28, 2019, respectively, the House amended and passed H.R. 8 and H.R. 1112 . On March 7, 2019, Representative Karen Bass introduced the Violence Against Women Reauthorization Act of 2019 ( H.R. 1585 ). On March 27, 2019, the House Committee on the Judiciary amended and reported H.R. 1585 . This bill includes provisions that would expand existing firearms transfer/receipt and possession prohibitions to include dating partners with histories of domestic violence and persons convicted of stalking-related misdemeanor offenses. The House passed H.R. 1585 on April 4, 2019. Also, of note, on March 13, 2019, the House Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies held a hearing on "Gun Violence Prevention and Enforcement." On March 18, 2019, the Federal Bureau of Investigation (FBI) released its FY2020 congressional budget request that includes a $4.2 million increase for the NICS, which would bring the total program budget to $114.7 million for FY2020. On the same date, the Office of Justice Programs (OJP) released its congressional budget request that includes $75 million for state, local, tribal, and territorial governments to upgrade criminal and mental incompetency records and make those records accessible to NICS for firearms eligibility determination purposes. On June 3, 2019, the House Committee on Appropriations reported an FY2020 Commerce, Justice, Science, and Related Agencies (CJS) Appropriations bill ( H.R. 3055 , H.Rept. 116-101 ). House report language indicates that the bill would fully support the FBI request for increased NICS funding. The bill would also provide $80 million for OJP-administered NICS improvement grants under NCHIP and NARIP. On September 26, 2019, Senate Committee on Appropriations reported an FY2020 CJS Appropriations bill ( S. 2584 ; S.Rept. 116-127 ). Senate report language indicates that the bill $131 million to increase NICS capacity and efficacy. This amount is $16.3 million above the Trump Administration's FY2020 request. The bill would also provide $78.3 million for OJP-administered NICS improvement grants under NCHIP and NARIP, of which $25 is for the latter program. In addition, on March 26, 2019, the Senate Committee on the Judiciary held a hearing on "Red Flag Laws: Examining Guidelines for State Action." Seventeen states and the District of Columbia have passed "Red Flag" laws. These laws essentially allow concerned persons, including family members in some cases, to petition a court to file an extreme risk protection order against an individual that would allow for the suspension of that individual's firearms eligibility under certain circumstances. These state laws vary considerably from state to state. Related proposals in the 116 th Congress would make subjects of such protective orders ineligible to receive or possess firearms under federal law in any state or would establish grant programs to encourage states to adopt such laws. On September 10, 2019, the House Committee on the Judiciary ordered reported such a bill, the Extreme Risk Protection Order Act ( H.R. 1236 ). In addition, this Committee also ordered reported the Disarm Hate Act ( H.R. 2708 ), which make persons convicted of a misdemeanor hate crime ineligible to receive or possess a firearm or ammunition. <4.1. The Bipartisan Background Checks Act of 2019 (H.R. 8)> The Bipartisan Background Checks Act of 2019 ( H.R. 8 ), a "universal" background check bill, would expand federal firearms background checks and, hence, recordkeeping requirements under the Gun Control Act of 1968 (GCA; 18 U.S.C. 921 et seq.) to include firearms transfers made in the same state (intrastate) between unlicensed persons. H.R. 8 would essentially prohibit unlicensed persons from transferring a firearm to any other unlicensed person, unless a federally licensed firearms dealer, or FFL, takes possession of such firearm and facilitates such a transaction by running a background check on the unlicensed prospective transferee (buyer). H.R. 8 includes exceptions for transfers between immediate family members; U.S. military, law enforcement members, or armed private security professionals in the course of official duties; temporary transfers under circumstances involving an imminent threat of bodily harm or death; and legitimate activities involving target shooting, hunting, trapping, or fishing. H.R. 8 would prohibit any implementing regulations that would (1) require FFLs to facilitate private firearms transactions; (2) require unlicensed sellers or buyers to maintain any records with regard to FFL-facilitated background checks; or (3) place a cap on the fee FFLs may charge for facilitating a private firearms transfer. H.R. 8 would also prohibit FFLs from transferring possession of, or title to, any firearm to any unlicensed person, unless the FFL provides notice of the proposed private firearm transfer prohibition under this bill. Further, H.R. 8 would extend a provision of current law that prohibits the DOJ from charging a fee for a NICS background check. Under H.R. 8 , facilitating FFLs would be required to treat firearms to be transferred on behalf of any unlicensed persons as if they were part of their business inventory. Thus, they would be required to comply with the GCA recordkeeping and background check requirements. As part of this process, FFLs would enter the firearm(s) to be exchanged into their bound log of firearms acquisitions and dispositions. The FFLs and unlicensed prospective transferees would then complete and sign a firearms transaction forms (ATF Form 4473) under penalty of law that everything entered onto that form was truthful. FFLs would then initiate a background check on the intending transferee through NICS. And either the FBI NICS Section or a state or local authority point of contact (POC) would conduct a background check to determine an intending transferee's firearms eligibility. Such a requirement, if enacted, would close off what some have long characterized as the "Gun Show loophole." For the past two decades, many gun control advocates have viewed the legal circumstances that allow individuals to transfer firearms intrastate among themselves without being subject to the licensing, recordkeeping, and background check requirements of the GCA as a "loophole" in the law, particularly within the context of these intrastate, private transactions at gun shows and other public venues or through the internet. Gun control advocates also maintain that expanding background checks to cover intrastate, private-party firearms sales would help stem gun trafficking; that is, the illegal diversion of firearms from legal channels of commerce to the black market, where federal, state, local, tribal, and territorial laws could be evaded. They maintain that prohibited persons or their friends or acquaintances could easily buy a firearm at a gun show, from an online seller, or in a person-to-person "private" sale. They also point to studies that suggest that there is moderate evidence that expanded background checks might reduce firearms-related homicides and suicides. Gun control advocates underscore that 20 states and the District of Columbia (DC) currently have laws that require background checks for certain types of firearms transfers not currently covered by federal law. Although these laws vary considerably from state to state, 11 states and DC require background checks for nearly all firearms transfers. Gun rights advocates contend that intrastate, private transfers are regulated already under federal law, in that it is a felony to transfer a firearm or ammunition knowingly to an underage or prohibited person. They contend further that most criminals would not submit to a background check. They ask, "Why would anyone submit to a background check unless they believed they were not prohibited and would pass?" Moreover, they argue that making private-party, intrastate transfers subject to the recordkeeping and background check provisions of the GCA could potentially criminalize firearms transfers under circumstances that could be characterized as legitimate and lawful. For example, it has been argued that H.R. 8 might prohibit a person from sharing a firearm with another person while target shooting on one's own property. Although H.R. 8 would provide exceptions for "temporary transfers" for target shooting and other related activities, some gun rights advocates argue that such exceptions are too narrow. For example, they argue further that H.R. 8 would prohibit a person from loaning a neighbor a firearm for a hunting trip with a background check being required for both the loan to the neighbor and the return of the firearm to its lawful owner. Perhaps more fundamentally, H.R. 8 would prohibit a person from loaning a firearm to another person who may be facing some threat of death or serious bodily injury for self-defense purposes, unless that threat were "imminent." Gun rights advocates might also see such a measure as a significant step towards a national albeit decentralized registry of firearms and firearms owners, since its practical implementation would likely necessitate recordkeeping on such transfers. Such advocates cite an Obama Administration, Department of Justice official who observed that "universal background checks" are unenforceable without a comprehensive registry of firearms. Legislation to expand federal recordkeeping and background check requirements to cover private, intrastate firearms transfers saw action in the 106 th and 108 th Congresses following the April 20, 1999, Columbine, CO, high school mass shooting; in the 113 th Congress following the December 14, 2012, Newtown, CT, elementary school mass shooting; and in the 114 th Congress following the December 2, 2015, San Bernardino, CA, social services center all-staff meeting and June 12, 2016, Orlando, FL, Pulse night club mass shootings. Over time, related legislative proposals have varied in the scope and type of intrastate, private party (nondealer) firearms exchanges between federally unlicensed persons that would fall under their respective background check provisions. Since the 113 th Congress, such proposals fall under two basic types that, respectively, have been labeled as either "Universal" or "Comprehensive" background check bills. "Comprehensive" background checks would cover transfers at gun shows and similar public venues (e.g., flea markets and public auctions) and firearms that are advertised via some public fora, including newspaper advertisements and the Internet. "Universal" background checks would cover private transfers under a much wider set of circumstances (sales, trades, barters, rentals, or loans), with more limited exceptions. In the Senate, from the 113 th Congress forward, the principal sponsors of "universal" background check bills have been Senators Charles Schumer, Christopher Murphy, and Richard Blumenthal. The principal sponsors of "comprehensive" background check amendments have been Senators Joe Manchin and Pat Toomey. "Universal" background check bills were introduced in the House in the 113 th and 114 th Congresses. While Representatives Peter King and Mike Thompson introduced proposals that were similar to Manchin-Toomey "comprehensive" background check bills in the past three Congresses, they have sponsored and supported a "universal" background check proposal ( H.R. 8 ) in the 116 th Congress. <4.2. Enhanced Background Checks Act of 2019 (H.R. 1112)> The House-passed Enhanced Background Checks Act of 2019 ( H.R. 1112 ) would revise the GCA background check provision to lengthen the delayed sale period, which is three business days under current law. Under H.R. 1112 , for background checks that do not result in a "proceed with transfer" or "transfer denied," the FBI NICS Section and POC state officials would have 10 business days to place a hold on a firearms-related transaction. At the end of 10 business days, the prospective transferee could petition the Attorney General for a final firearms eligibility determination. If the FFL does not receive a final determination within 10 days of the date of the petition, he or she could proceed with the transfer. The timeliness and accuracy of FBI-administered firearms background checks through NICS particularly with regard to "delayed proceeds" became a matter of controversy following the June 17, 2015, Charleston, SC, mass murder at the Emanuel African Methodist Episcopal Church. The assailant had acquired a handgun from an FFL in the Columbia, SC, area. According to press accounts, the NICS check on the assailant was initiated on April 11, 2015 (a Saturday). The FBI found an arrest record for him, but the arrest record was ambiguous with regard to the arrest's final disposition and the assailant's firearms receipt and possession eligibility. Therefore, the NICS response to the FFL was to delay the transfer for three business days as required under federal law. At his discretion, the FFL made the transfer on April 16, 2015 (a Thursday) as allowed under federal law. According to FBI, the NICS check would have remained active in the NICS examiner's queue for 30 days (until May 11, 2015), and would have remained in an "active status" in the NICS system for 88 days (until July 8, 2015). According to the assailant's arrest record, he had been processed for arrest by the Lexington County, SC, Sheriff's Department, so the FBI contacted the Lexington County court, sheriff's department, and prosecutor's office. The Lexington County Sheriff's Department responded that it did not have a record on the alleged assailant and advised the NICS examiner to contact the City of Columbia, SC, Police Department. However, the NICS examiner contacted the West Columbia, SC, Police Department, because it was listed on the NICS contact sheet for Lexington County. In turn, the West Columbia Police Department responded that it did not have a record on the alleged assailant either. The NICS examiner reportedly focused on Lexington County and missed the fact that the City of Columbia, SC, Police Department was listed as the contact for Richland County, the county in which most of the City of Columbia, SC, is located. Consequently, the NICS examiner did not contact the Columbia, SC, Police Department, the agency that actually held the arrest record for the assailant. If the FBI had ascertained during the 88 days that this person was prohibited, the NICS examiner would have likely contacted the FFL to verify whether a firearms transfer had been made after the three-business-day delay, and then would have notified the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) and a firearms retrieval action would have possibly been taken by that agency. In this case, the FBI did not ascertain that the assailant was possibly a prohibited person until after the June 17, 2015, mass shooting. Some gun control advocates have characterized these circumstances as the "Charleston loophole." In addition to the "Charleston loophole," gun control advocates sometimes refer to "delayed proceeds" that could result in a possibly prohibited person acquiring a firearm after three business days have expired as "default proceeds." They argue that extending the delayed proceed period would reduce the chance that an otherwise prohibited person might inadvertently be transferred a firearm, a circumstance that would likely necessitate an ATF firearms retrieval action had more time been allotted to complete the background check. According to data acquired by a gun control advocacy group, about 3.59% of FBI-administered background checks in 2017 were unresolved after a delayed proceed response and the three-business-day window had passed. To this advocacy group, this suggested that a relatively small number of people (310,232) would be affected, and any inconvenience to them would be outweighed by increasing the probability that a prohibited person might be prevented from acquiring a firearm. According to the FBI, it referred 6,004 "delayed denial" cases to the ATF in 2017 that could have possibly resulted in a finding of ineligibility and subsequent firearms retrieval action. In addition, the FBI reported that 4,864 of those cases involved individuals who were possibly prohibited and had probably acquired a firearm. Gun rights advocates would counter that a large percentage (98.1%) of background checks that resulted in a delayed proceed response involved persons who were not actually ineligible, prompting them to refer to such default proceed responses as "default infringements." They maintain that the "delayed proceeds" should be viewed as an indicator of understaffing and incomplete recordkeeping on prohibited persons. Gun rights advocates underscore further that if the overall timeliness and accuracy of FBI background checks were improved, the process would be less likely to inconvenience an otherwise eligible person and, at the same time, less likely to allow a firearm to be transferred to a prohibited person. According to the GAO, ATF processed 3,933 delayed denials in FY2017. Of those denials, 38 cases were referred to U.S. Attorney's Offices for prosecution. Nine of those cases were federally prosecuted. <4.3. Violence Against Women Reauthorization Act of 2019 (H.R. 1585)> The House-passed Violence Against Women Reauthorization Act of 2019 ( H.R. 1585 ) includes several provisions that seek to reduce firearms-related intimate partner violence (homicides and injury) by amending federal law to prohibit persons convicted of misdemeanor stalking crimes from receiving or possessing a firearm or ammunition. This bill would also revise provisions related to domestic violence protection orders and a definition of "intimate partner" under current law. The bill also includes other provisions related to leveraging state, local, tribal, and territorial resources to increase federal investigations and prosecutions of firearms-related eligibility offenses related to domestic violence and stalking. As discussed earlier, there are nine categories of persons prohibited under current law (18 U.S.C. 922(g)) from receiving or possessing firearms or ammunition (e.g., convicted felons, fugitives from justice, and unlawfully present aliens). Under 18 U.S.C. 922(n), a tenth category of prohibited persons those under felony indictment are prohibited from receiving, but not possessing firearms. In addition, under 18 U.S.C. 922(d), it is unlawful for any person to transfer or otherwise dispose of a firearm or ammunition to any person, if the transferor has reasonable cause to believe the transferee would be prohibited under one of those 10 categories. Two of the categories speak directly to domestic violence: persons under court-order restraints related to harassing, stalking, or threatening an intimate partner or child of such intimate partner (18 U.S.C. 922(d)(8) and (g)(8)); and persons convicted of a misdemeanor crime of domestic violence (MCDV) (18 U.S.C. 922(d)(9) and (g)(9)). <4.3.1. Qualifying Domestic Violence Protection Order (DVPO)> According to ATF, a qualifying DVPO order includes the following elements. The defendant/respondent must receive actual notice and opportunity to participate in a hearing before a judge, magistrate, or other judicial official. After such hearing, a DVPO may be issued by a criminal or civil court, such as a divorce court, family court, magistrate, or general jurisdiction court. The plaintiff/petitioner is an "intimate partner" of the defendant/respondent (subject). An intimate partner includes: 1. a spouse or former spouse of the subject; a person who cohabitates or cohabitated with the subject, who resides or resided in a sexual/romantic relationship with the subject, or 2. a person with whom the subject has or had a child in common (regardless of whether they ever married or cohabitated). A qualifying court order must also restrain the subject from harassing, stalking, or threatening an intimate partner or child of that intimate partner, or engaging in conduct that would place either of them in reasonable fear of bodily injury. There must also be a finding that the subject is a credible threat to the physical safety of the intimate partner or child, or explicitly prohibit the use of physical force. <4.3.2. Qualifying Misdemeanor Conviction of Domestic Violence (MCDV)> According to ATF, a qualifying misdemeanor conviction of domestic violence (MCDV) must include the following elements. Such offense is a misdemeanor crime under federal, state, or tribal law and involves the use or attempted use of physical force, or the threatened use of a deadly weapon. At the time of the offense, the offender must have been: 1. A current or former spouse, parent, or guardian of the victim; 2. A person with who the victim shared a child in common; 3. A person who was cohabitating with or had cohabitated with the victim as a spouse, parent, or guardian; or 4. A person who was or had been similarly situated to a spouse, parent, or guardian of the victim. <4.3.3. "Intimate Partner" Definition> Under current law, the term "intimate partner" means, with respect to a person, the spouse of the person, a former spouse of the person, an individual who is a parent of a child of the person, and an individual who cohabitates or has cohabitated with the person (18 U.S.C. 921(a)(32)). H.R. 1585 would expand the "intimate partner" definition to include a dating partner or former dating partner (as defined in section 2266 [of Title 18, United States Code]); and any other person similarly situated to a spouse who is protected by the domestic or family violence laws of the State or tribal jurisdiction in which the injury occurred or where the victim resides. Under 18 U.S.C. 2266(a)(10), the term "dating partner" refers to a person who is or has been in a social relationship of a romantic or intimate nature with the abuser; and the existence of such a relationship is based on a consideration of (1) the length of the relationship; (2) the type of relationship; and (3) the frequency of interaction between the persons involved in the relationship. <4.3.4. "Misdemeanor Crime of Stalking"> H.R. 1585 would make any person convicted of a "misdemeanor crime of stalking" a tenth category of persons prohibited from receiving and possessing a firearm under 18 U.S.C. 922(g). The bill would define such a crime as any misdemeanor stalking offense under federal, state, tribal, or municipal law; and one that in a course of harassment, intimidation, or surveillance of another person, places that person in reasonable fear of material harm to the health or safety of her- or himself, an immediate family member of that person, a household member of that person, or a spouse or intimate partner of that person; or that causes, attempts to cause, or would reasonably be expected to cause emotional distress to any of those persons. The proposed definition is subject to certain mitigating factors. A person would not be considered to have been convicted of a misdemeanor crime of stalking unless (1) the person was represented by counsel in the case, or (2) they knowingly and intelligently waived the right to counsel in the case. In the case of a prosecution for a misdemeanor crime of stalking for which a person was entitled to a jury trial, a person would not be considered convicted in the jurisdiction in which the case was tried, unless (1) the case was tried by a jury; or (2) the person knowingly and intelligently waived the right to have the case tried by a jury, by guilty plea, or otherwise. <4.3.5. "Protection Orders" or "Court-Order Restraints"> H.R. 1585 would also expand the scope of "protection orders" or "court-order restraints" under 18 U.S.C. 922(d)(8) and (g)(8). Under current law these provisions prohibit any person from firearms receipt, possession, or transfer, who is subject to a court order that: (A) was issued after a hearing of which such person received actual notice, and at which such person had an opportunity to participate; (B) restrains such person from harassing, stalking, or threatening an intimate partner of such person or child of such intimate partner or person, or engaging in other conduct that would place an intimate partner in reasonable fear of bodily injury to the partner or child; and (C) includes a finding that such person represents a credible threat to the physical safety of such intimate partner or child; or by its terms explicitly prohibits the use, attempted use, or threatened use of physical force against such intimate partner or child that would reasonably be expected to cause bodily injury. H.R. 1585 would substantively amend the domestic violence protection order prohibition (18 U.S.C. 922(g)(8), and 922(d)(8), by reference) to specifically include restraining orders under state, tribal, or territorial law that are issued after an "ex parte" hearing, and to expand it to include restraining orders related to "witness intimidation." The legal term "ex parte" ("for one party") refers generally to court motions, hearings, or orders granted on the request of and for the benefit of one party only without the respondent/defendant being present. H.R. 1585 would add the following at the end of 18 U.S.C. 922(g)(8)(A): in the case of an ex parte order, relative to which notice and opportunity to be heard are provided (I) within the time required by State, tribal, or territorial law; and (II) in any event within a reasonable time after the order is issued, sufficient to protect the due process rights of the person. Notwithstanding the reference to "due process" in the amending language, this language could potentially generate considerable debate about the balance between due process and public safety. In addition, at the end of clause 18 U.S.C. 922(g)(8)(B), it would add, "intimidating or dissuading a witness from testifying in court," which may appear less controversial, but critics might argue that such language has little to do with domestic violence. As discussed in the body of this report, Congress has passed legislation to encourage states to make DVPO and MCDV records accessible promptly to NICS. Progress has been made, but many state, tribal, and territorial authorities still find such reporting challenging, if not daunting. Gun control advocates, meanwhile, have argued that the definition of "intimate partner" ought to be expanded under the DVPO and MCDV definitions of "intimate partner" to include current and former dating partners, as well as persons convicted of misdemeanor stalking offenses. Expanding the grounds for firearms transfer or receipt and possession ineligibility is one avenue along which intimate partner gun violence could be addressed, perhaps effectively, but such an expansion could also strain ongoing federal-state efforts to ensure that prohibiting records under current law are accurate and reported to NICS in a timely manner in order to be accessible electronically during background checks. Appendix A. FBI and POC Firearms-Related Background Checks Pursuant to the Brady Act FBI NICS Section Checks and Denials, November 30, 1998, Through 2018 As Table A-1 shows, from November 30, 1998, through 2018, the FBI CJIS Division's NICS Section conducted 128.7 million background checks, resulting in nearly 1.6 million denials, for an overall initial denial rate of 1.2%. About 2.7% of those denials were appealed and eventually overturned. Table A-2 shows FBI NICS Section denials by prohibiting category. Over the 20-year and one month period (November 30, 1998, through 2018) that NICS has been in operation, over half of FBI firearms transfer denials were based on a prior felony conviction. For 2018, by comparison, a smaller percentage (45.1%) were based on a felony conviction. This percentage decrease can be attributed to at least two factors. One, over time, persons with past felony convictions could be less likely to risk a background check through NICS. Two, since the establishment of NICS, state and local government submissions of prohibiting records particularly those related to mental incompentency have increased. As shown in Table A-2 , such records accounted for 2.5% of denials over the 20-year period, but accounted for 6.1% of denials for 2018. As discussed below, Congress prioritized such reporting as part of the NICS Improvement Amendments Act of 2007 ( P.L. 110-180 ), in the aftermath of the April 20, 2007, VA Tech mass shooting. Ten years later, Congress passed the Fix NICS Act of 2017 in an effort to strengthen and streamline provisions previously enacted under P.L. 110-180 , and authorize future appropriations for grant and other programs designed to assist state, tribes, and territories with improving the quality of prohibiting records and increasing their accessibility to NICS ( P.L. 115-141 , Div. S, Title VI). State and Local POC Background Checks and Denials, November 30, 1998, Through 2015 As shown in the Table A-3 below, the Bureau of Justice Statistics (BJS) has reported that state and local POC agencies conducted nearly 81.7 million background checks from November 30, 1998, through 2015 for firearms transfers and permits. These checks resulted in nearly 1.46 million denials, for an overall denial rate of 1.8%, according to BJS. Over the same time period, the FBI NICS Section processed 102.4 background checks, resulting in 1.27 million denials of firearms transfers, for an overall denial rate of 1.2%. BJS also reports on the reasons (prohibitors) for some, but not all, state and local POC denials. For example, as shown in Table A-3 , while state and local POCs made 119,368 denials for firearms transfers and permits in 2015, BJS reported the reason for 84,199 (70.5%) of such denials. Similarly, state and local POCs made 102,468 denials in 2014, but BJS reported the reason for 57,001 (55.6%) of them. In addition, over the years, BJS sometimes reported for both state and local POC agencies, and in other years only for state POC agencies. Moreover, BJS's methodology for making estimates about state and local POC background checks and denials over the years has been revised. Notwithstanding these data limitations, Table A-4 shows the BJS-reported reasons for some, but not all denials made by state and local POCs for 2014 and 2015. Looking at the data in Table A-4 , it is notable that there either appears to be no denials based upon dishonorable discharges or renounced U.S. citizenship, or such denials were not estimated by BJS based on data submitted by state and local POC agencies. In addition, the percentages of felony conviction denials for either year, 2014 or 2015, are roughly half of the percentages of federal denials made by the FBI NICS Section. As a percentage of the total, it could be that these percentages are based on incomplete data and, therefore, are not particularly comparable with the percentages for federal denials, which are based on complete data. Appendix B. NICS-Queried Computer Systems and Files As part of a NICS check, the transferee's information is crosschecked against three computerized databases/systems to determine firearms transfer and possession eligibility. Those systems are the Interstate Identification Index (III), the National Crime Information Center (NCIC), and the NICS Indices. If prospective transferees indicate that they are non-U.S. citizens, then their information is also checked against the immigration and naturalization databases maintained by the Department of Homeland Security (DHS), Immigration and Customs Enforcement (ICE). Interstate Identification Index (III) The III, or "Triple I," is a computerized criminal history index pointer system that the FBI maintains so that records on persons arrested and convicted of felonies and serious misdemeanors at either the federal or state level can be shared nationally. This criminal history records exchange system includes arrest and disposition information on individuals charged with felonies and certain misdemeanors. Felony crimes generally include any offense that is punishable by a term of imprisonment exceeding one year. Under state law, there are misdemeanor crimes that are punishable by a term of imprisonment exceeding two years, which are also shared nationally through the III. By virtue of this record sharing, other information accessible through III also includes records on persons under felony indictment, fugitives from justice, persons found not guilty by reason of insanity or adjudicated incompetent to stand trial, persons convicted of misdemeanor crimes of domestic violence, and persons subject to domestic violence protection orders. All records in III are supported by fingerprint records which are exchanged through the Interstate Automated Fingerprint Identification System (IAFIS), though NICS checks do not entail fingerprint-based background checks under current law. National Crime Information Center (NCIC) The NCIC is a database of documented criminal justice information that is made available to law enforcement and authorized agencies, with the goal of assisting law enforcement in apprehending fugitives, finding missing persons, locating stolen property, and further protecting law enforcement personnel and the public. NCIC includes 21 files, 10 of which are queried by NICS. Those 10 NCIC files include Wanted Persons; Protection Orders; Immigration Violators; Protective Interest; Foreign Fugitive; Supervised Release; National Sex Offender Registry; Gang File; Known/Appropriately Suspected Terrorist (KST); and Violent Person. NICS Indices The NICS Indices contain records of persons prohibited from receiving or possessing firearms under federal, state, local, tribal, or territorial law that are not shared nationally in either the III or NCIC. Those records include felony arrest and disposition records (not included in the III); felony indictments; fugitives from justice; addicts and other unlawful users of controlled substances; involuntary commitments to mental institutions and other related adjudications; illegal or unlawful aliens; dishonorable discharges; renunciations of U.S. citizenship; domestic violence protection orders; domestic violence misdemeanor convictions; previous NICS denials under state laws (by POCs); and previous NICS denials made federally (by NICS Section). Appendix C. ATF-Certified Permanent Brady Permits Appendix D. ATF-Certified State Relief from Disabilities Statutes

The Federal Bureau of Investigation (FBI) administers a computer system of systems that is used to query federal, state, local, tribal, and territorial criminal history record information (CHRI) and other records to determine an individual's firearms transfer/receipt and possession eligibility. This FBI-administered system is the National Instant Criminal Background Check System (NICS). NICS, or parallel state systems, must be checked and the pending transfer approved by the FBI or state point of contact before a federally licensed gun dealer may transfer a firearm to any customer who is not also a federally licensed gun dealer. Current federal law does not require background checks for intrastate (same state), private-party firearms transactions between nondealers, though such checks are required under several state laws. In the 116 th Congress, the House of Representatives passed three bills that would expand federal firearms background check requirements and firearms transfer/receipt and possession ineligibility criteria related to domestic violence. The Bipartisan Background Checks Act of 2019 ( H.R. 8 ), a "universal" background check bill, would make nearly all intrastate, private-party firearms transactions subject to the recordkeeping and NICS background check requirements of the Gun Control Act of 1968 (GCA). For the past two decades, many gun control advocates have viewed the legal circumstances that allow individuals to transfer firearms intrastate among themselves without being subject to the licensing, recordkeeping, and background check requirements of the GCA as a "loophole" in the law, particularly within the context of gun shows. Gun rights supporters often oppose such measures, underscoring that it is already unlawful to knowingly transfer a firearm or ammunition to a prohibited person. In addition, some observers object to these circumstances being characterized as a loophole, in that the effects of the underlying provisions of current law are not unintended or inadvertent. The Enhanced Background Checks Act of 2019 ( H.R. 1112 ) would lengthen the amount of time firearms transactions could be delayed pending a completed NICS background check from three business days under current law to several weeks. The timeliness and accuracy of FBI-administered firearms background checks through NICS—particularly with regard to "delayed proceeds"—became a matter of controversy following the June 17, 2015, Charleston, SC, mass shooting at the Emanuel African Methodist Episcopal Church. The assailant in this incident had acquired a pistol following a three-business-day-delayed sale under current law and an unresolved background check. While it has never been definitely determined whether the assailant's arrest record would have prohibited the firearms transfer, this incident prompted gun control advocates to label the three-business-day delayed transfer provision of current law as the "Charleston loophole." Gun rights supporters counter that firearms background checks should be made more accurate and timely, so that otherwise eligible customers are not wrongly denied a firearms transfer, and ineligible persons are not allowed to acquire a firearm. The Violence Against Women Reauthorization Act of 2019 ( H.R. 1585 ) would expand federal firearms ineligibility provisions related to domestic violence to include former dating partners under court-ordered restraints or protective orders and persons convicted of misdemeanor stalking offenses. Gun control advocates see this proposal as closing off the "boyfriend loophole." Gun rights supporters are wary about certain provisions of this proposal that would allow a court to issue a restraining order ex parte ; that is, without the respondent/defendant having the opportunity for a hearing before a judge or magistrate. This report provides an overview of federal firearms background check procedures, analysis of recent legislative action, discussion about possible issues for Congress, and related materials.

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<1. Introduction> This report describes the structure, activities, legislative history, and funding history of seven federally-chartered regional commissions and authorities: the Appalachian Regional Commission (ARC); the Delta Regional Authority (DRA); the Denali Commission; the Northern Border Regional Commission (NBRC); the Northern Great Plains Regional Authority (NGPRA); the Southeast Crescent Regional Commission (SCRC); and the Southwest Border Regional Commission (SBRC) ( Table A-1 ). The federal regional commissions are also functioning examples of place-based and intergovernmental approaches to economic development, which receive regular congressional interest. The federal regional commissions and authorities integrate federal and state economic development priorities alongside regional and local considerations ( Figure A-1 ). As federally-chartered agencies created by acts of Congress, the federal regional commissions and authorities depend on congressional appropriations for their activities and administration, and are subject to congressional oversight. Seven federal regional commissions and authorities were authorized by Congress to address instances of major economic distress in certain defined socio-economic regions, with all but one (Alaska's Denali Commission) being multi-state regions ( Figure B-1 ). The first such federal regional commission, the Appalachian Regional Commission, was founded in 1965. The other commissions and authorities may have roots in the intervening decades, but were not founded until 1998 (Denali), 2000 (Delta Regional Authority), and 2002 (the Northern Great Plains Regional Authority). The most recent commissions Northern Border Regional Commission, Southeast Crescent Regional Commission, and Southwest Border Regional Commission were authorized in 2008. Four of the seven entities the Appalachian Regional Commission, the Delta Regional Authority, the Denali Commission, and the Northern Border Regional Commission are currently active and receive regular annual appropriations. Certain strategic emphases and programs have evolved over time in each of the functioning federal regional commissions and authorities. However, their overarching missions to address economic distress have not changed, and their associated activities have broadly remained consistent to those goals as funding has allowed. In practice, the functioning federal regional commissions and authorities engage in their respective economic development efforts through multiple program areas, which may include, but are not limited to basic infrastructure; energy; ecology/environment and natural resources; workforce/labor; and business development. <2. Appalachian Regional Commission> The Appalachian Regional Commission was established in 1965 to address economic distress in the Appalachian region. The ARC's jurisdiction spans 420 counties in Alabama, Georgia, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia ( Figure 1 ). The ARC was originally created to address severe economic disparities between Appalachia and that of the broader United States; recently, its mission has grown to include regional competitiveness in a global economic environment. <2.1. Structure and Activities> <2.1.1. Commission Structure> According to the authorizing legislation, the Appalachian Regional Development Act of 1965, as amended, the ARC is a federally-chartered, regional economic development entity led by a federal co-chair, whose term is open-ended, and the 13 participating state governors, of which one serves as the state co-chair for a term of "at least one year." The federal co-chair is appointed by the President with the advice and consent of the Senate. The authorizing act also allows for the appointment of federal and state alternates to the commission. The ARC is a federal-state partnership, with administrative costs shared equally by the federal government and member states, while economic development activities are funded by congressional appropriations. <2.1.2. Regional Development Plan> According to authorizing legislation and the ARC code, the ARC's programs abide by a Regional Development Plan (RDP), which includes documents prepared by the states and the commission. The RDP is comprised of the ARC's strategic plan, its bylaws, member state development plans, each participating state's annual strategy statement, the commission's annual program budget, and the commission's internal implementation and performance management guidelines. The RDP integrates local, state, and federal economic development priorities into a common regional agenda. Through state plans and annual work statements, states establish goals, priorities, and agendas for fulfilling them. State planning typically includes consulting with local development districts (LDDs), which are multicounty organizations that are associated with and financially supported by the ARC and advise on local priorities. There are 73 ARC-associated LDDs. They may be conduits for funding for other eligible organizations, and may also themselves be ARC grantees. State and local governments, governmental entities, and nonprofit organizations are eligible for ARC investments, including both federal- and also state-designated tribal entities. Notably, non-federally recognized, state-designated tribal entities are eligible to receive ARC funding, which is an exception to the general rarity of federal funds being available to non-federally recognized tribal entities. ARC's strategic plan is a five-year document, reviewed annually, and revised as necessary. The current strategic plan, adopted in November 2015, prioritizes five investment goals: 1. entrepreneurial and business development; 2. workforce development; 3. infrastructure development; 4. natural and cultural assets; and 5. leadership and community capacity. The ARC's investment activities are divided into 10 program areas: These program areas can be funded through five types of eligible activities: 1. business development and entrepreneurship, through grants to help create and retain jobs in the region, including through targeted loan funds; 2. education and training, for projects that "develop, support, or expand education and training programs"; 3. health care, through funding for "equipment and demonstration projects" and sometimes for facility construction and renovation, including hospital and community health services; 4. physical infrastructure, including funds for basic infrastructure services such as water and sewer facilities, as well as housing and telecommunications; and 5. leadership development and civic capacity, such as community-based strategic plans, training for local leaders, and organizational support. While most funds are used for economic development grants, approximately $50 million is reserved for the Partnerships for Opportunity and Workforce and Economic Revitalization (POWER) Initiative. The POWER Initiative began in 2015 to provide economic development funding for addressing economic and labor dislocations caused by energy transition principally in coal communities in the Appalachian region. <2.1.3. Distressed Counties> The ARC is statutorily obligated to designate counties according to levels of economic distress. Distress designations influence funding priority and determine grant match requirements. Using an index-based classification system, the ARC compares each county within its jurisdiction with national averages based on three economic indicators: (1) three-year average unemployment rates; (2) per capita market income; and (3) poverty rates. These factors are calculated into a composite index value for each county, which are ranked and sorted into designated distress levels. Each distress level corresponds to a given county's ranking relative to that of the United States as a whole. These designations are defined as follows by the ARC, starting from "worst" distress: distressed counties, or those with values in the "worst" 10% of U.S. counties; at-risk , which rank between worst 10% and 25%; transitional , which rank between worst 25% and best 25%; competitive , which rank between "best" 25% and best 10%; and attainment , or those which rank in the best 10%. The designated level of distress is statutorily tied to allowable funding levels by the ARC (funding allowance), the balance of which must be met through grant matches from other funding sources (including potentially other federal funds) unless a waiver or special dispensation is permitted: distressed (80% funding allowance, 20% grant match); at-risk (70%); transitional (50%); competitive (30%); and attainment (0% funding allowance). Exceptions can be made to grant match thresholds. Attainment counties may be able to receive funding for projects where sub-county areas are considered to be at higher levels of distress, and/or in those cases where the inclusion of an attainment county in a multi-county project would benefit one or more non-attainment counties or areas. In addition, special allowances may reduce or discharge matches, and match requirements may be met with other federal funds. <2.2. Legislative History> <2.2.1. Council of Appalachian Governors> In 1960, the Alabama, Georgia, Kentucky, Maryland, North Carolina, Pennsylvania, Tennessee, Virginia, and West Virginia governors formed the Council of Appalachian Governors to highlight Appalachia's extended economic distress and to press for increased federal involvement. In 1963, President John F. Kennedy formed the President's Appalachian Regional Commission (PARC) and charged it with developing an economic development program for the region. PARC's report, issued in 1964, called for the creation of an independent agency to coordinate federal and state efforts to address infrastructure, natural resources, and human capital issues in the region. The PARC also included some Ohio counties as part of the Appalachian region. <2.2.2. Appalachian Regional Development Act> In 1965, President Lyndon Johnson signed the Appalachian Regional Development Act, which created the ARC to address the PARC's recommendations, and added counties in New York and Mississippi. The ARC was directed to administer or assist in the following initiatives: The creation of the Appalachian Development Highway System; Establishing "Demonstration Health Facilities" to fund health infrastructure; Land stabilization, conservation, and erosion control programs; Timber development organizations, for purposes of forest management; Mining area restoration, for rehabilitating and/or revitalizing mining sites; A water resources survey; Vocational education programs; and Sewage treatment infrastructure. <2.2.3. Major Amendments to the ARC Before 2008> <2.2.3.1. Appalachian Regional Development Act Amendments of 1975> In 1975, the ARC's authorizing legislation was amended to require that state governors themselves serve as the state representatives on the commission, overriding original statutory language in which governors were permitted to appoint designated representatives. The amendments also included provisions to expand public participation in ARC plans and programs. They also required states to consult with local development districts and local governments and authorized federal grants to the ARC to assist states in enhancing state development planning. <2.2.3.2. Appalachian Regional Development Reform Act of 1998> Legislative reforms in 1998 introduced county-level designations of distress. The legislation organized county-level distress into three bands, from "worst" to "best": distressed counties; competitive counties; and attainment counties. The act imposed limitations on funding for economically strong counties: (1) "competitive," which could only accept ARC funding for 30% of project costs (with the 70% balance being subject to grant match requirements); and (2) "attainment," which were generally ineligible for funding, except through waivers or exceptions. In addition, the act withdrew the ARC's legislative mandate for certain programs, including the land stabilization, conservation, and erosion control program; the timber development program; the mining area restoration program; the water resource development and utilization survey; the Appalachian airport safety improvements program (a program added in 1971); the sewage treatment works program; and amendments to the Housing Act of 1954 from the original 1965 act. <2.2.3.3. Appalachian Regional Development Act Amendments of 2002> Legislation in 2002 expanded the ARC's ability to support LDDs, introduced an emphasis on ecological issues, and provided for a greater coordinating role by the ARC in federal economic development activities. The amendments also provided new stipulations for the ARC's grant making, limiting the organization to funding 50% of project costs or 80% in designated distressed counties. The amendments also expanded the ARC's efforts in human capital development projects, such as through various vocational, entrepreneurial, and skill training initiatives. <2.2.4. The Appalachian Regional Development Act Amendments of 2008> The Appalachian Regional Development Act Amendments of 2008 is the ARC's most recent substantive legislative development and reflects its current configuration. The amendments included: 1. various limitations on project funding amounts and commission contributions; 2. the establishment of an economic and energy development initiative; 3. the expansion of county designations to include an "at-risk" designation; and 4. the expansion of the number of counties under the ARC's jurisdiction. The 2008 amendments introduced funding limitations for ARC grant activities as a whole, as well as to specific programs. According to the 2008 legislation, "the amount of the grant shall not exceed 50 percent of administrative expenses." However, at the ARC's discretion, an LDD that included a "distressed" county in its service area could provide for 75% of administrative expenses of a relevant project, or 70% for "at-risk" counties. Eligible activities could only be funded by the ARC at a maximum of 50% of the project cost, or 80% for distressed counties and 70% for "at-risk" counties. The act introduced special project categories, including (1) demonstration health projects; (2) assistance for proposed low- and middle-income housing projects; (3) the telecommunications and technology initiative; (4) the entrepreneurship initiative; and (5) the regional skills partnership. Finally, the "economic and energy development initiative" provided for the ARC to fund activities supporting energy efficiency and renewable technologies. The legislation expanded distress designations to include an "at-risk" category, or counties "most at risk of becoming economically distressed." This raised the number of distress levels to five. The legislation also expanded ARC's service area. Ten counties in four states were added to the ARC, which represents the most recent expansion. <2.3. Funding History> The ARC is a federal-state partnership, with administrative costs shared equally by the federal government and states, while economic development activities are federally funded. The ARC is also the highest-funded of the federal regional commissions and authorities. Its funding ( Table 1 ) has increased 126% from approximately $73 million in FY2008 to $165 million in FY2019. The ARC's funding growth is attributable to incremental increases in appropriations along with an approximately $50 million increase in annual appropriated funds in FY2016 set aside to support the POWER Initiative. The POWER Initiative was part of a wider federal effort under the Obama Administration to support coal communities affected by the decline of the coal industry. The FY2018 White House budget proposed to shutter the ARC as well as the other federal regional commissions and authorities. Congress did not adopt these provisions from the President's budget, and continued to fund the ARC and other commissions. <3. Delta Regional Authority> The Delta Regional Authority was established in 2000 to address economic distress in the Mississippi River Delta region. The DRA aims to "improve regional economic opportunity by helping to create jobs, build communities, and improve the lives of the 10 million people" in 252 designated counties and parishes in Alabama, Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee ( Figure 2 ). <3.1. Overview of Structure and Activities> <3.1.1. Authority Structure> Like the ARC, the DRA is a federal-state partnership that shares administrative expenses equally, while activities are federally funded. The DRA consists of a federal co-chair appointed by the President with the advice and consent of the Senate, and the eight state governors, of which one is state co-chair. The governors are permitted to appoint a designee to represent the state, who also generally serves as the state alternate. Entities that are eligible to apply for DRA funding include: 1. state and local governments (state agencies, cities and counties/parishes); 2. public bodies; and 3. non-profit entities. These entities must apply for projects that operate in or are serving residents and communities within the 252 counties/parishes of the DRA's jurisdiction. <3.1.2. DRA Strategic Planning> Funding determinations are assessed according to the DRA's authorizing statute, its strategic plan, state priorities, and distress designation. The DRA strategic plan articulates the authority's high-level economic development priorities. The current strategic plan Moving the Delta Forward , Delta Regional Development Plan III was released in April 2016 and is in effect through 2021. The strategic plan lists three primary goals: 1. workforce competitiveness, to "advance the productivity and economic competitiveness of the Delta workforce"; 2. strengthened infrastructure, to "strengthen the Delta's physical, digital, and capital connections to the global economy"; and 3. increased community capacity, to "facilitate local capacity building within Delta communities, organizations, businesses, and individuals." State development plans are required by statute every five years to coincide with the strategic plan, and reflect the economic development goals and priorities of member states and LDDs. The DRA funds projects through 44 LDDs, which are multicounty economic development organizations financially supported by the DRA and advise on local priorities. LDDs "provide technical assistance, application support and review, and other services" to the DRA and entities applying for funding. LDDs receive administrative fees paid from awarded DRA funds, which are calculated as 5% of the first $100,000 of an award, and 1% for all dollars above that amount. <3.1.3. Distress Designations> The DRA determines a county or parish as distressed on an annual basis through the following criteria: 1. an unemployment rate of 1% higher than the national average for the most recent 24-month period; and 2. a per capita income of 80% or less than the national per capita income. The DRA designates counties as either distressed or not, and distressed counties received priority funding from DRA grant making activities. By statute, the DRA directs at least 75% of funds to distressed counties; half of those funds must target transportation and basic infrastructure. As of FY2018, 234 of the DRA's 252 counties are considered distressed. <3.1.4. States' Economic Development Assistance Program> The principal investment tool used by the DRA is the States' Economic Development Assistance Program (SEDAP), which "provides direct investment into community-based and regional projects that address the DRA's congressionally mandated four funding priorities." The DRA's four funding priorities are: 1. (1) basic public infrastructure; 2. (2) transportation infrastructure; 3. (3) workforce development; and 4. (4) business development (emphasizing entrepreneurship). The DRA's SEDAP funding is made available to each state according to a four-factor, formula-derived allocation that balances geographic breadth, population size, and economic distress ( Table 2 ). The factors and their respective weights are calculated as follows: Equity Factor (equal funding among eight states), 50%; Distressed Population (DRA counties/parishes), 20%; Distressed County Area (DRA counties/parishes), 20%; and Population Factor (DRA counties/parishes), 10%. DRA investments are awarded from state allocations. SEDAP applications are accepted through LDDs, and projects are sorted into tiers of priority. While all projects must be associated with one of the DRA's four funding priorities, additional prioritization determines the rank order of awards, which include county-level distress designations; adherence to at least one of the federal priority eligibility criteria (see below); adherence to at least one of the DRA Regional Development Plan goals (from the strategic plan); and adherence to at least one of the state's DRA priorities. The federal priority eligibility criteria are as follows: The DRA is also mandated to expend 50% of its appropriated SEDAP dollars on basic public and transportation infrastructure projects, which lend additional weight to this particular criterion. <3.2. Legislative History> In 1988, the Rural Development, Agriculture, and Related Agencies Appropriations Act for FY1989 ( P.L. 100-460 ) appropriated $2 million and included language that authorized the creation of the Lower Mississippi Delta Development Commission. The LMDDC was a DRA predecessor tasked with studying economic issues in the Delta and developing a 10-year economic development plan. The LMDDC consisted of two commissioners appointed by the President as well as the governors of Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee. The commission was chaired by then-Governor William J. Clinton of Arkansas, and the LMDDC released interim and final reports before completing its mandate in 1990. Later, in the White House, the Clinton Administration continued to show interest in an expanded federal role in Mississippi Delta regional economic development. <3.2.1. Key Legislative Activity> In 1994, Congress enacted the Lower Mississippi Delta Region Heritage Study Act, which built on the LMDDC's recommendations. In particular, the 1994 act saw the Department of the Interior conduct a study on key regional cultural, natural, and heritage sites and locations in the Mississippi Delta region. In 1999, the Delta Regional Authority Act of 1999 was introduced in the House ( H.R. 2911 ) and Senate ( S. 1622 ) to establish the DRA by amending the Consolidated Farm and Rural Development Act. Neither bill was enacted, but they established the structure and mission later incorporated into the DRA. <3.2.1.1. 106th Congress> In 2000, the Consolidated Appropriations Act for FY2001 ( P.L. 106-554 ) included language authorizing the creation of the DRA based on the seven participating states of the LMDDC, with the addition of Alabama and 16 of its counties. <3.2.1.2. 107th Congress> The Farm Security and Rural Investment Act of 2002, or 2002 farm bill ( P.L. 107-171 ), amended voting procedures for DRA states, provided new funds for Delta regional projects, and added four additional Alabama counties to the DRA. <3.2.1.3. 110th Congress> The Food, Conservation, and Energy Act of 2008, or 2008 farm bill ( P.L. 110-234 ) reauthorized the DRA from FY2008 through FY2012 and expanded it to include Beauregard, Bienville, Cameron, Claiborne, DeSoto, Jefferson Davis, Red River, St. Mary, Vermillion, and Webster Parishes in Louisiana; and Jasper and Smith Counties in Mississippi. <3.2.1.4. 113th Congress> The Agricultural Act of 2014, or 2014 farm bill ( P.L. 113-79 ) reauthorized the DRA through FY2018. <3.2.1.5. 115th Congress> The Agriculture Improvement Act of 2018, or 2018 farm bill ( P.L. 115-334 ), reauthorized the DRA from FY2019 to FY2023, and emphasized Alabama's position as a "full member" of the DRA. <3.3. Funding History> Under "farm bill" legislation, the DRA has consistently received funding authorizations of $30 million annually since it was first authorized. However, appropriations have fluctuated over the years. Although the DRA was appropriated $20 million in the same legislation authorizing its creation, that amount was halved in 2002, and continued a downward trend through its funding nadir of $5 million in FY2004. However, funding had increased by FY2006 to $12 million. Since FY2008, DRA's annual appropriations have increased from almost $12 million to the current level of $25 million ( Table 3 ). <4. Denali Commission> The Denali Commission was established in 1998 to support rural economic development in Alaska. It is "designed to provide critical utilities, infrastructure, and economic support throughout Alaska." The Denali Commission is unique as a single-state commission, and in its reliance on federal funding for both administration and activities. <4.1. Overview of Structure and Activities> The commission's statutory mission includes providing workforce and other economic development assistance to distressed rural regions in Alaska. However, the commission no longer engages in substantial activities in general economic development or transportation, which were once core elements of the Denali Commission's activities. Its recent activities are principally limited to coastal infrastructure protection and energy infrastructure and fuel storage projects. <4.1.1. Commission Structure> The Denali Commission's structure is unique as the only commission with a single-state mandate. The commission is comprised of seven members (or a designated nominee), including the federal co-chair, appointed by the U.S. Secretary of Commerce; the Alaska governor, who is state co-chair (or his/her designated representative); the University of Alaska president; the Alaska Municipal League president; the Alaska Federation of Natives president; the Alaska State AFL-CIO president; and the Associated General Contractors of Alaska president. These structural novelties offer a different model compared to the organization typified by the ARC and broadly adopted by the other functioning federal regional commissions and authorities. For example, the federal co-chair's appointment by the Secretary of Commerce, and not the President with Senate confirmation, allows for a potentially more expeditious appointment of a federal co-chair. The Denali Commission is required by law to create an annual work plan, which solicits project proposals, guides activities, and informs a five-year strategic plan. The work plan is reviewed by the federal co-chair, the Secretary of Commerce, and the Office of Management and Budget, and is subject to a public comment period. The current FY2018-FY2022 strategic plan, released in October 2017, lists four strategic goals and objectives: (1) facilities management; (2) infrastructure protection from ecological change; (3) energy, including storage, production, heating, and electricity; and (4) innovation and collaboration. The commission's recent activities largely focus on energy and infrastructure protection. <4.1.2. Distressed Areas> The Denali Commission's authorizing statute obligates the Commission to address economic distress in rural areas of Alaska. As of 2018, the Commission utilizes two overlapping standards to assess distress: a "surrogate standard," adopted by the Commission in 2000, and an "expanded standard." These standards are applied to rural communities in Alaska and assessed by the Alaska Department of Labor and Workforce Development (DOL&WD), Research and Analysis Section. DOL&WD uses the most current population, employment, and earnings data available to identify Alaska communities and Census Designated Places considered "distressed." Appeals can be made to community distress determinations, but only through a demonstration that DOL&WD data or analysis was erroneous, invalid, or outdated. New information "must come from a verifiable source, and be robust and representative of the entire community and/or population." Appeals are accepted and adjudicated only for the same reporting year in question. <4.1.3. Recent Activities> The Denali Commission's scope is more constrained compared to the other federal regional commissions and authorities. The organization reports that due to funding constraints, the commission reduced its involvement in what might be considered traditional economic development and, instead, focused on rural fuel and energy infrastructure and coastal protection efforts. Since the Denali Commission's founding, bulk fuel safety and security, energy reliability and security, transportation system improvements, and healthcare projects have commanded the vast majority of Commission projects. Of these, only energy reliability and security and bulk fuel safety and security projects remain active and are still funded. Village infrastructure protection a program launched in 2015 to address community infrastructure threatened by erosion, flooding and permafrost degradation is a program that is relatively new and still being funded. By contrast, most "traditional" economic development programs are no longer being funded, including in housing, workforce development, and general economic development activities. <4.2. Legislative History> <4.2.1. 106th Congress> In 1999, the Consolidated Appropriations Act, 2000 ( P.L. 106-113 ) authorized the commission to enter into contracts and cooperative agreements, award grants, and make payments "necessary to carry out the purposes of the commission." The act also established the federal co-chair's compensation schedule, prohibited using more than 5% of appropriated funds for administrative expenses, and established "demonstration health projects" as authorized activities and authorized the Department of Health and Human Services to make grants to the commission to that effect. <4.2.2. 108th Congress> The Consolidated Appropriations Act, 2004 ( P.L. 108-199 ) created an Economic Development Committee within the commission chaired by the Alaska Federation of Natives president, and included the Alaska Commissioner of Community and Economic Affairs, a representative of the Alaska Bankers Association, the chairman of the Alaska Permanent Fund, a representative from the Alaska Chamber of Commerce, and representatives from each region. <4.2.3. 109th Congress> In 2005, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, or SAFETEA-LU ( P.L. 109-59 ), established the Denali Access System Program among the commission's authorized activities. The program was part of its surface transportation efforts, which were active from 2005 through 2009. <4.2.4. 112th Congress> 2012's Moving Ahead for Progress in the 21 st Century Act, or MAP-21 ( P.L. 112-141 ), authorized the commission to accept funds from federal agencies, allowed it to accept gifts or donations of "service, property, or money" on behalf of the U.S. government, and included guidance regarding gifts. <4.2.5. 114th Congress> In 2016, the Water Infrastructure Improvements for the Nation Act, or the WIIN Act ( P.L. 114-322 ), reauthorized the Denali Commission through FY2021, and established a four-year term for the federal co-chair (with allowances for reappointment), but provided that other members were appointed for life. The act also allowed for the Secretary of Commerce to appoint an interim federal co-chair, and included clarifying language on the non-federal status of commission staff and ethical issues regarding conflicts of interest and disclosure. <4.3. Funding History> Under its authorizing statute, the Denali Commission received funding authorizations for $20 million for FY1999, and "such sums as necessary" (SSAN) for FY2000 through FY2003. Legislation passed in 2003 extended the commission's SSAN funding authorization through 2008. Its authorization lapsed after 2008; reauthorizing legislation was introduced in 2007, but was not enacted. The commission continued to receive annual appropriations for FY2009 and several years thereafter. In 2016, legislation was enacted reauthorizing the Denali Commission through FY2021 with a $15 million annual funding authorization ( Table 4 ). <5. Northern Border Regional Commission> The Northern Border Regional Commission (NBRC) was created by the Food, Conservation, and Energy Act of 2008, otherwise known as the 2008 farm bill. The act also created the Southeast Crescent Regional Commission (SCRC) and the Southwest Border Regional Commission (SBRC). All three commissions share common authorizing language modeled after the ARC. The NBRC is the only one of the three new commissions that has been both reauthorized and received progressively increasing annual appropriations since it was established in 2008. The NBRC was founded to alleviate economic distress in the northern border areas of Maine, New Hampshire, New York, and, as of 2018, the entire state of Vermont ( Figure 4 ). The stated mission of the NBRC is "to catalyze regional, collaborative, and transformative community economic development approaches that alleviate economic distress and position the region for economic growth." Eligible counties within the NBRC's jurisdiction may receive funding "for community and economic development" projects pursuant to regional, state, and local planning and priorities ( Table C-4 ). <5.1. Overview of Structure and Activities> The NBRC is led by a federal co-chair, appointed by the President with the advice and consent of the Senate, and four state governors, of which one is appointed state co-chair. There is no term limit for the federal co-chair. The state co-chair is limited to two consecutive terms, but may not serve a term of less than one year. Each of the four governors may appoint an alternate; each state also designates an NBRC program manager to handle the day-to-day operations of coordinating, reviewing, and recommending economic development projects to the full membership. While program funding depends on congressional appropriations, administrative costs are shared equally between the federal government and the four states of the NBRC. Through commission votes, applications are ranked by priority, and are approved in that order as grant funds allow. <5.1.1. Program Areas> All projects are required to address at least one of the NBRC's four authorized program areas and its five-year strategic plan. The NBRC's four program areas are: (1) economic and infrastructure development (EID); (2) comprehensive planning for states; (3) local development districts; and (4) the regional forest economy partnership. <5.1.1.1. Economic and Infrastructure Development (EID)> The NBRC's state EID investment program is the chief mechanism for investing in economic development programs in the participating states. The EID program prioritizes projects focusing on infrastructure, telecommunications, energy costs, business development, entrepreneurship, workforce development, leadership, and regional strategic planning. The EID program provides approximately $3.5 million to each state for such activities. Eligible applicants include public bodies, 501(c) organizations, Native American tribes, and the four state governments. EID projects may require matching funds of up to 50% depending on the level of distress. <5.1.1.2. Comprehensive Planning> The NBRC may also assist states in developing comprehensive economic and infrastructure development plans for their NBRC counties. These initiatives are undertaken in collaboration with LDDs, localities, institutions of higher education, and other relevant stakeholders. <5.1.1.3. Local Development Districts (LDD)> The NBRC uses 16 multicounty LDDs to advise on local priorities, identify opportunities, conduct outreach, and administer grants, from which the LDDs receive fees. LDDs receive fees according to a graduated schedule tied to total project funds. The rate is 5% for the first $100,000 awarded and 1% in excess of $100,000. Notably, this formula does not apply to Vermont-only projects. Vermont is the only state where grantees are not required to contract with an LDD for the administration of grants, though this requirement may be waived. <5.1.1.4. Regional Forest Economy Partnership (RFEP)> The RFEP is an NBRC program to address economic distress caused by the decline of the regional forest products industry. The program provides funding to rural communities for "economic diversity, independence, and innovation." The NBRC received $7 million in FY2018 and FY2019 to address the decline in the forest-based economies in the NBRC region. <5.1.2. Strategic Plan> The NBRC's activities are guided by a five-year strategic plan, which is developed through "extensive engagement with NBRC stakeholders" alongside "local, state, and regional economic development strategies already in place." The 2017-2021 strategic plan lists three goals: 1. modernizing infrastructure; 2. creating and sustaining jobs; and 3. anticipating and capitalizing on shifting economic and demographic trends. The strategic plan also lists five-year performance goals, which are: 5,000 jobs created or retained; 10,000 households and businesses with access to improved infrastructure; 1,000 businesses representing 5,000 employees benefit from NBRC investments; 7,500 workers provided with skills training; 250 communities and 1,000 leaders engaged in regional leadership, learning and/or innovation networks supported by the NBRC; and 3:1 NBRC investment leverage. The strategic plan also takes stock of various socioeconomic trends in the northern border region, including (1) population shifts; (2) distressed communities; and (3) changing workforce needs. <5.1.3. Economic and Demographic Distress> The NBRC is unique in that it is statutorily obligated to assess distress according to economic as well as demographic factors ( Table C-4 ). These designations are made and refined annually. The NBRC defines levels of "distress" for counties that "have high rates of poverty, unemployment, or outmigration" and "are the most severely and persistently economic distressed and underdeveloped." The NBRC is required to allocate 50% of its total appropriations to projects in distressed counties. The NBRC's county designations are as follows, in descending levels of distress: Distressed counties (80% maximum funding allowance); Transitional counties (50%); and Attainment (0%). Transitional counties are defined as counties that do not exhibit the same levels of economic and demographic distress as a distressed county, but suffer from "high rates of poverty, unemployment, or outmigration." Attainment counties are not allowed to be funded by the NBRC except for those projects that are located within an "isolated area of distress," or have been granted a waiver. Distress is calculated in tiers of primary and secondary distress categories and constituent factors: Primary Distress Categories 1. Percent of population below the poverty level 2. Unemployment rate 3. Percent change in population Secondary Distress Categories 4. Percent of population below the poverty level 5. Median household income 6. Percent of secondary and/or seasonal homes Each county is assessed by the primary and secondary distress categories and factors and compared to the figures for the United States as a whole. Designations of county distress are made by tallying those factors against the following criteria: Distressed counties are those with at least three factors from both primary and secondary distress categories and at least one from each category; Transitional counties are those with at least one factor from either category; and Attainment counties are those which show no measures of distress. <5.2. Legislative History> <5.2.1. 110th Congress> The NBRC was first proposed in the Northern Border Economic Development Commission Act of 2007 ( H.R. 1548 ), introduced on March 15, 2007. H.R. 1548 proposed the creation of a federally-chartered, multi-state economic development organization modeled after the ARC covering designated northern border counties in Maine, New Hampshire, New York, and Vermont. The bill would have authorized the appropriation of $40 million per year for FY2008 through FY2012 ( H.R. 1548 ). The bill received regional co-sponsorship from Members of Congress representing areas in the northern border region. The NBRC was reintroduced in the Regional Economic and Infrastructure Development Act of 2007 ( H.R. 3246 ), which would have authorized the NBRC, the SCRC, and the SBRC, and reauthorized the DRA and the NGPRA (discussed in the next section) in a combined bill. H.R. 3246 won a broader range of support, which included 18 co-sponsors in addition to the original bill sponsor, and passed the House by a vote of 264-154 on October 4, 2007. Upon House passage, H.R. 3246 was referred to the Senate Committee on Environment and Public Works. The Senate incorporated authorizations for the establishment of the NBRC, SCRC, and the SBRC in the 2008 farm bill. The 2008 farm bill authorized annual appropriations of $30 million for FY2008 through FY2012 for all three new commissions. <5.2.2. 115th Congress> The only major changes to the NBRC since its creation were made in the Agriculture Improvement Act of 2018 ( P.L. 115-334 ), or the 2018 farm bill, which authorized the state capacity building grant program. In addition, the 2018 farm bill expanded the NBRC to include the following counties: Belknap and Cheshire counties in New Hampshire; Genesee, Greene, Livingston, Montgomery, Niagara, Oneida, Orleans, Rensselaer, Saratoga, Schenectady, Sullivan, Washington, Warren, Wayne, and Yates counties in New York; and Addison, Bennington, Chittenden, Orange, Rutland, Washington, Windham, and Windsor counties in Vermont, making it the only state entirely within the NBRC. <5.3. Funding History> Since its creation, the NBRC has received consistent authorizations of appropriations ( Table 5 ). The 2008 farm bill authorized the appropriation of $30 million for the NBRC for each of FY2008 through FY2013 ( P.L. 110-234 ); the same in the 2014 farm bill for each of FY2014 through FY2018 ( P.L. 113-79 ); and $33 million for each of FY2019 through FY2023 ( P.L. 115-334 ). Due to its statutory linkages to the SCRC and SBRC, all three commissions also share common authorizing legislation and identical funding authorizations. To date, the NBRC is the only commission of the three to receive substantial annual appropriations. Congress has funded the NBRC since FY2010 ( Table 5 ). The NBRC's appropriated funding level has increased from $5 million in FY2014, to $7.5 million in FY2016, $10 million in FY2017, $15 million in FY2018, and $20 million in FY2019. <6. Northern Great Plains Regional Authority> The Northern Great Plains Regional Authority was created by the 2002 farm bill. The NGPRA was created to address economic distress in Iowa, Minnesota, Missouri (other than counties included in the Delta Regional Authority), North Dakota, Nebraska, and South Dakota. The NGPRA appears to have been briefly active shortly after it was created, when it received its only annual appropriation from Congress. The NGPRA's funding authorization lapsed at the end of FY2018; it was not reauthorized. <6.1. Structure and Activities> <6.1.1. Authority Structure> The NGPRA featured broad similarities to the basic structure shared among most of the federal regional authorities and commissions, being a federal-state partnership led by a federal co-chair (appointed by the President, with the advice and consent of the Senate) and governors of the participating states, of which one was designated as the state co-chair. Unique to the NGPRA were certain structural novelties reflective of regional socio-political features. The NGPRA also included a Native American tribal co-chair, who was the chairperson of an Indian tribe in the region (or their designated representative), and appointed by the President, with the advice and consent of the Senate. The tribal co-chair served as the "liaison between the governments of Indian tribes in the region and the [NGPRA]." No term limit is established in statute; the only term-related proscription is that the state co-chair "shall be elected by the state members for a term of not less than 1 year." Another novel feature among the federal regional commissions and authorities was also the NGPRA's statutory reliance on a 501(c)(3) non-profit corporation Northern Great Plains, Inc. in furtherance of its mission. While Northern Great Plains, Inc. was statutorily organized to complement the NGPRA's activities, it effectively served as the sole manifestation of the NGPRA concept and rationale while it was active, given that the NGPRA was only once appropriated funds and never appeared to exist as an active organization. The Northern Great Plains, Inc. was active for several years, and reportedly received external funding, but is currently defunct. <6.1.2. Activities and Administration> Under its authorizing statute, the federal government would initially fund all administrative costs in FY2002, which would decrease to 75% in FY2003, and 50% in FY2004. Also, the NGPRA would have designated levels of county economic distress; 75% of funds were reserved for the most distressed counties in each state, and 50% reserved for transportation, telecommunications, and basic infrastructure improvements. Accordingly, non-distressed communities were eligible to receive no more than 25% of appropriated funds. The NGPRA was also structured to include a network of designated, multi-county LDDs at the sub-state levels. As with its sister organizations, the LDDs would have served as nodes for project implementation and reporting, and as advisors to their respective states and the NGPRA as a whole. <6.2. Legislative History> <6.2.1. 103rd Congress> The Northern Great Plains Rural Development Act ( P.L. 103-318 ), which became law in 1994, established the Northern Great Plains Rural Development Commission to study economic conditions and provide economic development planning for the Northern Great Plains region. The Commission was comprised of the governors (or designated representative) from the Northern Great Plains states of Iowa, Minnesota, North Dakota, Nebraska, and South Dakota (prior to Missouri's inclusion), along with one member from each of those states appointed by the Secretary of Agriculture. <6.2.2. 104th Congress> The Agricultural, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1995 ( P.L. 103-330 ) provided $1,000,000 to carry out the Northern Great Plains Rural Development Act. The Commission produced a 10-year plan to address economic development and distress in the five states. After a legislative extension ( P.L. 104-327 ), the report was submitted in 1997. The Northern Great Plains Initiative for Rural Development (NGPIRD), a non-profit 501(c)(3), was established to implement the Commission's advisories. <6.2.3. 107th Congress> The Farm Security and Rural Investment Act of 2002, or 2002 farm bill ( P.L. 107-171 ), authorized the NGPRA, which superseded the Commission. The statute also created Northern Great Plains, Inc., a 501(c)(3), as a resource for regional issues and international trade, which supplanted the NGPIRD with a broader remit that included research, education, training, and issues of international trade. <6.2.4. 110th Congress> The Food, Conservation, and Energy Act of 2008, or 2008 farm bill ( P.L. 110-246 ), extended the NGPRA's authorization through FY2012. The legislation also expanded the authority to include areas of Missouri not covered by the DRA, and provided mechanisms to enable the NGPRA to begin operations even without the Senate confirmation of a federal co-chair, as well as in the absence of a confirmed tribal co-chair. The Agricultural Act of 2014, or 2014 farm bill ( P.L. 113-79 ), reauthorized the NGPRA and the DRA, and extended their authorizations from FY2012 to FY2018. <6.3. Funding History> The NGPRA was authorized to receive $30 million annually from FY2002 to FY2018. It received appropriations once for $1.5 million in FY2004. Its authorization of appropriations lapsed at the end of FY2018. <7. Southeast Crescent Regional Commission> The Southeast Crescent Regional Commission (SCRC) was created by the 2008 farm bill, which also created the NBRC and the Southwest Border Regional Commission. All three commissions share common authorizing language modeled after the ARC. The SCRC is not currently active. The SCRC was created to address economic distress in areas of Virginia, North Carolina, South Carolina, Georgia, Alabama, Mississippi, and Florida ( Figure 6 ) not served by the ARC or the DRA ( Table 13 ). <7.1. Overview of Structure and Activities> As authorized, the SCRC would share an organizing structure with the NBRC and the Southwest Border Regional Commission, as all three share common statutory authorizing language modeled after the ARC. As authorized, the SCRC would consist of a federal co-chair, appointed by the President with the advice and consent of the Senate, along with the participating state governors (or their designated representatives), of which one would be named by the state representatives as state co-chair. There is no term limit for the federal co-chair. However, the state co-chair is limited to two consecutive terms, but may not serve a term of less than one year. However, no federal co-chair has been appointed since the SCRC was authorized; therefore, the commission cannot form and begin operations. <7.2. Legislative History> The SCRC concept was first introduced by university researchers working on rural development issues in 1990 at Tuskegee University's Annual Professional Agricultural Worker's Conference for 1862 and 1890 Land-Grant Universities. In 1994, the Southern Rural Development Commission Act was introduced in the House Agricultural Committee, which would provide the statutory basis for a "Southern Black Belt Commission." While the concept was not reintroduced in Congress until the 2000s, various nongovernmental initiatives sustained discussion and interest in the concept in the intervening period. Supportive legislation was reintroduced in 2002, which touched off other accompanying legislative efforts until the SCRC was authorized in 2008. <7.3. Funding History> Congress authorized $30 million funding levels for each fiscal year from FY2008 to FY2018, and $33 million in FY2019, and appropriated $250,000 in each fiscal year from FY2010 to FY2019 ( Table 5 ). Despite receiving regular appropriations since it was authorized in 2008, a review of government budgetary and fiscal sources yields no record of the SCRC receiving, obligating, or spending funds appropriated by Congress. In successive presidential administration budget requests (FY2013, FY2015-FY2017), no funding was requested. In the U.S. Treasury 2018 Combined Statement of Receipts, Outlays, and Balances, Part III, the SCRC does not appear, further indicating that the SCRC remains unfunded. Notably, the Commission for the Preservation of America's Heritage Abroad, which has periodically shared a common section with the SCRC in presidential budgets, is listed in the 2018 Combined Statement, as it is elsewhere. <8. Southwest Border Regional Commission> The Southwest Border Regional Commission (SBRC) was created with the enactment of the Food, Conservation, and Energy Act of 2008, or the 2008 farm bill ( P.L. 110-234 ), which also created the NBRC and the SCRC. All three commissions share common statutory authorizing language modeled after the ARC. The SBRC was created to address economic distress in the southern border regions of Arizona, California, New Mexico, and Texas ( Figure 7 ; Table 1 5 ). The SBRC has not received an annual appropriation since it was created and is not currently active. <8.1. Overview of Structure and Activities> As authorized, the SBRC would share an organizing structure with the NBRC and the SCRC, as all three commissions share common statutory authorizing language modeled after the ARC. By statute, the SBRC consists of a federal co-chair, appointed by the President with the advice and consent of the Senate, along with the participating state governors (or their designated representatives), of which one would be named by the state representatives as state co-chair. As enacted in statute, there is no term limit for the federal co-chair. However, the state co-chair is limited to two consecutive terms, but may not serve a term of less than one year. However, as no federal co-chair has been appointed since the SCRC was authorized, it is not operational. <8.2. Legislative History> The concept of an economic development agency focusing on the southwest border region has existed at least since 1976, though the SBRC was established through more recent efforts. Executive Order 13122 in 1999 created the Interagency Task Force on the Economic Development of the Southwest Border, which examined issues of socioeconomic distress and economic development in the southwest border regions and advised on federal efforts to address them. <8.2.1. 108th Congress> In February 2003, a "Southwest Regional Border Authority" was proposed in S. 548 . A companion bill, H.R. 1071 , was introduced in March 2003. The SBRC was reintroduced in the Regional Economic and Infrastructure Development Act of 2003 ( H.R. 3196 ), which would have authorized the SBRC, the DRA, the NGPRA, and the SCRC. <8.2.2. 109th Congress> In 2006, the proposed Southwest Regional Border Authority Act would have created the "Southwest Regional Border Authority" ( H.R. 5742 ), similar to S. 458 in 2003. <8.2.3. 110th Congress> In 2007, SBRC was reintroduced in the Regional Economic and Infrastructure Development Act of 2007 ( H.R. 3246 ), which would have authorized the SBRC, the SCRC, and the NBRC, and reauthorized the DRA and the NGPRA in a combined bill. Upon House passage, the Senate incorporated authorizations for the establishment of the NBRC, SCRC, and SBRC in the 2008 farm bill. The 2008 farm bill authorized annual appropriations of $30 million for FY2008 through FY2012 for all three of the new organizations. <8.3. Funding History> Congress authorized annual funding of $30 million for the SBRC from FY2008 to FY2018, and $33 million in FY2019. The SBRC has never received annual appropriations and is not active. <9. Concluding Notes> Given their geographic reach, broad activities, and integrated intergovernmental structures, the federal regional commissions and authorities are a significant element of federal economic development efforts. At the same time, as organizations that are largely governed by the respective state-based commissioners, the federal regional commissions and authorities are not typical federal agencies but federally-chartered entities that integrate federal funding and direction with state and local economic development priorities. This structure provides Congress with a flexible platform for economic development efforts. The intergovernmental structure allows for strategic-level economic development initiatives to be launched at the federal level and implemented across multi-state jurisdictions with extensive state and local input, and more adaptable to regional needs. The federal regional commissions and authorities reflect an emphasis by the federal government on place-based economic development strategies sensitive to regional and local contexts. However, the geographic specificity and varying functionality of the statutorily authorized federal regional commissions and authorities, both active and inactive, potentially raise questions about the efficacy and equity of federal economic development policies. More in-depth analysis of these and other such issues related to the federal regional authorities and commissions, and their role as instruments for federal economic development efforts, is reserved for possible future companion products to this report. Appendix A. Basic Information at a Glance Contact Information (for active commissions and authorities) Appalachian Regional Commission Address:1666 Connecticut Avenue, NW Suite 700 Washington, DC 20009-1068 Phone:[phone number scrubbed] Website: http://www.arc.gov Delta Regional Authority Address:236 Sharkey Avenue Suite 400 Clarksdale, MS 38614 Phone:[phone number scrubbed] Website: http://www.dra.gov Denali Commission Address:510 L Street Suite 410 Anchorage, AK 99501 Phone:[phone number scrubbed] Website: http://www.denali.gov Northern Border Regional Commission Address:James Cleveland Federal Building, Suite 1201 53 Pleasant Street Concord, NH 03301 Phone:[phone number scrubbed] Website: http://www.NBRC.gov Appendix B. Map of Federal Regional Commissions and Authorities Appendix C. Service Areas of Federal Regional Commissions and Authorities Appalachian Regional Commission Delta Regional Authority Denali Commission Northern Border Regional Commission Northern Great Plains Regional Authority Southeast Crescent Regional Commission Southwest Border Regional Commission

This report describes the structure, activities, legislative history, and funding history of seven federal regional commissions and authorities: the Appalachian Regional Commission; the Delta Regional Authority; the Denali Commission; the Northern Border Regional Commission; the Northern Great Plains Regional Authority; the Southeast Crescent Regional Commission; and the Southwest Border Regional Commission. All seven regional commissions and authorities are broadly modeled after the Appalachian Regional Commission structure, which is composed of a federal co-chair appointed by the president with the advice and consent of the Senate, and the member state governors, of which one is appointed the state co-chair. This structure is broadly replicated in the other commissions and authorities, albeit with notable variations and exceptions to local contexts. In addition, the service areas for all of the federal regional commissions and authorities are defined in statute and thus can only be amended or modified through congressional action. While the service areas for the federal regional commissions and authorities have shifted over time, those jurisdictions have not changed radically in their respective service lives. Of the seven federal regional commissions and authorities, four could be considered active: the Appalachian Regional Commission; the Delta Regional Authority; the Denali Commission; and the Northern Border Regional Commission. The four active regional commissions and authority received $15 million to $165 million in congressional appropriations in FY2019 for their various activities. Each of the four functioning regional commissions and authority engage in economic development to varying extents, and address multiple programmatic activities in their respective service areas. These activities may include, but are not limited to: basic infrastructure; energy; ecology/environment and natural resources; workforce/labor; and business development. Though they are federally-chartered, receive congressional appropriations for their administration and activities, and include an appointed federal representative in their respective leadership structures (the federal co-chair and his/her alternate, as applicable), the federal regional commissions and authorities are quasi-governmental partnerships between the federal government and the constituent state(s) of a given authority or commission. This partnership structure, which also typically includes substantial input and efforts at the sub-state level, represents a unique federal approach to economic development and a potentially flexible mechanism for coordinating strategic economic development goals to local, state, and multi-state/regional priorities and contexts. Congress has expressed interest in the federal regional commissions and authorities pursuant to its appropriations and oversight authority, as well as its interest in facilitating economic development programming. Given relevant congressional interest, the federal regional commissions and authorities provide a model of functioning economic development approaches that are place-based, intergovernmental, and multifaceted in their programmatic orientation (e.g., infrastructure, energy, environment/ecology, workforce, business development).

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<1. Introduction> Program eligibility requirements and payment limits are central to how various U.S. farm programs operate. These requirements fundamentally address various equity concerns and reflect the goals of government intervention in agriculture. They determine who receives federal farm program payments and how much they receive. Eligibility requirements and payment limits are controversial because they influence what size farms are supported. Policymakers have debated what limit is optimal for annual payments, whether payments should be proportional to production or limited per individual or per farm operation, and whether the limit should be specific to each program or cumulative across all programs. Furthermore, program eligibility requirements and payment limits generate considerable congressional interest because their effects differ across regions and by type of commodities produced and because a substantial amount of annual U.S. farm program payments are at stake: Direct federal outlays have averaged $13.7 billion per year from 1996 through 2018. When federal crop insurance premium subsidies are included, annual farm payments have averaged $17.6 billion over the same period. <1.1. Report Overview5> This report discusses various eligibility factors and their interaction with current farm programs, including those authorized under the 2018 farm bill as well as several disaster assistance and other ad hoc payment programs initiated under different authorities. It describes current restrictions that limit or preclude payments to farmers based on a number of factors as well as areas where few, if any, restrictions limit farmers' access to such benefits or to the amount of benefits. Much of the information on farm programs and their eligibility criteria and payment limits is summarized in Table A-1 . A second appendix table, Table A-2 , provides a brief history of the legislative evolution of the income eligibility thresholds that is, means testing. A final appendix table, Table A-3 , contains a history of the legislative evolution of annual payment limits for major commodity programs. This report concludes with a discussion of several issues related to farm program payment limits, including policy design issues, that may be of interest to Congress. <1.2. Background> Farm program payment limits and eligibility requirements may differ by both type of program and type of participating legal entity (e.g., an individual, a partnership, or a corporation). The Farm Service Agency (FSA) has administrative responsibility for collecting and maintaining data used to make eligibility and payment limit determinations for U.S. Department of Agriculture (USDA) farm programs. FSA provides this data to the Natural Resources Conservation Service (NRCS) to administer conservation programs for which they have responsibility. Congress first added payment limits as part of farm commodity programs in the 1970 farm bill (P.L. 91-524). However, such limits have evolved over time in both scope and amount ( Table A-1 ) as the structure of U.S. agriculture, farm policies, and commodity support programs has changed. With each succeeding farm bill, and occasionally via other legislation, Congress has addressed anew who is eligible for farm payments and how much an individual recipient should be permitted to receive in a single year. In recent years, congressional debate has focused on attributing payments directly to individual recipients, ensuring that payments go to persons or entities currently engaged in farming, capping the amount of payments that a qualifying recipient may receive in any one year, and excluding farmers or farming entities with incomes above a certain level as measured by their adjusted gross income (AGI) from payment eligibility. Each of these policy measures depending on how they are designed and implemented can have consequences, both intended and unintended, for U.S. agriculture. These consequences include, but are not limited to, farm management structure, crop choices, and farm size. Because U.S. farm program eligibility requirements and annual payment limit policy have such broad potential consequences for U.S. agriculture, a review of both current policies and related issues is of potential interest to Congress. <2. Program Eligibility> Not all farm businesses are eligible to participate in federal farm programs. A number of statutory and regulatory requirements govern federal farm program eligibility for benefits under various programs. Some farm businesses, although eligible to participate, are restricted from receiving certain benefits or may be limited in the extent of program payments that they may receive. Over time, program eligibility rules have evolved, expanding to more programs and including more limitations. Cross-cutting methods of determining program eligibility such as AGI thresholds are relatively new. Discussed below are cross-cutting eligibility requirements that affect multiple programs, including participant identification, foreign ownership, nature and extent of participation (i.e., AEF criteria), means tests, and conservation requirements. <2.1. Participant Identification> Generally, program eligibility begins with identification of participants. Identifying who or what entity is participating and therefore how payments may be attributed is the cornerstone of most farm program eligibility. To be eligible to receive any farm program payment, every person or legal entity including both U.S. citizens and noncitizens must provide a name and address and have either a Social Security number (SSN), in the case of a person, or a Taxpayer Identification Number (TIN) or Employee Identification Number (EIN), in the case of a legal entity with multiple persons having ownership interests. In this latter situation, each person with an interest must have a TIN or EIN and must declare his or her interest share in the joint entity using the requisite USDA forms. All participants in programs subject to payment eligibility and payment limitation requirements must submit to USDA two completed forms. The first, CCC-901 (Members' Information), identifies the participating persons and/or entities (through four levels of attribution if needed) and their interest share in the operation. The second form, CCC-902 (Farm Operating Plan), identifies the nature of each person's or entity's stake that is, capital, land, equipment, active personal labor, or active personal management in the operation. These forms need to be submitted only once (not annually) but must be kept current in regard to any change in the farming operation. Critical changes to a farming operation might include expanding the number of limitations for payment, such as by adding a new family member, changing the land rental status from cash to share basis, purchasing additional base acres equivalent to at least 20% of the previous base, or substantially altering the interest share of capital or equipment contributed to the farm operation. This information is critical in determining the extent to which each person is actively engaged in the farming operation, as described below. <2.2. Three Principal Farm Business Categories> Many types of farm business entities own operations engaged in agricultural production. For purposes of determining the extent to which the participants of a farm operation qualify as potential farm program participants, three major categories are considered ( Table 1 ): 1. Sole proprietorship or family farm. The farm business is run by a single operator or multiple adult family members the linkage being common family lineage whereby each qualifying member is subject to an individual payment limit. Thus, a family farm potentially qualifies for an additional payment limit for each family member (18 years or older) associated with the principal operator. Family farms or sole proprietorships comprised nearly 86% of U.S. farm operations in 2017. 2. Joint operation . Each member of a joint operation where members need not have a common family relation or lineage is treated separately and individually for purposes of determining eligibility and payment limits. Thus, a partnership's potential payment limit is equal to the number of qualifying members (plus any special designees such as spouses) times the individual payment limit. 3. Corporation. A legally defined association of joint owners or shareholders that is treated as a single person for purposes of determining eligibility and payment limits. This includes corporations, limited liability companies, and similar entities. Nearly 90% of incorporated farm operations are family held. As of 2017, these three categories represented nearly 98% of U.S. farm operations ( Table 1 ). In addition, federal regulations exist for evaluating both the eligibility of and relevant payment limits for other exceptional types of potential recipients, including a spouse, minor children, and other family members, as well as marketing cooperatives, trusts and estates, cash-rent tenants, sharecroppers, landowners, federal agencies, and state and local governments. These institutional arrangements represent a small share (2.2%) of U.S. farm operations, according to USDA's 2017 Census of Agriculture . Special rules also describe eligibility and payment limits in the event of the death of a previously eligible person. <2.3. AEF Requirement> To be eligible for certain farm program benefits, participants individuals as well as other types of legal entities must meet AEF requirements. The AEF requirements (where applicable) apply equally to U.S. citizens, resident aliens, and foreign entities. This section briefly reviews the specific requirements for each type of legal entity person, partnership, or corporation to qualify as "actively engaged in farming." <2.3.1. Individual AEF Requirements> An individual producer must meet three AEF criteria: 1. The person, independently and separately, makes a significant contribution to the farming operation of (a) capital, equipment, or land; and (b) active personal labor, active personal management, or a combination of active personal labor and management. 2. The person's share of profits or losses is commensurate with his/her contribution to the farming operation. 3. The person shares in the risk of loss from the farming operation. In general, family farms receive special treatment whereby every adult member (i.e., 18 years or older) is deemed to meet the AEF requirements. Family membership is based on lineal ascendants or descendants but is also extended to siblings and spouses. Furthermore, under the 2018 farm bill ( 1703), for purposes of assessing the availability of individual payment limits, the definition of family member has been extended to include first cousins, nieces, and nephews. Current law also allows for special treatment of a spouse: If one spouse is determined to be actively engaged in farming, then the other spouse shall also be determined to have met the requirement. The spousal exception applies to both individual producers (as in a family farm) and producers operating within a partnership. An additional exception is made for landowners who may be deemed in compliance with all AEF requirements if they receive income based on the farm's operating results without providing labor or management. <2.3.2. Partnership AEF Requirements> In a general partnership, each member is treated separately for purposes of meeting the AEF criteria and determining eligibility. In particular, each partner with an ownership interest must contribute active personal labor and/or active personal management to the farming operation on a regular basis. The contribution must be identifiable, documentable, separate, and distinct from the contributions made by any other partner. Each partner who fails to meet the AEF criteria is ineligible to participate in the relevant farm program. <2.3.3. Corporate AEF Requirements> A corporation, as an association of joint owners, is treated as a single person for purposes of meeting the AEF criteria and determining eligibility. In addition to the AEF criteria cited for a person of sharing commensurate profits or losses and bearing commensurate risk each member with an ownership interest in the corporation must make a significant contribution of personal labor or active personal management whether compensated or not to the operation that is (a) performed on a regular basis, (b) identifiable and documentable, and (c) separate and distinct from such contributions of other stockholders or members. Furthermore, the collective contribution of corporate members must be significant and commensurate with contributions to the farming operation. If any member of the legal entity fails to meet the labor or management contribution requirements, then any program payment or benefit to the corporation will be reduced by an amount commensurate with the ownership share of that member. An exception applies if (a) at least 50% of the entity's stock is held by members that are "actively engaged in providing labor or management" and (b) the total annual farm program payments received collectively by the stockholders or members of the entity are less than one payment limitation. <2.3.4. Special Nonfamily AEF Requirements> Prior to the 2014 farm bill ( P.L. 113-79 ), the definition of active personal labor or management was broad and could be satisfied by undertaking passive activities without visiting the operation, thus enabling individuals who lived significant distances from an operation to claim such labor or management contributions. This was often seen as problematic, as passive investors were receiving farm program payments without actively contributing to the farming operation. Recent farm bills have amended the AEF criteria in an attempt to tighten the requirements. However, the issue remains controversial. In particular, the 2014 farm bill ( 1604) required USDA to add more specificity to the role that a nonfamily producer must play to qualify for farm program benefits. These AEF regulations were not changed under the 2018 farm bill. As a result of the rule, a limit is placed on the number of nonfamily members of a farming operation who can qualify as a farm manager depending on the size and complexity of the farm operation. Also, additional recordkeeping requirements now apply for each nonfamily member of a farming operation claiming active personal management status. No such limit applies to the potential number of qualifying family members. <2.4. Foreign Person or Legal Entity> Generally, foreign persons (or foreign legal entities) are eligible to participate if they meet a particular farm program's eligibility requirements. Exceptions include the four permanent disaster assistance programs Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP); Livestock Forage Disaster Program (LFP); Livestock Indemnity Program (LIP); and Tree Assistance Program (TAP) and the Noninsured Crop Disaster Assistance Program (NAP), which explicitly prohibit payments to foreign entities other than resident aliens. As of December 31, 2018, foreign persons held an interest in 31.8 million acres of U.S. agricultural land (including forest land). This accounts for 2.5% of all privately held agricultural land in the United States and approximately 1% of total U.S. land. Foreign persons or entities can become eligible for most farm program benefits if they have the requisite U.S. taxpayer ID and meet the AEF criteria discussed earlier. In the case where a foreign corporation or similar entity fails to meet the AEF criteria but has shareholders or partners with U.S. residency status, then the foreign entity may upon written request to USDA receive payments representative of the percentage ownership interest by those U.S. citizens or U.S. resident aliens that do meet the AEF criteria. Current law imposes no specific restrictions on foreign persons or entities with respect to eligibility for crop and livestock insurance premium subsidies. Also, the Dairy Margin Coverage (DMC) program makes no distinction about producer or owner citizenship. Instead, the law states that all dairy operations in the United States shall be eligible to participate in the DMC program to receive margin protection payments. Similarly, no citizenship requirement exists for a sugar processor or a cane or beet producer operating under the U.S. sugar program price guarantees. However, the sugarcane and sugar beets being processed must be of U.S. origin. <2.5. AGI Limit> Generally, means testing prohibits persons or legal entities from being eligible to receive any benefit under certain commodity and conservation programs during a crop, fiscal, or program year as appropriate if their income is above an established level. The first means test for farm programs was established by the 2002 farm bill ( P.L. 107-171 ). Income is measured by an individual's or entity's average AGI from the previous three-year period but excluding the most recent complete taxable year. A brief history of the legislative evolution of the AGI threshold is provided in Table A-2 . Means testing has recently been applied as a determining factor for the level of payment limit rather than a threshold for eligibility. Supplemental disaster assistance authorized in 2018 and 2019 uses an individual's or entity's average AGI over a three-year period to determine the total payment limits depending on how much of that income is derived from farming. This is discussed further in the " Payment Limits " section below. Recent farm bills, including the 2018 farm bill, have preserved the three-year average AGI as the relevant measure of income. Now that an AGI limit appears acceptable, the debate has shifted to which programs are covered by the means test and what income level is an appropriate threshold. <2.5.1. AGI Defined> Since most U.S. farms are operated as sole proprietorships or partnerships ( Table 1 ), most farm households are taxed under the individual income tax rather than the corporate income tax. For an individual, AGI is the Internal Revenue Service (IRS) reported AGI. AGI measures net income that is, income after expenses. Farm income is reported on the IRS Schedule F where AGI is net of farm operating expenses. For an incorporated business, a comparable measure to AGI as determined by USDA is used to measure income. Since the household is the typical unit of taxation, farm and nonfarm income are combined when computing federal income taxes for farm households. In fact, most federal income tax paid by farm households (80% in 2019) can be attributed to nonfarm income. Farm operations overwhelmingly report operating losses for tax purposes. For example, in 2015, two-thirds of farm sole proprietors reported a net farm loss for tax purposes. The substantial portion of capital investment that can be expensed in the first year is an important determinant of the large loss reporting, along with cash accounting and other practices. Program participants are required to give their consent to the IRS annually to verify that they are in compliance with their AGI limit provisions using a specific USDA form (CCC-941). Failure to provide the consent and subsequent certification of compliance results in ineligibility for program payments and a required refund of any payments already received for the relevant year. <2.5.2. Historical Development of the AGI Eligibility Limit> The 2002 farm bill ( 1604) established the initial AGI threshold for program eligibility at $2.5 million. This AGI criterion applied to most farm programs (listed in Table A-2 ). However, the 2002 farm bill included an exemption if at least 75% of AGI was from farming. The 2008 farm bill ( 1604) replaced the single AGI limit of the 2002 farm bill with three separate AGI limits that distinguished between farm and nonfarm AGI: 1. First, a nonfarm AGI limit of $500,000 applied to eligibility for selected farm commodity program benefits, including the Milk Income Loss Contract program, NAP, and the disaster assistance programs. 2. Second, a farm-specific AGI limit of $750,000 applied to eligibility for direct payments. 3. Third, a nonfarm AGI limit of $1 million but subject to an exclusion if 66.6% of total AGI was farm-related income applied to eligibility for benefits under conservation programs. However, the AGI limit could be waived in its entirety on a case-by-case basis if implementing a particular conservation program would protect environmentally sensitive land of special significance. The 2008 farm bill also added a provision for married individuals filing a joint tax return whereby the joint AGI could be allocated as if a separate return had been filed by each spouse. This would potentially allow the farmer to exclude any earned income from a spouse as well as a share of any unearned income from jointly held assets for purposes of the eligibility cap. This provision had the potential to significantly reduce the share of farms affected by the AGI cap. The 2014 farm bill ( 1605) returned the eligibility threshold to a single total AGI limit but at a level of $900,000 for individuals and incorporated businesses. It also retained the provision for married individuals filing a joint tax return to allocate the AGI as if a separate return had been filed by each spouse. In the case of a payment to a general partnership or joint venture comprising multiple individuals, the payment would be reduced by an amount that is commensurate with the share of ownership interest of each person who has an average AGI in excess of $900,000. The 2018 farm bill retained the AGI provisions from the 2014 farm bill but added the 2008 farm bill's case-by-case waiver for conservation programs that would protect environmentally sensitive land of special significance. In July 2018, USDA announced financial assistance under a new Market Facilitation Program (MFP) in response to retaliatory tariffs targeting various U.S. agricultural commodities. The MFP provides direct payments to producers of selected commodities. To qualify, USDA requires that MFP recipients meet AEF, AGI, and conservation compliance (see below) criteria. For payments under the 2018 MFP, a producer's average AGI for tax years 2014, 2015, and 2016 must be less than $900,000. However, Congress amended the AGI criterion as it applies to MFP payments in the FY2019 Supplemental Appropriations for Disaster Relief Act ( P.L. 116-20 , 103). The MFP-relevant AGI criterion was amended to (1) use the tax years 2013, 2014, and 2015 to calculate average AGI for evaluating eligibility for 2018 MFP payments and (2) allow eligibility for AGI in excess of $900,000 if at least 75% came from farming, ranching, or forestry-related activities. It is unclear if MFP payments made in 2018 under the previous AGI criteria would be re-evaluated against the new AGI specification and would then be subject to repayment if the new AGI formulation made a producer ineligible. In May 2019, USDA announced a second round of MFP payments referred to as 2019 MFP payments. To qualify, USDA requires 2019 MFP recipients to meet AEF, AGI, and conservation compliance criteria. However, the AGI criteria to assess eligibility for the 2019 MFP payments would use the 2015, 2016, and 2017 tax years. <2.6. Conservation Compliance> Two provisions highly erodible land conservation (Sodbuster) and wetland conservation (Swampbuster) are collectively referred to as conservation compliance. To be eligible for certain USDA program benefits, a producer agrees to conservation compliance that is, to maintain a minimum level of conservation on highly erodible land and not to convert or make production possible on wetlands. Conservation compliance has been in effect since the 1985 farm bill ( P.L. 99-198 ). The majority of farm program payments, loans, disaster assistance, and conservation programs are benefits that may be lost if a participant is out of compliance with the conservation requirements. The 2014 farm bill extended conservation compliance to federal crop insurance premium subsidies, and the 2018 farm bill retains this compliance requirement. Most recently, the 2018 farm bill made relatively minor amendments to the compliance provisions. Within U.S. farm policy, conservation compliance continues to be one of the only environmentally based requirements for program participation. <3. Direct Attribution of Payments> The process of tracking payments to an individual through various levels of ownership in single and multiperson legal entities is referred to as "direct attribution." Several types of legal entities may qualify for farm program payments. However, ultimately every legal entity represents some combination of individuals. For example, a joint operation can be made up of a combination of individuals, partnerships, and/or corporate entities. A particular individual may be part of each of these three component entities, as well as additional subentities within each of these components. Farm payments flow down through these arrangements to individual recipients. Congress defines legal entity as an entity created under federal or state law that (1) owns land or an agricultural commodity or (2) produces an agricultural commodity. This broad definition encompasses the multiperson legal entities discussed earlier such as family farm operations, joint ventures, corporations, and institutional arrangements. Ownership shares in a multiperson legal entity are tracked via a person's SSN or EIN as reported in CCC-901 and CCC-902. Identification at the individual payment recipient level is critical for assessing the cumulative payments of each individual against the annual payment limit. Direct attribution was originally authorized in the 2008 farm bill ( 1603(b)(3)). All farm program payments made directly or indirectly to an individual associated with a specific farming operation are combined with any other payments received by that same person from any other farming operation based on that person's pro rata interest in those other operations. It is this accumulation of an individual's payments tracked through four levels of ownership in multiperson legal entities that is subject to the annual payment limit (see text box below). The first level of attribution is an individual's personal farming operation. Subsequent levels of attribution are related to those legal entities in which an individual has an ownership share. If a person meets his or her payment limit at the first level of attribution (i.e., on his or her own personal farming operation), then any payments to legal entities at lower levels of attribution are reduced by that person's pro rata share. <4. Payment Limits> When the eligibility criteria including AEF, AGI, conservation compliance, and others are met, the cumulative benefits across certain farm programs are subject to specific annual payment limits (detailed in Table A-1 ) that can be received by an individual or legal entity in a year. Explicit payment limits date back to the 1970s. Despite their longevity, payment limits are not universal among programs. Payment limits are also enforced differently for different types of legal entities (as mentioned earlier and summarized below). For example, certain program limits may be expanded depending on the number of participants, or they may be subject to exceptions, or they may not exist. The major categories of farm program support and the applicability of annual payment limits, if any, are briefly discussed below. <4.1. Farm Support Programs Subject to Annual Payment Limits> Traditionally, much attention focuses on the annual payment limits for the Title I commodity programs, largely because this has been the conduit for the majority of farm program expenditures. Title I commodity program payment limits were first included in a farm bill in 1970 but have evolved substantially since that initial effort ( Table A-1 ). Several major farm support programs as defined by specific titles of the 2018 farm bill are currently subject to annual payment limits. Title I (Subtitle A): ARC and PLC . Payments for the two revenue-support programs Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) must be combined for all covered commodities (except peanuts) and reduced by any sequestration prior to assessing whether they are within the $125,000 annual payment limit for an individual. Peanuts are a notable exception to this rule in that ARC and PLC payments for peanuts (after sequestration) are subject to their own annual payment limit of $125,000 per individual. Title I (Subtitle E): LFP . The LFP program is subject to an annual limit of $125,000 per person. Title I (Subtitle F ) : NAP . Available for crops not currently eligible for crop insurance. Payments for catastrophic coverage are limited to $125,000 per crop year per individual or entity. Payments for additional coverage (referred to as buy-up coverage) have a separate limit of $300,000 per crop year per individual or entity. In addition to commodity programs authorized in periodic farm bills, the Secretary of Agriculture has broad authority under the CCC charter to make payments in support of U.S. agriculture. These payments may be purely ad hoc in nature, or they may be made according to a formula as part of a temporary program. Payments under this type of authority may or may not be subject to payment limits in accordance with the program's specification. Three such programs have been initiated since 2016 all subject to annual payment limits. 1. Cotton Ginning Cost Share (CGCS) Program. The CGCS program has been available only in the 2016 and 2018 crop years. Payments under the CGCS program are subject to an annual payment limit of $40,000 per person. 2. 2018 MFP. USDA established the MFP program in August 2018 as a one-time payment program to help offset the financial losses associated with lost agricultural trade to China as a result of a trade dispute with the United States. MFP payments are subject to a per-person payment limit of $125,000. However, the limit applies separately to three categories of commodities field crops (corn, sorghum, soybeans, upland cotton, and wheat); livestock (dairy and hogs); and specialty crops (shelled almonds and fresh, sweet cherries). 3. 2019 MFP. In July 2019 USDA established a second round of MFP payments, again subject to per-person payment limits but at a higher rate of $250,000 per commodity category with an overall cap of $500,000 per person. The three eligible categories included non-specialty crops (primarily grain and oilseed crops), specialty crops (selected tree nuts, cranberries, ginseng, sweet cherries, and table grapes), and livestock (hogs and dairy). When the farm program benefits for a qualifying recipient exceed the annual limits (as listed in Table A-1 ) for a given year, then that individual is no longer eligible for further benefits under that particular program during that year and is required to refund any payments already received under that program that are in excess of the relevant payment limit for that year. <4.1.1. Special Treatment of Family Farms> As mentioned earlier, family farms receive special treatment whereby every adult member 18 years or older is deemed to meet the AEF requirements and is potentially eligible to receive farm program payments in an amount up to the individual payment limit. Furthermore, under the 2018 farm bill ( 1703(a)(1)), the definition of family member was extended to include first cousins, nieces, and nephews. Thus, a family farm with a single active farm operator may still qualify for multiple payment limits based on the number of immediate and extended family members. For example, suppose that a farmer who is married with two adult children also has two neighboring married cousins, each with two children, that occasionally help out with farm work. This farm operation could potentially be eligible for 12 individual payment limits (four on the core farm operation and four from each of the cousin's families) for a total of $1.5 million in program payments. <4.1.2. Multiple Payment Limits for a Partnership> A partnership's potential payment limit is equal to the limit for a single person times the number of persons or legal entities that comprise the ownership of the joint operation plus any additional exemptions or exceptions. Adding a new member can provide one or two (with qualifying spouse) additional payment limits. Each member of a partnership or joint venture must meet the AEF criteria and must be within the AGI limit. Furthermore, the partnership's total payment limit is reduced by the share of each single member who has already met his or her payment limit (or portion thereof) on another farm operation outside of the partnership. <4.1.3. Single Payment Limit for a Corporation> A corporation is treated as a single person for purposes of determining eligibility and payment limits provided that the entity meets the AEF criteria. Adding a new member to the corporation generally does not affect the payment limit but only increases the number of members that can share a single payment limit. <4.2. Supplemental Assistance Programs Subject to Payment Limits> In FY2018 and FY2019, Congress provided several supplemental appropriations for production losses resulting from natural disasters and not covered by NAP or crop insurance. The majority of the supplemental funding has been administered by USDA through two versions of a similar program the Wildfires and Hurricanes Indemnity Program (WHIP). Losses occurring in 2017 were eligible for the "2017 WHIP." An expanded set of losses occurring in 2018 and 2019 are eligible for "WHIP Plus" (referred to as WHIP+). In addition to WHIP+, USDA implemented two other ad hoc programs the On-Farm Storage Loss Program and the Milk Loss Program as well as block grants with states. USDA established payment limits for WHIP under authority granted to the Secretary in authorizing legislation. Payment limits for 2017 WHIP and WHIP+ are based on an individual's or entity's average AGI over a three-year period depending on how much of that income is derived from farming ( Table 2 ). Producers are assumed to be in the lowest payment limit category unless an exception to the payment limit is filed using a USDA form and documentation from a certified public accountant or attorney that at least 75% of the person's or legal entity's average AGI was from adjusted gross farm income. Unlike the aforementioned AGI consent form (CCC-941), verification of payment limit exceptions is not submitted to the IRS for the WHIP programs. Direct attribution applies for both payment limits and determining average AGI. <4.3. Conservation Programs Subject to Payment Limits> Limits on conservation programs have existed long before limits on farm support programs have. Most current conservation programs include some limit on the amount of funding a participant may receive, but these limits vary by program. Some programs have multiple limits that vary based on activity or practice implemented. Several major conservation programs in Title II of the 2018 farm bill are currently subject to payment limits. Conservation Reserve Program (CRP) . Payments for CRP can vary based on the type of contract and type of payment. In general, annual rental payments for general enrollment contracts and continuous enrollment contracts are limited to 85% and 90% of the average county rental rate, respectively, and not more than $50,000 total per year. Cost-share payments and incentive payments are also limited and may be waived or applied at different levels under subprograms of CRP, such as land enrolled under the Conservation Reserve Enhancement Program or the Soil Health and Income Protection Pilot. Environmental Quality Incentives Program (EQIP). Total cost-share and incentive payments are limited to $450,000 for all EQIP contracts entered into by a person or legal entity between FY2019 and FY2023. Additional limits apply to select EQIP contract payments, including incentive contract payments, which are limited to a total of $200,000 between FY2019 and FY2023; payments for EQIP conservation practices related to organic production, which are limited to a total of $140,000 between FY2019 and FY2023; and eligible water management entity payments, which are limited to a total of $900,000 between FY2019 and FY2023. Conservation Stewardship Program (CSP). A person or legal entity may not receive more than a total of $200,000 for all CSP contracts between FY2019 and FY2023. A CSP contract with any joint operation is limited to $400,000 over the term of the contract period. These limits do not apply to the CSP Grassland Conservation Initiative, in which annual payments are limited to $18 per acre, not to exceed the number of base acres on a farm. <4.4. Exceptions That Avoid Payment Limits> Payments under certain Title I and Title II programs in the 2018 farm bill are excluded from annual payment limits. These exceptions are described below. Another exception to payment limits could result if the principal operator or a major partner of a farm operation dies during the course of a program year and any associated program benefits for the deceased are transferred to another farm operator or partner. <4.4.1. Selected Farm Programs Without Payment Limits> Certain farm programs are not subject to annual payment limits. This includes any benefits obtainable under the Marketing Assistance Loan (MAL) program, the sugar program, the dairy program, and three of the four disaster assistance programs (ELAP, LIP, and TAP). Also, benefits from crop insurance premium subsidies and indemnity payments on loss claims are not subject to any limits. Finally, any payments made under the Emergency Watershed Protection Program (EWP) are not subject to payment limits. Title I (Subtitle B) MAL program. Benefits under the MAL program include loan deficiency payments (LDP), marketing loan gains (MLG), and gains under forfeiture or commodity certificate exchanges. Traditionally, MAL benefits in the form of LDPs and MLGs have been subject to payment limits, whereas MAL benefits derived from forfeiting to the CCC the quantity of a commodity pledged as collateral for a marketing assistance loan or from use of commodity certificates to repay a marketing assistance loan have traditionally been excluded from payment limits. However, the 2018 farm bill ( 1703(a)(2)) excluded all MAL benefits from payment limits. Title I (Subtitle C) sugar program. The U.S. sugar program does not rely on direct payments from USDA and generally operates with no federal budget outlays. Instead, the sugar program provides indirect price support to producers of sugar beets and sugarcane and direct price guarantees to the processors of both crops in the form of a marketing assistance loan at statutorily fixed prices. Congress has directed USDA to administer the U.S. sugar program at no budgetary cost to the federal government by limiting the amount of sugar supplied for food use in the U.S. market, thus indirectly supporting market prices. This indirect subsidy is implicit and not subject to budgetary restrictions. Furthermore, there is no citizenship requirement for a sugar processor, but the sugarcane and sugar beets being processed under the U.S. sugar program price guarantees must be of U.S. origin. Title I (Subtitle D) dairy program . The margin-based dairy support program was first established under the 2014 farm bill ( 1401-1431) without payment limits as the Margin Protection Program (MPP) for dairy. The MPP was revised and renamed as the Dairy Margin Coverage (DMC) program by the 2018 farm bill. Under the DMC, participants benefit from two potential types of support: an implicit premium subsidy and an indemnity-like payment made when program price triggers are met. The fees or premiums charged for participating in the DMC are set in statute rather than being set annually based on historical data and market conditions. Thus, the subsidy is implicit to the premium paid with no limit on the level of participation. Similarly, any payments made under the DMC are not subject to payment limits. Title I (Subtitle E ) disaster assistance program s: ELAP, LIP, and TAP . Payments under three of the disaster assistance programs in Title I of the 2018 farm bill are excluded from any payment limits. This includes ELAP, LIP, and TAP. Title II conservation programs. Total payments under certain conservation programs are limited to the value or cost of the specific conservation measure that the program is paying for rather than a fixed limit. Under the Agricultural Conservation Easement Program and the EWP program, payments are limited to a portion of the total cost of the easement or project rather than a total funding amount. In the case of the Regional Conservation Partnership Program (RCPP), USDA may make payments to producers in an amount necessary to achieve the purposes of the program with no statutory limit on the total amount. Title XI crop- and livestock-related insurance premium subsidies and indemnity payments . The principal support provided for farmers under the federal crop insurance program are federal premium subsidies for both catastrophic and buy-up insurance coverage. Premium subsidies are not subject to any limit on the level of participation or underlying value. Crop insurance indemnities are payments made to cover insurable losses and thus are not subject to any payment limit. To be eligible to purchase catastrophic risk protection coverage, the producer must be a "person" as defined by USDA, and to be eligible to purchase any other plan of insurance (such as buy-up coverage, among others), the producer must be at least 18 years of age and have a bona fide insurable interest in a crop as an owner-operator, landlord, tenant, or sharecropper. <4.4.2. Death of a Principal Operator> A noteworthy exception to payment limits may occur if the principal operator should die during the crop year. In particular, payments received directly or indirectly by a qualifying person (i.e., someone who meets AEF, AGI, and any other eligibility requirements) may exceed the applicable limitation if all of the following apply: ownership interest in farmland or agricultural commodities was transferred because of death, the new owner is the successor to the previous owner's contract, and the new owner meets all other eligibility requirements. This provision also applies to an ownership interest in a legal entity received by inheritance if the legal entity was the owner of the land enrolled in an annual or multiyear farm program contract or agreement at the time of the shareholder's death. The new owner cannot exceed the payment amount that the previous owner was entitled to receive under the applicable program contracts at the time of death. However, the new payment limit associated with this transfer would be in addition to the payment limit of the person's own farm operation. If the new owner meets all program and payment eligibility requirements, this provision applies for one program year for ARC and PLC. This reflects the idea that individual resources were committed by both farming operations (the deceased's and the inheritor's) during the growing season with no expectation of death and that individual payment limits should reflect that resource commitment and not impose an unnecessary and unexpected burden on the inheritor. <5. Issues for Congress> Limitations on farm program payments raise a number of issues that have led to debate among farm policymakers and agricultural stakeholders and may continue to be of interest to Congress as it considers issues of equity and efficiency in farm programs. <5.1. Payment Limits and Market Signals> Theoretically, market prices based on relative supply and demand conditions under competitive market conditions provide the most useful signals for allocating scarce resources. In other words, in a situation where no policy support is available, most producers would make production decisions based primarily on market conditions. If these conditions hold, then tighter payment limits (i.e., a smaller role for government support policies and production incentives) would imply that more land would be farmed based on market conditions and less land would be farmed based on policy choices. Supporters of payment limits use both economic and political arguments to justify tighter limits. Economically, they contend that large payments facilitate consolidation of farms into larger units, raise the price of land, and put smaller, family-sized farming operations and beginning farmers at a disadvantage. Even though tighter limits would not redistribute benefits to smaller farms, they say that tighter limits could help indirectly by reducing incentives to expand, thus potentially reducing upward price pressure on land markets. This could help small and beginning farmers buy and rent land. Politically, they believe that large payments undermine public support for farm subsidies and are costly. In the past, newspapers have published stories critical of farm payments and how they are distributed to large farms, nonfarmers, or landowners. Limits increasingly appeal to urban lawmakers and have advocates among smaller farms and social interest groups. Critics of payment limits (and thus supporters of higher limits or no limits) counter that all farms are in need of support, especially when market prices decline, and that larger farms should not be penalized for the economies of size and efficiencies they have achieved. They say that farm payments help U.S. agriculture compete in global markets and that income testing is at odds with federal farm policies directed toward improving U.S. agriculture and its competitiveness. In addition to these concerns, this section briefly reviews other selected payment limit issues and eligibility requirements. <5.2. Distributional Impacts on Farm Size> The majority of farm payments go to a small share of large operators. According to USDA's 2017 Agricultural Census, farms with market revenue equal to or greater than $250,000 accounted for 12% of farm households but produced 90% of the value of total U.S. agricultural production and received 62% of federal farm program payments. Selecting a particular dollar value as a limit on annual government support payments involves a fundamental choice about who should benefit from farm program payments. This has important, but complex, policy implications. For example, numerous academic studies have shown that government payments are usually capitalized into cropland values, thus raising rental rates and land prices. Higher land values disfavor beginning and small farmers, who generally have limited access to capital. As a result, critics contend that there is a lack of equity and fairness under the current system of farm program payments that appears to favor large operations over small and that payment limits are really about farm size. In contrast, supporters of the current system argue that larger farms tend to be more efficient operators and that altering the system in favor of smaller operators may create inefficiencies and reduce U.S. competitiveness in international markets. Furthermore, they contend that tightening payment limits will have different effects across crops, thus resulting in potentially harmful regional effects. <5.3. Potential Crop and Regional Effects of Tighter Payment Limits> Tighter payment limits do not affect all crops and regions equally. As limits are tightened, they will likely first impact those crops with higher per-unit and per-acre production value. Among the major U.S. program crops, higher valued crops include rice, peanuts, and cotton, all of which tend to be produced in the Southeast, the Mississippi Delta, and western states. Furthermore, payment limits may influence local economic activity. In particular, payment limits are likely to have a larger economic impact in regions where agricultural production accounts for a larger share of economic output that is in rural, agriculture-based counties and where there may be fewer opportunities for diversification to offset any payment-limit-induced reduction in agricultural incomes. <5.4. Separate Payment Limit for Peanuts> Under current law, peanuts have a separate program payment limit a consequence of the 2002 federal quota buyout ( P.L. 107-171 , 1603). This separate payment limit affords peanut production an advantage over production of other program crops that are subject to combined payments for ARC and PLC under a single limit. As a result of this feature, a farmer who grows multiple program crops including peanuts has essentially two different program payment limits: 1. $125,000 per person for an aggregation of ARC and PLC program payments made to all program crops other than peanuts, and 2. $125,000 per person for ARC and PLC program payments made exclusively to peanuts. Thus, under an extreme scenario involving large payments for both peanuts and other program crops, this could potentially double a peanut farmer's payment limits to as much as $250,000. <5.5. No Payment Limit on MAL Benefits> The 2018 farm bill ( 1703) excluded MAL benefits from any payment limit while also raising the MAL rates for several program crops ( 1202), including barley, corn, grain sorghum, oats, extra-long-staple cotton, rice, soybeans, dry peas, lentils, and small and large chickpeas. Raising MAL rates has two potential program effects. First, since MAL rates function as floor prices for eligible loan commodities, higher rates increase the potential for greater USDA outlays under MAL. Second, MAL rates are used to establish the floor price in calculating the maximum payment under PLC. Thus, raising the loan rate for a program commodity lowers its potential PLC program payment rate. The absence of a limit on benefits received under the MAL program creates the potential for unlimited, fully coupled USDA farm support outlays. As a result, an apparent equity issue emerges when comparing program benefits of a producer facing a hard cap for ARC and PLC payments as compared to a producer with access to MAL benefits. Because MAL payments are fully coupled that is, tied to the production of a specific crop MAL program outlays count directly against U.S. amber box spending limits under World Trade Organization (WTO) commitments. To the extent that such program outlays might induce surplus production and depress market prices, they could result in potential challenges under the WTO's dispute settlement mechanism. <5.6. Policy Design Considerations> When eligibility requirements or payment limits are changed, economically rational producers are likely to alter their behavior to make adjustments to optimize net revenue under the new set of policy and market circumstances. For example, new eligibility requirements or tighter payment limits may result in a reorganization of the farm operation to increase the number of eligible persons or to lower the income that counts against a new AGI limit or the farm program payments that count against a smaller payment limit; a change in the crop and program choices or marketing practices, for example, to take advantage of the absence of a payment limit on MAL benefits; a change in crop choices, as agronomic and marketing opportunities allow, to favor a crop with an expanded limit (e.g., peanuts) over crops with more restricted program payment opportunities; or a change in land use, such as instead of farming the same acreage, renting out or selling some land to farmers who have not hit their payment limits. Payment limits applied per unit or per base acre represent an alternative to per-person payment limits that may mitigate some potential distortions to producer behavior. An example of such a per-unit payment limit is the 85% payment reduction factor applied to base acres receiving payments under either the PLC or ARC programs. The reduction factor is applied equally across all program payments irrespective of crop choice, farm size, AGI, or total value of payments. Some economists contend that such a payment reduction factor is generally applied for cost-saving reasons rather than for "fairness" or equity reasons that at least partially motivate per-person payment limits. <5.7. AGI Limit Concerns: On- versus Off-Farm Income> The 2018 farm bill retained the $900,000 AGI limit established under the 2014 farm bill. This AGI limit applies to all farm income whether earned on the farm or off. Under the 2008 farm bill, the AGI limit was divided into two components: a $500,000 AGI limit for farm-earned income and a $750,000 AGI cap on nonfarm-earned income. Analysis by USDA (2016) found that fewer farms are affected by the single AGI cap ($900,000) compared with the multiple farm ($500,000) and nonfarm ($750,000) AGI caps of the 2008 farm bill. For example, while federal income tax data are not available for the $900,000 cap level, published data from 2013 a year of record-high farm income found that only about 0.7% of all farm sole proprietors and share rent landlords reported total AGI in excess of $1 million. Thus, it is likely that consolidating the separate AGI farm and nonfarm limits into a single AGI limit with a higher bound has restored eligibility for farm program payments to some farm operations that had previously been disqualified. Other major exemptions from the AGI limit include state and local governments and agencies, federally recognized Indian tribes, and waivers under RCPP. The 2014 farm bill shifted the farm safety net focus away from traditional revenue support programs and toward crop insurance programs, which are not subject to the AGI cap. The 2018 farm bill maintains this emphasis on crop insurance as the foundational farm safety net program. During the eight-year period of 2011-2018, federal crop insurance premium subsidies averaged $6.4 billion annually. Extending the AGI cap to crop insurance subsidies was considered during both the 2014 and 2018 farm bill debates. However, concerns were raised that the elimination of subsidies for higher-income participants could affect overall participation in crop insurance and damage the soundness of the entire program. However, USDA has estimated that in most years, less than 0.5% of farms and less than 1% of premiums would be affected by the $900,000 income cap if it were extended to crop insurance subsidies as well as to farm program payments. Appendix A. Appendix B. Supplementary Tables

Under the Agricultural Improvement Act of 2018 ( P.L. 115-334 , 2018 farm bill), U.S. farm program participants—whether individuals or multiperson legal entities—must meet specific eligibility requirements to receive benefits under certain farm programs. Some requirements are common across most programs, while others are specific to individual programs. In addition, program participants are subject to annual payment limits that vary across different combinations of farm programs. Since 1970, Congress has used various policies to address the issue of who should be eligible for farm payments and how much an individual recipient should be permitted to receive in a single year. In recent years, congressional policy has focused on tracking payments through multiperson entities to individual recipients (referred to as direct attribution), ensuring that payments go to persons or entities actively engaged in farming (AEF), capping the amount of payments that a qualifying recipient may receive in any one year, and excluding farmers or farming entities with large average incomes from payment eligibility. Every participating person or legal entity that participates in a farm program must submit identification information. Other eligibility requirements—which may vary across programs—include U.S. citizenship; the nature and extent of an individual's participation (i.e., AEF criteria), including ownership interests in multiperson entities and personal time commitments (whether as labor or management); means testing (persons with combined farm and nonfarm adjusted gross income [AGI] in excess of $900,000 are ineligible for most program benefits); and conservation compliance requirements. For example, under the FY2019 Additional Supplemental Appropriations for Disaster Relief Act ( P.L. 116-20 ), the AGI requirement as it applies to payments under the Market Facilitation Program may be waived if at least 75% of AGI is from farming, ranching, or forestry-related activities. In general, foreign persons (or foreign legal entities) are eligible to participate in farm programs if they meet the eligibility requirements. Exceptions are the four permanent disaster assistance programs created under the 2014 farm bill ( P.L. 113-79 ) and the Noninsured Crop Disaster Assistance program (NAP), which exclude nonresident aliens. Current law requires tracking payments through four levels of ownership in multiperson legal entities to the individual recipients. Current payment limits include a cumulative limit of $125,000 for all covered commodities under the Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) support programs, with the exception of peanuts, which has its own $125,000 limit. Only one permanent disaster assistance program—the Livestock Forage Disaster Program (LFP)—is subject to a payment limit ($125,000 per crop year). NAP is also subject to a $125,000 per crop year limit per person for catastrophic coverage. Family farms receive special treatment with respect to payment limits—every adult member (18 years or older) is deemed to meet the AEF requirements and is potentially eligible to receive farm program payments in an amount up to the individual payment limit. Furthermore, the 2018 farm bill extended the definition of family member to include first cousins, nieces, and nephews. Thus, a family farm with a single active farm operator may still qualify for multiple payment limits based on the number of immediate and extended adult family members. Congress addresses program eligibility and payment limit issues in periodic farm legislation. Supporters of payment limits contend that large payments facilitate consolidation of farms into larger units, raise the price of land, and put smaller, family-sized farming operations and beginning farmers at a disadvantage. In addition, they argue that large payments undermine public support for farm subsidies and are costly. Critics of payment limits counter that all farms need support, especially when market prices decline, and that larger farms should not be penalized for the economies of size and efficiencies they have achieved. Further, critics argue that farm payments help U.S. agriculture compete in global markets and that income testing is at odds with federal farm policies directed toward improving U.S. agriculture and its competitiveness. Congress may continue to address these issues, as well as related questions, such as: How does the current policy design of payment limits relate to their distributional impact on crops, regions, and farm size? Is there an optimal aggregation of payment limits across commodities or programs? Do unlimited benefits under the Marketing Assistance Loan (MAL) program reduce the effectiveness of overall payment limits?

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<1. Introduction> The primary source of federal aid in support of elementary and secondary education is the Elementary and Secondary Education Act (ESEA) particularly its Title I-A program, which authorizes federal aid for the education of disadvantaged students. The ESEA was initially enacted in 1965 (P.L. 89-10) "to strengthen and improve educational quality and educational opportunities in the Nation's elementary and secondary schools." It was most recently comprehensively amended and reauthorized by the Every Student Succeeds Act (ESSA; P.L. 114-95 ), which was enacted "to ensure that every child achieves." The ESSA authorized appropriations for ESEA programs through FY2020. FY2020 appropriations for ESEA programs were $25.9 billion. The ESSA also enacted a series of revisions to educational accountability requirements that are applicable to recipients of ESEA funds. Under Title I-A of the ESEA, as amended by the ESSA, if a state accepts Title I-A funds then the state, its local educational agencies (LEAs), and its public schools are required to focus on educational accountability as a condition of receiving federal grant funds. States, LEAs, and individual public schools are held accountable for monitoring and improving achievement outcomes for students and closing achievement gaps. Each state is required to have content standards, academic achievement standards, and aligned assessments in reading/language arts (RLA), mathematics, and science for specific grade levels. States must also have an accountability system that incorporates (1) long-term and interim performance goals for specified measures; (2) weighted indicators based, in part, on these goals; and (3) an annual system for meaningful differentiation that is used to identify schools that need additional support to improve student achievement. These academic accountability requirements must be detailed in each state's Title I-A state plan. Each state educational agency (SEA) is required to submit a state plan delineating its academic accountability system, among other state plan requirements, for approval by the U.S. Department of Education (ED) in order to receive Title I-A funds. This plan must be developed by the SEA with "timely and meaningful consultation" with other education stakeholders, including the governor, the state board of education, members of the state legislature, school staff, and parents. The plan must be peer-reviewed through a process established by the Secretary of Education (hereinafter referred to as the Secretary) and then approved by the Secretary. The state plan will remain in effect for the duration of the state's participation in Title I-A and must be periodically reviewed and revised as necessary by the SEA to reflect any changes in the state's strategies or programs under Title I-A. As part of this plan, the SEA is required to provide information on its standards, assessments, and academic accountability system. State plans can be submitted for individual formula grant programs or, if permitted by the Secretary, the SEA may submit a consolidated state plan based on requirements established by the Secretary. Following the enactment of the ESSA, all SEAs submitted consolidated state plans. The Secretary has approved these plans for all 50 states, the District of Columbia, and Puerto Rico. This report discusses the Title I-A requirements related to academic standards, assessments, and state accountability systems that are in effect under current law. This is followed by a brief discussion of special rules that apply to schools operated or funded by the Bureau of Indian Education (BIE), and an examination of SEA and LEA report card and reporting requirements related to standards, assessments, and accountability systems. Frequently asked questions (FAQs) related to each of these areas are included at the end of the report. <2. Academic Standards> As a condition of receiving Title I-A funds, each state must have state standards in specific subject areas that meet certain requirements. This section discusses general requirements related to standards, as well as alternate achievement standards for students with the most significant cognitive disabilities and English language proficiency standards. <2.1. General Requirements Related to Academic Standards> Each state receiving Title I-A funds is required to provide an assurance in its state plan that it has adopted challenging academic content standards and aligned academic achievement standards in RLA, mathematics, and science (and any other subject selected by the state). The achievement standards must include at least three levels of achievement (e.g., basic, proficient, and advanced). Except as discussed below, the same standards and achievement levels must be applied to all public schools and all public school students. The standards must include the same knowledge, skills, and levels of achievement expected of all public school students in the state. In addition, states are required to demonstrate that these academic standards are aligned with entrance requirements for credit-bearing coursework in the state's system of public higher education and relevant state career and technical education standards. <2.2. Alternate Achievement Standards> States may adopt alternate achievement standards for students with the most significant cognitive disabilities. The term most significant cognitive disabilities is not defined in federal legislation. States are required to define the term relative to a student's cognitive functioning and adaptive behavior. Alternate achievement standards must be aligned with state academic content standards, promote access to the general education curriculum, and reflect professional judgment as to the highest possible standards achievable by such students. The standards must be designated for use in the student's individualized education program (IEP) and developed in accordance with the Individuals with Disabilities Education Act (IDEA). Alternate achievement standards must also ensure that a student is on track to pursue postsecondary education or employment. <2.3. English Language Proficiency Standards> States must adopt English language proficiency (ELP) standards that cover the four domains of language: speaking, listening, reading, and writing. The standards must address different proficiency levels of English learners (ELs) and be aligned with the state academic content standards. <3. Academic Assessments> States must implement a set of high-quality academic assessments in mathematics, RLA, science, and any other subject chosen by the state. The assessments must be the same academic assessments used to measure the achievement of all public elementary and secondary schools in the state and be administered to all students in the state within the required grades and subjects. <3.1. General Requirements Related to Assessments> Academic assessments must be aligned with state academic content standards and provide coherent and timely information about student attainment of the academic standards and whether a student is performing at grade level. The state assessments must be the same for all public elementary and secondary school students in the state. Assessments must be used for purposes for which they are reliable and valid and be of adequate technical quality for each purpose required by the ESEA. Assessments must objectively measure academic achievement, knowledge, and skills without assessing personal or family beliefs and attitudes. They must involve multiple up-to-date measures of student academic achievement, including measures that assess higher-order thinking. Assessments may be administered through a single summative assessment or through multiple statewide interim assessments during the academic year that result in a single summative score. The format of assessments may be "partially delivered" in the form of portfolios, projects, or extended performance tasks. In general, a state is required to administer mathematics and RLA assessments in grades 3 through 8 and once in high school. For science, the assessment must be administered at least once in each of three grade spans (3-5, 6-9, and 10-12). For any other subjects chosen by the state, assessments are administered at the discretion of the state. Thus, for any given school year, a state must administer 17 assessments to comply with these Title I-A requirements but no student would be required by federal legislation to take more than 3 assessments (mathematics, RLA, and science). The assessments must allow for the participation of all students, including students with disabilities and ELs by using principles of universal design and allowing appropriate accommodations. States, however, may exempt students with the most significant cognitive disabilities, provided these students participate in an alternate assessment based on alternate achievement standards. States may provide the RLA assessment in another language or form for ELs if (1) a student has attended school in the United States for less than three consecutive years, and (2) doing so "would likely yield more accurate and reliable information on what such student knows and can do." Furthermore, an LEA may, on a case-by-case basis, extend the time period during which a student is assessed in a language other than English by up to an additional two years if the student has not reached a level of English language proficiency sufficient to yield valid and reliable results on a test administered in English. Under the ESEA, states are required to use assessment results for accountability purposes, reporting purposes, or both. Assessment results for accountability purposes inform the statewide accountability system. Some assessment results are used for reporting purposes only and have no bearing on the statewide accountability system. For accountability purposes, assessments must enable results to be disaggregated within the SEA, LEAs, and schools by the following groups (commonly referred to as subgroups ): (1) each major racial and ethnic group, (2) economically disadvantaged students compared to students who are not economically disadvantaged, (3) students with disabilities compared to students without disabilities, and (4) English proficiency status. For reporting purposes, in addition to the four aforementioned subgroups of students, assessment results must also be disaggregated by gender, migrant status, homeless status, foster care status, and whether a student has a parent who is a member of the Armed Forces on active duty, including a parent on full-time National Guard duty. For reporting purposes, assessments must also provide for timely individual student reports regarding achievement that allow parents, teachers, principals, and other school leaders to understand and address specific academic needs of a student. Individual student reports of achievement must allow for itemized score analyses to assist LEAs and schools in addressing the needs of students based on their responses to specific assessment items, provided that personally identifiable information is not publicly disclosed. <3.2. Assessments for English Learners> States must include all ELs in their statewide assessment systems and disaggregate results for these students. Under certain circumstances, the ESEA allows ELs to participate in assessments in a language other than English. ELs also participate in other English language proficiency assessments. ELs participate in statewide assessment and accountability systems in different ways, depending on their level of language proficiency and number of years of schooling in the United States. The following sections describe the statutory requirements regarding the assessment of ELs. <3.2.1. Language Assessments for English Learners> Each state plan must identify languages other than English that are spoken "to a significant extent" in the student population of the state and indicate the languages for which state assessments are not available and are needed. The state must make every effort to develop such assessments that are needed. The state may request assistance from the Secretary to identify appropriate assessments, but the Secretary shall not mandate a specific assessment. <3.2.2. English Proficiency Assessments> Each state plan must demonstrate that LEAs will administer an annual assessment of English proficiency of all ELs in the schools served by the SEA. Such assessments must be aligned with the state's ELP standards. Regulations reiterate that English proficiency assessments must be administered annually in each domain (reading, writing, speaking, and listening) for all ELs in kindergarten through grade 12 served by the LEA. ELP scores from previous years may not be banked and counted as proficient for a student in the following year. For example, proficient listening scores and speaking scores cannot be banked in first grade and allow for an EL to be administered only reading and writing assessments in the following year. All domains must be assessed annually. <3.2.3. Exceptions for Recently Arrived English Learners> The ESEA includes provisions regarding recently arrived ELs. As was previously permitted prior to the enactment of the ESSA, a state may exclude an EL from one administration of the RLA assessment if the student has been enrolled in school in the United States for less than 12 months and may exclude the EL's performance on the mathematics or ELP assessment for the first year of the EL's enrollment in school for accountability purposes. However, the EL does still have to participate in the mathematics and ELP assessments. The ESSA added a second option regarding the assessment of recently arrived ELs. A state may choose to assess and report the performance of a recently arrived EL on the statewide RLA and mathematics assessments for each year of the student's enrollment. However, for the first year of the student's enrollment, the state may exclude his or her results on the RLA and mathematics assessments from the state's accountability system. In the second year of the student's enrollment, the state must include a measure of student growth on the RLA and mathematics assessments. In the student's third year of enrollment and all subsequent years, the state must include his or her performance on the RLA and mathematics assessments in the state's accountability system. The results of statewide academic assessments must be disaggregated for ELs. A state may include the scores of formerly identified ELs in the EL subgroup for a period of four years after the student ceases to be identified an EL. That is, once an EL becomes proficient in English, his or her score may still be included in the "EL subgroup" for RLA and mathematics assessment results for four years. <3.3. Assessments for Students with Disabilities> States are required to include all students with disabilities in the statewide assessment system. Furthermore, states are required to disaggregate assessment results for students with disabilities. The majority of students with disabilities participate in the general academic assessment with their peers. However, the ESEA allows students with the most significant cognitive disabilities to participate in an alternate assessment based on alternate achievement standards. The following sections describe the statutory requirements regarding the assessment of students with disabilities. <3.3.1. Alternate Assessments for Students with the Most Significant Cognitive Disabilities> Students with the most significant cognitive disabilities may be eligible to participate in an alternate assessment. As mentioned above, the term most significant cognitive disabilities is not defined in federal legislation. States are required to define the term relative to a student's cognitive functioning and adaptive behavior. The IEP team for a student with a disability determines when the student shall participate in an alternate assessment, using guidelines provided by the state. In this situation, parents must be notified (1) that their child's achievement will be measured with an alternate assessment based on alternate achievement standards, and (2) how participation in an alternate assessment may affect the attainment of a regular high school diploma. A state must ensure that alternate assessments are administered in accordance with ESEA requirements. Alternate assessments must be aligned with alternate achievement standards. The ESEA requires that within a state, the number of students assessed in each subject with alternate assessments does not exceed 1% of the total number of students in the state who are assessed in that subject. A state may request a waiver from the Secretary to exceed the 1% cap. The 1% cap, however, does not apply at the LEA level. An LEA may administer alternate assessments to more than 1% of students, provided that the LEA submits information to the SEA justifying the need to exceed the cap. More specifically, if a state anticipates that it will exceed the 1% cap, it must submit a waiver request to the Secretary. The waiver request must meet the following criteria: It must be submitted at least 90 days prior to the start of the state's testing window. It must include (1) the number and percentage of students in each subgroup of students who took the alternate assessment, and (2) data demonstrating that the state has measured the achievement of at least 95% of students in the "children with disabilities" subgroup for all grades in which the alternate assessment is administered. It must include state assurances that the state is appropriately monitoring its LEAs. If an LEA anticipates that it will assess more than 1% of students with disabilities using an alternate assessment, the state must ensure that the LEA followed the state's guidelines and the LEA will address any issues of disproportionality in the percentage of students participating in alternate assessments. It must include a plan and timeline for improving the implementation of state guidelines regarding alternate assessments. Such a plan may include revising the definition of students with the "most significant cognitive disabilities." The state must take additional steps to support LEAs and describe how LEAs that assess more than 1% of students will be monitored and evaluated. The state will address any disproportionality in the percentage of students participating in alternate assessments. If the state is requesting to extend the waiver for an additional year, the state must meet all requirements described above and demonstrate substantial progress towards achieving each component of the prior year's plan and timeline. The use of alternate assessments must be consistent with tenets of IDEA that emphasize that students with disabilities have access to the general education curriculum. That is, if a student is selected to participate in an alternate assessment, he or she must not be excluded from involvement and progress within the general education curriculum. The state must also describe within the state plan (1) how it has incorporated universal design in alternate assessments, and (2) that general and special educators know how to administer the alternate assessment and provide appropriate accommodations. <3.4. State and Local Flexibility in Assessment> The ESEA, as amended by the ESSA, provides for some additional flexibility in assessment systems. New provisions allow states to (1) administer advanced mathematics assessments in middle school, (2) administer locally selected assessments in high school, (3) administer computer adaptive assessments, and (4) design an innovative assessment and accountability program. The following sections describe each flexibility. <3.4.1. Advanced Mathematics Assessments in Middle School> A state may exempt any 8 th -grade student from the regular mathematics assessment if the student participates in a more advanced end-of-course assessment that can be used to measure mathematics achievement within the state's Title I-A accountability system. This flexibility allows the state to avoid double testing students who take advanced mathematics courses in 8 th grade. When the student is in high school, however, he or she must take another mathematics end-of-course or other assessment that is more advanced than the assessment administered in middle school and is used to determine a student's mathematics proficiency in grades 9-12 for Title I-A accountability purposes. <3.4.2. Locally Selected Assessments> An LEA may administer a locally selected, nationally recognized high school academic assessment (hereinafter referred to as a locally selected high school assessment ) in lieu of the state test in high school, provided that the assessment has been approved by the state. Though specific locally selected high school assessments are not referenced in legislation, education groups posit that the term generally refers to the SAT and ACT, as well as several other types of assessments, such as Advanced Placement or International Baccalaureate exams, ACCUPLACER, and the Armed Services Vocational Aptitude Battery (ASVAB). If a state has already approved one of the above mentioned assessments as the high school assessment used for accountability, the LEA is not required to request using it. For example, if the SAT or ACT is already approved as the statewide assessment in high school, an LEA would not need to request its use as a locally selected high school assessment. In other cases where a state uses a state assessment, such as PARCC or Smarter Balanced, the LEA may request the use of another test like the SAT or ACT in lieu of the state test provided the assessment meets the requirements discussed below. Before LEAs may use this flexibility, the state must approve the assessment for use. The SEA is required to establish technical criteria to determine whether a locally selected high school assessment meets the requirements of the statutory flexibility. At a minimum, the SEA must (1) conduct a review of the assessment to determine whether it meets or exceeds the technical criteria established by the SEA, (2) submit evidence for peer review, and (3) approve such assessment for selection and use by any LEA that requests to use it. To receive approval from the SEA, a locally selected high school assessment must meet the following criteria: be aligned with the state's academic content standards, address the depth and breadth of the standards, and be equivalent to the state assessment with regard to content coverage, difficulty, and quality; provide comparable, valid, and reliable data on academic achievement as compared to the state assessment (for all students and each subgroup of students) and results must be expressed in terms consistent with the state academic achievement standards; meet the general requirements of assessment systems, including technical criteria, with the exception that the locally selected high school assessment need not be the same assessment used for all students in the state and administered to all students in the state; and provide unbiased, rational, and consistent differentiation between schools within the state. The LEA may choose to submit a locally selected high school assessment to the SEA for approval. If the LEA requests to use a locally selected high school assessment, it must notify parents of its request and, upon approval of the request and at the beginning of each subsequent school year in which the assessment is used, inform them that the locally selected high school assessment is different from the state high school assessment. <3.4.3. Computer Adaptive Assessments> States may develop and administer computer adaptive assessments, provided that these assessments meet the general requirements of state assessment systems. A computer adaptive assessment can measure a student's academic ability above and below the student's current grade level. Because of this assessment property, the ESEA specifies additional requirements to ensure compliance with the general assessment requirements. The provision allowing states to use computer adaptive assessments clarifies that the language in Section 1111(b)(2)(B)(i) requiring that all students participate in same academic assessment shall not be interpreted as requiring that all students be administered the same assessment items. The computer adaptive assessment must, at a minimum, measure each student's academic proficiency with respect to state academic standards for the student's grade level and growth toward such standards. Once the assessment has measured the student's proficiency at grade level, it may measure the student's level of academic proficiency above or below his or her grade level. States may use computer adaptive assessments for students with the most significant cognitive disabilities, provided that the assessments (1) meet the legislative requirements for alternate assessments, and (2) assess the student's academic achievement and whether the student is performing at grade level. States may also use computer adaptive assessments to assess English language proficiency, provided that the assessments (1) meet the requirements for the assessment of English language proficiency, and (2) assess the student's language proficiency, which may include growth towards proficiency. <3.4.4. Innovative Assessment and Accountability Demonstration Authority> ESEA, Section 1204 includes a new demonstration authority for the development and use of an innovative assessment system . Over time, the innovative assessment system could replace assessments required by Title I-A. States or consortia of states may apply for the demonstration authority to develop an innovative assessment system that "may include competency-based assessments, instructionally embedded assessments, interim assessments, cumulative year-end assessments, or performance based assessments that combine into an annual summative determination for each student" and "assessments that validate when students are ready to demonstrate mastery or proficiency and allow for differentiated student support based on individual learning needs." A maximum of seven SEAs, including not more than four states participating in consortia, may receive this authority. Separate funding is not provided under the demonstration authority; however, states may use formula and competitive grant funding provided through the State Assessment Grant program to carry out this demonstration authority. States and consortia may apply for an initial demonstration period of three years to develop innovative assessment systems and implement them in a subset of LEAs. If the initial demonstration period is successful, states and consortia may apply for a two-year extension in order to transition the innovative assessment system into statewide use by the end of the extension period. If the SEA meets all relevant requirements and successfully scales the innovative assessment system for statewide use, the state may continue to operate the innovative assessment system. In general, applications for the demonstration authority must show that the innovative assessments meet all the general requirements of Title I-A state assessments discussed above. The only explicit differences between state assessment systems and innovative assessment systems are the format of the innovative assessment (i.e., competency-based assessments, instructionally embedded assessments, interim assessments, cumulative year-end assessments, and performance-based assessments) and that the reporting of results from the innovative assessments may be expressed in terms of student competencies aligned with the state's achievement standards. <3.5. Administration and Special Requirements Regarding Assessment> There are several additional considerations in the administration of state assessments. Specifically, there are provisions relevant to parent rights regarding student assessment, limitations on assessment time, and participation in the National Assessment of Educational Progress (NAEP). <3.5.1. Parent Rights> The ESEA does not preempt a state or local law regarding the decision of a parent not to have his or her child participate in an academic assessment. If a state or local law allows parents to permit their student to "opt-out" of an assessment, the student cannot be required to participate in a state assessment. <3.5.2. Limitation on Assessment Time> There have been concerns over the amount of time schools spend on assessment and assessment preparation activities. Each state may set a limit on the total amount of time devoted to the administration of assessments for each grade, expressed as a percentage of annual instructional hours. <3.5.3. NAEP> As a condition of receiving Title I-A funds, a state must agree to participate in the biennial state NAEP assessments in reading and mathematics in grades 4 and 8 if the Secretary pays the costs of administering these assessments. NAEP is referred to as the "Nation's Report Card" because it is the "largest nationally representative and continuing assessment of what America's students know and can do in various subject areas." A sample of public schools and students are selected for the assessments to create a representative sample of students within each state. Participation in the NAEP assessments is voluntary at the individual level. Results are reported at the national and state levels, as well as at the LEA level for a limited number of LEAs that participate in the trial urban district assessment (TUDA). Results are not reported at the school or individual student levels. <4. Accountability Systems> In order to receive funds under Title I-A, each state is required to submit a plan to ED that, among other items, describes its accountability system. The system must incorporate the state's academic standards and aligned assessments in RLA and mathematics. In addition, the system must meet numerous requirements discussed below. <4.1. Subgroups and Minimum Number of Students> Each state's accountability system must disaggregate data by specified student subgroups. These subgroups, which must receive separate accountincludeability determinations, include (1) economically disadvantaged students, (2) students from major racial/ethnic groups, (3) children with disabilities, and (4) English learners, provided the number of students in each subgroup meets the state's minimum number of students (also referred to as minimum group size) for inclusion in accountability determinations. Each state establishes its own minimum group size. In selecting its minimum group size, each state is required to describe the minimum number of students that are necessary to implement requirements related to the disaggregation of data by subgroup and how the number selected is statistically sound. The state must explain how the minimum number of students was determined, including whether stakeholders were included in the determination process, and how the state ensures that the selected minimum number of students is sufficient to not reveal any personally identifiable information. The same state determined minimum group size number must be used for all students and for each subgroup of students in the state. <4.2. Interim and Long-Term Goals> The system must include state established long-term goals (and measures of interim progress) for all students, and separately for subgroups of students, for academic achievement as measured by proficiency on the state RLA and mathematics assessments and high school graduation rates. In addition, the goals for subgroups of students who are behind on any of these measures must take into account the improvement needed to close statewide achievement gaps. Also, the system must include long-term goals (and measures of interim progress) for increases in the percentage of English learners making progress in achieving English proficiency, as defined by the state. <4.3. Indicators> A state must then use a set of indicators that are based, in part, on the long-term goals established by the state to annually measure the performance of all students and each subgroup of students to evaluate public schools. These indicators must include the following: 1. Student Proficiency on RLA and Mathematics Assessments. For all public schools, student performance on the RLA and mathematics assessments as measured by student proficiency, and for high schools may also include a measure of student growth on such assessments. 2. Measure s of Student Growth or Another Indicator of School Performance . For public elementary and secondary schools that are not high schools, a measure of student growth or another indicator that allows for meaningful differentiation in school performance. 3. Graduation Rates. For public high schools only. 4. English Language Proficiency. For all public schools, ELs' progress in achieving English language proficiency. 5. School Quality or Student Success. For all public schools, at least one indicator of school quality or student success (e.g., measure of student engagement, postsecondary readiness, school climate) that allows for meaningful differentiation in school performance. <4.4. 95% Participation Rate and Calculating Proficiency on Assessments> Each state is required annually to measure the performance of not less than 95% of all public school students and not less than 95% of all public school students in each subgroup on the mathematics and RLA assessments. For example, assume a school had 100 students enrolled in grades where state RLA and mathematics assessments were required (e.g., grades 3-6), but only 80 students participated in the RLA assessment. The school's participation rate for the RLA assessment would be 80% (80/100). The state is required to provide a clear and understandable explanation of how it will factor the participation rate requirement into the state's accountability system. Thus, each state is able to determine the extent to which failing to meet the 95% participation rate will be factored into its accountability system for evaluating school performance. For example, a state might decide that failing to meet the 95% participation rate requirement only has consequences if a school fails to meet it for the all students group or a subgroup for multiple years. Alternatively, a state could decide that for any year, failing to meet the participation rate requirement means that a school cannot receive the highest rating level in the state's accountability system. For the purposes of measuring, calculating, and reporting student proficiency on the mathematics and RLA assessments, the state must use as the denominator the greater of either (1) 95% of all public school students or 95% of all public school students in the subgroup (whichever is applicable to the calculation), or (2) the number of students participating in the assessments. Returning to the previous example, the school's maximum proficiency rate for the RLA assessment would be calculated by dividing the 80 participating students by 95% of all students in the school (i.e., 95 students) as 95% of the students is higher than the number of participating students. This would mean that the school's proficiency rate on the RLA assessment could be no higher than 84.2%. <4.5. System of Annual Meaningful Differentiation> Based on the aforementioned indicators, the SEA must establish an annual system for meaningfully differentiating all public schools that gives substantial weight to each indicator but in the aggregate provides greater weight to the first four indicators than to the measure of school quality or student success. The system must also identify any school in which any subgroup of students is "consistently underperforming, as determined by the state," based on all the aforementioned indicators and the system for annual meaningful differentiation (AMD). <4.6. Comprehensive Support and Improvement> Based on the state's system for AMD, each SEA must establish a state-determined methodology to identify schools for comprehensive support and improvement (CSI), beginning with school year 2018-2019, and at least once every three years thereafter, 1. at least the lowest-performing 5% of all schools receiving Title I-A funds, 2. all public high schools failing to graduate 67% or more of their students, 3. schools required to implement additional targeted support and improvement (see below) that have not improved in a state-determined number of years, and 4. additional statewide categories of schools, at the state's discretion. The first category of CSI schools is the only category strictly limited to Title I-A schools. High schools can be identified for CSI regardless of whether they receive Title I-A funds or not. The third category of schools only includes Title I-A schools that have been identified for additional targeted support and improvement (ATSI) but have failed to improve within a state determined number of years. States have the discretion to determine whether any other schools will be identified for CSI. The statutory language does not specify whether this category of schools must be limited to only schools receiving Title I-A funds. Non-Title I-A schools that are identified for CSI are eligible to receive school improvement funds under Section 1003. However, the receipt of school improvement funds does not make a non-Title I-A school a Title I-A school. Each SEA is required to notify each LEA in the state if any of the schools served by the LEA have been identified for CSI. The LEAs in which schools are identified for CSI are then required to work with stakeholders, including principals or other school leaders, teachers, and parents, to develop a comprehensive support and improvement plan that meets the following requirements: is informed by all of the aforementioned indicators; includes evidence-based interventions; is based on a school-level needs assessment; identifies resource inequities to be addressed through the comprehensive support and improvement plan; is approved by the school, LEA, and SEA; and upon approval and implementation, is monitored and periodically reviewed by the SEA. <4.6.1. Evidence-Based Interventions> The ESEA includes a definition of evidence-based . In general, when the term is used with respect to a state, LEA, or school activity, it means an "activity, strategy, or intervention" that (1) demonstrates a statistically significant effect on improving student outcomes or other relevant outcomes based on one of three levels of evidence, or (2) demonstrates a "rationale based on high-quality research findings or positive evaluation that such activity, strategy, or intervention is likely to improve student outcomes or other relevant outcomes." The three levels of evidence for demonstrating a statistically significant effect are the following: 1. "strong evidence from at least 1 well-designed and well-implemented study"; 2. "moderate evidence from at least 1 well-designed and well-implemented quasi-experimental study"; and 3. "promising evidence from at least 1 well-designed and well-implemented correlational study with statistical controls for selection bias." For activities, strategies, or interventions funded under Section 1003 (School Improvement), which can be used to support CSI and other support and improvement activities, the term evidence-based only includes activities, strategies, or interventions that meet one of the three levels of evidence for a statistically significant effect. School improvement funds may not be used for activities, strategies, or interventions that are likely to improve outcomes based only on a rationale constructed from high-quality research findings or positive evaluations. <4.6.2. Special Provisions for High Schools> For high schools that are identified for CSI, the SEA may permit differentiated improvement activities that use evidence-based interventions at a school that predominantly serves students who (1) have returned to high school after previously leaving secondary school without a regular high school diploma, or (2) "based on the grade or age, are significantly off track to accumulate sufficient academic credits to meet high school graduation requirements." In addition, if a high school serves fewer than 100 students, the SEA may permit the LEA to "forego implementation" of CSI activities. <4.6.3. Public School Choice> An LEA may offer students enrolled in a school identified for CSI the option to transfer to another public school served by the LEA, unless doing so is prohibited by state law. If an LEA offers public school choice, it must give priority to the lowest-achieving children from low-income families. A student who opts to transfer to another school must be permitted to remain in that school until he or she has completed the highest grade available at it. The student must also be permitted to enroll in classes and other activities in the same manner as all other students at the school. An LEA may use not more than 5% of its Title I-A allocation to pay for transportation costs associated with the public school choice option. <4.7. Targeted Support and Improvement> States are also required to identify for targeted support and improvement (TSI) any school in which a subgroup of students is consistently underperforming. As previously discussed, the state has sole discretion to determine how the term consistently underperforming is defined. SEAs must notify each LEA in the state if a school served by the LEA has been identified as having at least one subgroup that is consistently underperforming and ensure that the LEA notifies such school with respect to which subgroup(s) is consistently underperforming. Once an LEA notifies a school that it has been identified for TSI, the school is required to work in partnership with stakeholders, including principals and other school leaders, teachers, and parents, to develop a school-level TSI plan to improve student outcomes based on the aforementioned indicators for each subgroup of students that was the subject of the notification provided by the SEA. The TSI plan must meet the following requirements: is informed by all of the aforementioned indicators; includes evidence-based interventions; is approved by the LEA prior to implementation; upon submission and implementation, is monitored by the LEA; and results in additional action, should implementation of the plan be unsuccessful after a number of years determined by the LEA. <4.7.1. Additional Targeted Support and Improvement> For a school in which one or more subgroups is performing at a level that, if reflective of an entire school's performance, would result in its identification for CSI as one of the lowest performing 5% of schools in the state, the school must be identified for additional targeted support and improvement (ATSI) activities. Schools identified for ATSI must include an identification of resource inequities as one of its activities. If a Title I-A school identified for ATSI does not improve within a state-determined number of years, the state is required to identify the school for CSI. Statutory language includes a special rule with respect to the identification of schools for ATSI. For the 2017-2018 school year, based on the state's system of meaningful differentiation, the SEA was required to notify an LEA if any of its schools met the ATSI identification requirements, as SEAs did not have to identify schools for TSI for the 2017-2018 school year. ED subsequently provided SEAs with an extra year to meet this requirement, so SEAs had to begin identifying schools for ATSI by the 2018-2019 school year. In some states, ATSI schools were identified prior to any TSI schools being identified, as statutory language did not include a requirement for when TSI schools had to be identified for the first time. For subsequent years, schools are required to be identified for ATSI following their initial identification for TSI based on the requirements of Section 1111(c)(4)(C)(iii). Thus, the frequency with which additional schools are identified for ATSI will depend on the frequency with which states identify schools for TSI. In determining which schools identified for TSI will also have to meet the additional ATSI requirements, each school is to be evaluated individually. If a school meets the ATSI criteria, then it is subject to the additional requirements and could ultimately be identified for CSI if it is a Title I-A school and fails to improve. There is no cap on the number of schools identified for TSI that may also be identified for ATSI. Thus, it is possible that every school identified for TSI could also be identified for ATSI, depending on how the state chooses to define consistently underperforming , when identifying TSI schools. However, if the state establishes a definition of consistently underperforming that is more restrictive than the ATSI requirement, it is possible that schools that would otherwise qualify for ATSI would not be identified for ATSI, as they would not be identified for TSI. <4.8. State Support and Additional Action> If schools identified for CSI fail to improve in a state-determined number of years (not to exceed four years), the state must implement more rigorous State-determined action , and Title I-A schools identified for ATSI that fail to improve within a state-determined number of years must be identified for CSI. In addition, SEAs are required to periodically review the resource allocation to support school improvement in each LEA that serves a "significant number" of schools identified for CSI and a "significant number" of schools implementing TSI. SEAs are also required to provide technical assistance to each LEA serving a "significant number" of schools implementing CSI plans or TSI plans. SEAs have the option to initiate additional improvement in any LEA with (1) a "significant number of schools that are consistently identified" for CSI and are not meeting the exit criteria to be removed from this status, or (2) a "significant number of schools" implementing TSI plans. As part of these efforts, SEAs may establish alternative evidence-based state-determined strategies for use by LEAs to assist schools identified for CSI. The statutory language does not specify whether LEAs would have to use one or more of the strategies, or whether these would be the only strategies that could be used. Statutory language also does not address the state establishing alternative evidence-based state-determined strategies for LEAs to use to assist schools implementing TSI plans. <4.9. Reservation of Funds to Support School Improvement Under Section 1003> Section 1003 of the ESEA provides for a state reservation of Title I-A funds for school improvement. An SEA is required to reserve the greater of (1) 7% of the amount the state receives under Title I-A, or (2) the sum of the amount the state reserved for school improvement under Title I-A in FY2016, and the amount the state received under the School Improvement Grants (SIG) program in FY2016. No LEA is permitted to receive less Title I-A funding than it received in the prior year as a result of this provision in FY2018 and subsequent fiscal years. Of the funds reserved for school improvement, states are required under ESSA provisions to provide at least 95% to LEAs through formula or competitive grants to serve schools that are implementing CSI activities or TSI activities. In allocating funds, an SEA must give priority to LEAs that serve high numbers or a high percentage of schools implementing CSI and TSI plans; demonstrate the strongest need for the funds, as determined by the state; and demonstrate the strongest commitment to using the funds to help the lowest-performing schools to improve student achievement and outcomes. Funds reserved by the SEA must be used for establishing the method by which funds will be allocated to LEAs; monitoring and evaluating the use of funds by LEAs; and, as appropriate, "reducing barriers and providing operational flexibility to schools" to implement CSI and TSI activities. <4.10. Direct Student Services (Section 1003A)> In addition to the required reservation of Title I-A funds for school improvement, SEAs have the option of reserving up to 3% of the Title I-A funds they receive for direct student services. This optional reservation of funds was not included in the law prior to the ESSA. Of the funds reserved, states must distribute 99% to geographically diverse LEAs using a competitive grant process that prioritizes grants to LEAs that serve the highest percentages of schools identified for CSI or that are implementing TSI plans. Funds may be used by LEAs for a variety of purposes, including to pay the costs associated with the enrollment and participation of students in academic courses not otherwise available at the students' school; credit recovery and academic acceleration courses that lead to a regular high school diploma; activities that lead to the successful completion of postsecondary level instruction and examinations that are accepted for credit at institutions of higher education (IHEs), including reimbursing low-income students for the costs of these examinations ; and public school choice if an LEA does not reserve funds for this purpose under Section 1111. <4.11. Teacher and Paraprofessional Requirements> Title I-A also holds states accountable for teachers and paraprofessionals working in a program supported with Title I-A funds. These teachers or paraprofessionals must meet applicable state certification and licensure requirements. In addition, states participating in Title I-A must describe in their state plans how low-income and minority children enrolled in Title I-A schools are not served at disproportionate rates by "ineffective, out-of-field, or inexperienced teachers." The state must also describe the measures that will be used to measure and evaluate the state's success in this area. <5. Special Rules for Bureau of Indian Education Schools> The BIE oversees a total of 183 elementary, secondary, residential, and peripheral dormitory (i.e., "boarding") schools across 23 states. Of these 183 schools, 130 are tribally controlled and 53 are operated by the BIE. There are special rules regarding standards, assessment, and accountability for schools operated or funded by the BIE included in Section 1111(k) that apply until the requirements of Section 8204 (discussed below) are met. The special rules are as follows: Each BIE school accredited by the state in which it is operating shall use the assessments and other academic indicators the state has developed and implemented to meet the requirements of Section 1111, or such other appropriate assessment and academic indicators as approved by the Secretary of the Interior. Each BIE school that is accredited by a regional accrediting organization (in consultation with and with the approval of the Secretary of the Interior, and consistent with assessments and academic indicators adopted by other schools in the same state or region) shall adopt an appropriate assessment and other academic indicators that meet the requirements of Section 1111. Each BIE school that is accredited by a tribal accrediting agency or tribal division of education shall use an assessment and other academic indicators developed by such agency or division, except that the Secretary of the Interior shall ensure that such assessment and academic indicators meet the requirements of Section 1111. ESEA, Section 8204 contains provisions related to the setting aside of funds for the Department of the Interior to participate in the development of standards, assessments, and accountability systems in BIE-funded schools. For the purposes of Title I-A, the Secretary of the Interior, in consultation with the Secretary of Education (if requested by the Secretary of the Interior), shall use a negotiated rulemaking process to develop regulations that define the standards, assessments, and accountability systems for schools funded by the BIE. Using the negotiated rulemaking process, the Secretary of the Interior was required to develop regulations for implementation no later than the 2017-2018 school year. The tribal governing body or school board of a school funded by the Bureau of Indian Affairs may waive the aforementioned requirements if they are determined by such body to be inappropriate. If the requirements are waived, the tribal governing body or school board must submit a proposal to the Secretary of the Interior for alternative standards, assessments, and accountability systems within 60 days. The Secretary of the Interior and the Secretary of Education shall approve such standards, assessments, and accountability systems unless the Secretary of Education determines that they do not meet the requirements of ESEA, Section 1111, while taking into account the unique circumstances and needs of the schools and students served. The Secretary of the Interior and the Secretary of Education shall provide technical assistance, either directly or through a contract, to a tribal governing body or school board (if requested by such body) to develop alternative standards, assessments, and accountability systems. <6. Report Cards and Other Reports> Section 1111 includes specific requirements related to annual SEA, LEA, and school public report cards. It also includes requirements related to reporting data to the Secretary and Congress. This section discusses these requirements as well as privacy requirements that apply to Section 1111. <6.1. Report Card Requirements> States and LEAs are required to prepare and disseminate annual report cards that include a range of information. LEAs are also required to prepare and disseminate report cards for each of their public schools. <6.1.1. State Report Cards> Any state that receives Title I-A funding is required to prepare and widely disseminate an annual, overall state report card. The report card must be concise. It must be presented in an "understandable and uniform" format that is developed in consultation with parents. And, to the extent practicable, it must be made available in a language that parents can understand. With respect to the dissemination of the document, an SEA is required to have a single page on its website that includes the state report card, all LEA report cards, and the annual report that the SEA must submit to the Secretary. The state report card must include, at a minimum, several elements ranging from information about the state's accountability system to teacher qualifications. Each required element is discussed briefly below. In guidance issued in September 2019, ED included a table that summarizes subgroup disaggregation reporting requirements for each data element. <6.1.1.1. Description of State Accountability System> Each state report card must include a "clear and concise" description of the state's accountability system required under Title I-A. This includes a description of the minimum number of students for each subgroup for use in the accountability system. The report card must also include the long-term goals and measures of interim progress for all students and the subgroups for which the SEA is held accountable. In addition, the report card must include a description of the state's system for meaningfully differentiating all public schools in the state, including the following: The specific weight assigned to each of the indicators in the state's system for meaningful differentiation. The methodology used by the state to differentiate among schools; The methodology by which a state differentiates a school as "consistently underperforming" for any subgroup of students for which the SEA is held accountable. The report card must also indicate the number of years used in determining whether a school is consistently underperforming. The methodology used by the state to identify a school for CSI. <6.1.1.2. Schools Identified for CSI or TSI> The report card must include the number and names of all public schools in the state identified for CSI or implementing TSI. There is no separate reporting requirement for schools implementing ATSI. The report card must also provide a description of the exit criteria established by the state for exiting CSI status and the number of years that ATSI schools have to fail to improve before being identified for CSI. <6.1.1.3. Disaggregated Data on Student Performance> Each state report card is required to include information about student performance. The report must include data for all students and data disaggregated by each major racial/ethnic group, economically disadvantaged students, children with disabilities, English proficiency status, gender, migrant status, homeless status, foster care status, and status as a student with a parent who is a member of the Armed Forces on activity duty on student achievement on the mathematics, RLA, and science assessments required under Title I-A at each level of achievement. Further, for the (1) "all students" group, (2) student subgroups with separate accountability determinations, (3) students who are homeless, and (4) students in foster care, the state report card must include information on performance on the other academic indicator included in the state's accountability system for elementary schools and secondary schools that are not high schools. For the same groups of students, the state report card must report on high school graduation rates, including the four-year adjusted cohort graduation rate and, at the state's discretion, any extended-year adjusted cohort graduation rates used by the state. The state report card must also include other student-specific data. For only students in the EL subgroup, state report cards must provide data on the number and percentage of ELs achieving English language proficiency. For the (1) "all students" group, and (2) student subgroups with separate accountability determinations (with the exception of ELs), the state report card must include information on performance on the indicator(s) of school quality or student success used in the state's accountability system, as well as their progress toward meeting the state's long-term accountability system goals, including interim progress. And for the (1) "all students" group, (2) student subgroups with separate accountability determinations, (3) gender subgroups, and (4) migrant status group, the state report card must include data on the percentage of students assessed and not assessed. <6.1.1.4. Civil Rights Data Collection (CRDC) Reports> The state report card is required to include information submitted by the SEA and each LEA in the state pursuant to Section 203(c)(1) of the Department of Education Organization Act (DEOA), which is a reference to data collected through the Civil Rights Data Collection (CRDC) administered by the Office of Civil Rights at ED. The CRDC is conducted every other year and the next CRDC is scheduled to collect data from the 2019-2020 school year. From the data reported on the CRDC, the state report card must include the following information: "measures of school quality, climate, and safety, including rates of in-school suspensions, out-of-school suspensions, expulsions, school-related arrests, referrals to law enforcement, chronic absenteeism (including both excused and unexcused absences), incidences of violence, including bullying and harassment;" the number and percentage of students in preschool programs; and the number and percentage of students in accelerated coursework to earn postsecondary credit while in high school (e.g., Advanced Placement, International Baccalaureate, dual or concurrent enrollment). For some of the reporting requirements related to the CRDC, the CRDC collects multiple measures from which SEAs and LEAs must select at least one to include on the required report cards. The ESEA requires that these data be included annually on report cards. As the CRDC reports data biennially, SEAs and LEAs are permitted to include the same information for consecutive years provided it is the most recent data provided by ED. SEAs and LEAs also have the option to report, in addition to the ED-provided data, more recent data that the SEAs and LEAs have provided to ED through a more recent CRDC data collection as long as the data provided are reported separately from the ED-provided data. Additional statutory language reinforces that the reporting requirement related to the aforementioned data elements is limited to data collected under the authority of Section 203(c)(1) of the DEOA and cannot require disaggregation for subgroups beyond economically disadvantaged students, students from major racial/ethnic groups, children with disabilities, and ELs, as well as by homeless status and foster care status. <6.1.1.5. Teacher Qualifications> State report cards must provide data, in the aggregate, and disaggregated by high-poverty as compared to low-poverty schools, on the professional qualifications of teachers. More specifically, data must be provided on the number and percentage of inexperienced teachers, principals, and other school leaders; teachers teaching with emergency or provisional credentials; and teachers who are not teaching in the subject or field for which they are certified or licensed. Several of the terms related to the reporting of these data elements, such as high-poverty schools , low-poverty schools , and teachers who are not teaching in the subject or field for which the teacher is certified or licensed are not defined in statutory language. In its guidance, ED suggests that SEAs may want to develop uniform definitions for the undefined terms. <6.1.1.6. Per-Pupil Expenditures> The state report card must provide data on LEA- and school-level per-pupil expenditures of federal, state, and local funds, including actual personnel expenditures and actual nonpersonnel expenditures of these funds, disaggregated by the source of funds for the preceding fiscal year. The data reported to meet the requirements of Section 1111 cannot be based on average staff salary data. The data must be reported for every LEA and public school in the state. An SEA may provide LEAs with the flexibility to develop their own procedures for calculating per-pupil expenditures or could opt to establish uniform statewide procedures for making these calculations. Per-pupil expenditure data have not been reported for LEAs and public schools in the past. Based on guidance issued by ED, SEAs and LEAs may delay reporting per-pupil expenditures until they issue report cards for the 2018-2019 school year. However, if an LEA decides to delay the reporting of per-pupil expenditures, the SEA and its LEAs are required to provide information on their report cards for the 2017-2018 school year about the steps they are taking to provide such information on the 2018-2019 school year report card. ED has indicated that it expects SEAs and LEAs to make these data public by the end of the school year during which the other report card data are released. <6.1.1.7. Student Assessments> The state report card must include additional information related to student assessments. It must include the number and percentage of students with the most significant cognitive disabilities who take an alternate assessment (see previous discussion) by grade and subject. It must also include the results on the state's National Assessment of Education Progress (NAEP) for reading and mathematics in grades 4 and 8 compared to the national average. As NAEP is administered biennially, report cards should reflect the most recent data available. In states where data are available, SEAs must include data on the cohort rate for all students and disaggregated for economically disadvantaged students, students from major racial/ethnic groups, children with disabilities, and English learners who graduate from high school and enroll, for the first academic year following the students' graduation, (1) in public postsecondary education programs in the state, and (2) if data are available and to the extent practicable, in private postsecondary education programs in the state or in postsecondary education programs outside of the state. <6.1.1.8. State-Determined Information> The state may include any additional information on its state report card that it believes will provide members of the public, including parents and students, with information about the progress of each of the state's elementary and secondary schools. Statutory language notes that this may include the number and percentage of students attaining career and technical proficiencies. <6.1.2. State Data Cross Tabulations> SEAs are required to provide specific information included on the state report card to the public in an "easily accessible and user-friendly manner" that allows the data to be cross-tabulated by, at a minimum, each major racial and ethnic group, gender, English proficiency status, and children with or without disabilities. The ability to cross-tabulate data applies to data reported on student achievement on the RLA, mathematics, and science assessments at all achievement levels; performance on the other academic indicator used for public elementary schools and secondary schools that are not high schools; high school graduation rates, including the four-year adjusted cohort graduation rate and, at the state's discretion, any extended-year adjusted cohort graduation rates used by the state; and the percentage of students assessed and not assessed. SEAs may choose to include this information in the annual state report card. The data provided for cross-tabulation purposes must not reveal any personally identifiable information about an individual student and cannot include a number of students in any cross-tabulation that is insufficient to provide statistically reliable information or that would reveal any personally identifiable information about an individual student. It must also be consistent with the Family Educational Rights and Privacy Act (FERPA) of 1974. <6.1.3. LEA and School Report Cards> An LEA that receives Title I-A funds is required to prepare and disseminate an annual LEA report card that includes information on the LEA overall and each public school it serves. Similar to the requirements for state report cards, an LEA report card must be concise. It must be presented in an understandable and uniform format and, to the extent practicable, in a language that parents can understand. The report card must also be publicly accessible, including on the LEA's website. An SEA is required to ensure that each of its LEA collects necessary data and includes information on all of the items that are also required to be reported on the state report card, including the disaggregation of data as specified above, with one exception: the LEA report card does not have to include NAEP scores, as these scores are only available at the LEA level for a subset of all LEAs in the United States. In addition, requirements for the state report card that require comparisons between the state and the nation as a whole are modified to be a comparison between an LEA and the state as a whole in the case of LEA report cards, and a comparison between a school and the LEA as a whole and the state as a whole in the case of school report cards. LEAs are permitted to include additional information on their report cards that the LEA determines will provide members of the public, including parents and students, with information about the progress of each of the state's elementary and secondary schools, regardless of whether the information is also included on the state report card. <6.2. State Reports to the Secretary> Each SEA receiving Title I-A funds is required annually to report to the Secretary, and make several pieces of information "widely available" in the state. The SEA must provide information on student achievement on the mathematics, RLA, and science assessments required under Title I-A, and must disaggregate the results for student subgroups with separate accountability determinations. The report must also include information on the acquisition of English proficiency by ELs. The SEA must include the number and names of each public school in the state that has been identified for CSI and the number and names of each public school in the state that is implementing TSI. There is no separate reporting requirement for schools identified for or implementing ATSI. In addition, the report must include information on the professional qualifications of teachers, including the number and percentage of inexperienced teachers, teachers teaching with emergency or provisional credentials, and teachers who are not teaching in the subject or field in which they are certified or licensed. <6.3. Secretary Reports to Congress> The Secretary is required annually to submit a report to the House Committee on Education and the Workforce and the Senate Committee on Health, Education, Labor, and Pensions that provides national and state-level data based on the data that were submitted to the Secretary by the states. The report must be submitted electronically only. There is no requirement that the report be made available publicly. <6.4. Privacy> Any information collected and disseminated in response to the aforementioned reporting requirements must be collected and disseminated in such a way that it protects the privacy of individuals consistent with FERPA. In addition, the report cards and reports shall only include data that "are sufficient to yield statistically reliable information." Data reported in the report cards and reports do not have to be disaggregated if doing so will reveal personally identifiable information about a student, teacher, principal, or other school leader. Data also do not have to be disaggregated if doing so will provide data that are insufficient to yield statistically reliable information. <7. Frequently Asked Questions> The last part of this report provides responses to frequently asked questions (FAQs) about various aspects of the educational accountability requirements enacted in the ESEA, as amended by the ESSA. In particular, FAQs related to academic content standards, assessment, accountability systems, and report cards are addressed. <7.1. Standards> This section highlights two frequently asked questions with respect to the state standards requirements under Title I-A. <7.1.1. Does the Secretary tell states what standards they have to use?> The ESEA explicitly says that a state is not required to submit its challenging state academic standards, alternate achievement standards, or English language proficiency standards to the Secretary for review or approval. The Secretary also does not have the authority "to mandate, direct, control, coerce, or exercise any direction or supervision over any of the challenging State academic standards adopted or implemented by a State." <7.1.2. What are the Common Core State Standards? Do states have to use them?> Concerns related to the diversity of accountability systems, student mobility, consistent expectations for students, preparation of students for global competition, and skills students need for employment spurred an effort led by the National Governors Association and the Council of Chief State School Officers to develop common standards for English language arts/literacy and mathematics in grades K-12 (referred to as the Common Core State Standards). This effort is referred to as the Common Core State Standards Initiative (CCSSI). According to the CCSSI, The purpose of this state-led initiative ... is to create a rigorous set of shared standards that states can voluntarily adopt. The standards are crafted to "define the knowledge and skills students should have within their K-12 education careers so they graduate from high school able to succeed in entry-level, credit-bearing academic college courses and workforce training programs." Overall, 45 states, the District of Columbia, four outlying areas, and the Department of Defense Education Activity (DoDEA) adopted the Common Core State Standards at some point in time. Adoption of the Common Core State Standards has always been optional. However, some federal initiatives such as the Race to the Top (RTT) State Grant competition that began in 2009 provided substantial incentives to states that had adopted college- and career-ready standards that met specified requirements, and the Common Core State Standards was the most widely available set of standards that met such requirements. As discussed above, however, the Secretary does not have the authority to tell states what standards they must use to comply with the requirements of Title I-A. Thus, the decision to adopt (or not adopt) the Common Core State Standards as a state's standards rests solely with the state. <7.2. Assessment> This section discusses some examples of FAQs that have arisen as SEAs and LEAs implement the assessment requirements. The FAQs are related to the use specific assessments, assessment of students with disabilities, and the new assessment flexibilities. <7.2.1. Can the Secretary tell states what assessments they have to use?> The ESEA contains multiple provisions that prohibit the Secretary from specifying the assessments that a state must use to comply with the requirements of Title I-A. <7.2.2. Do states have to use the assessments developed to align with the Common Core State Standards?> As previously discussed, the Secretary is prohibited from prescribing which assessments a state must use, provided the assessments selected by the state meet statutory requirements. Through the Race to the Top Assessment Grant competition, the Partnership for the Assessment of Readiness for College and Careers (PARCC) and the SMARTER Balanced Assessment Consortium (Smarter Balanced) received grants to develop assessments aligned with the Common Core State Standards. Many states continue to use assessments developed by these organizations, but doing so is optional. <7.2.3. Can a state or LEA use a test like the SAT or ACT for its high school assessment in its statewide accountability system?> A state may use the SAT or ACT for its high school assessment in its statewide accountability system, provided that the assessment is approved for use in the state plan. In short, the state must provide evidence that the SAT or ACT (1) is aligned with and equivalent to the state's academic content standards; (2) provides comparable, valid, and reliable data compared to the state assessment; (3) meets the general requirements of assessment systems with the exception that it need not be administered to all students in the state; and (4) provides unbiased, rational, and consistent differentiation between schools within the state. While the use of the SAT or ACT is a potentially viable option, the alignment evidence that must be collected and submitted to ED may be a barrier to implementing the flexibility. In March 2016, the SAT administered a newly redesigned assessment, which made a more focused effort to align itself with the Common Core Academic Standards. If there is a high degree of alignment between a state's academic content standards and the Common Core Academic Standards, the SAT may be suitable for use in accountability systems (provided the SAT meets the other requirements). The ACT was redesigned prior to the development of the Common Core Academic Standards; however, a representative from the ACT maintains that there is "significant overlap" between the common core and the college- and career-readiness constructs measured by the ACT. An Education Week survey of the states found that 25 require students to take the SAT or ACT, and 12 currently use the SAT or ACT for federal reporting and statewide accountability systems. If the SAT or ACT is not already used by the state in its accountability system, an LEA may request the use of a locally selected high school assessment (such as the SAT, ACT, Advanced Placement or International Baccalaureate exams, ACCUPLACER, or the ASVAB). The locally selected high school assessment must be approved by the state before an LEA uses it for accountability purposes. An Education Week article cites several reasons why states may not be adopting this flexibility more quickly, including the requirements that a state (1) figure out how to pay for the flexibility, (2) design a process for districts to apply for the flexibility, and (3) collect evidence that compares data from the statewide assessment and the locally selected high school assessment. Furthermore, an assessment expert explains in the article that it is difficult to have this flexibility and a comparable accountability system. By allowing the flexibility, states are opening the door to LEAs requesting different assessments from one year to the next. While the locally selected high school assessment must be comparable to the statewide assessment, it will not overlap 100% with the statewide assessment. If assessments continue to change from one year to the next, it may be more difficult to compare results across assessments and track progress over time than if only one assessment was allowed. Some states have applied for waivers of the locally selected high school assessments requirements. In one case, a state requested a waiver because an LEA requested to administer the ACT in lieu of the high school assessment before the state approval process was completed. The waiver was not approved, in part because the state had not submitted a timely request and did not demonstrate how the results of the ACT would be comparable to the results of the state test used in other high schools. <7.2.4. Are states applying for the alternate assessment waiver for students with disabilities?> For school year 2017-2018, 28 states requested a waiver to exceed the 1% cap for alternate assessments. Of the 28 states that requested waivers, 23 received them. At least 19 of the 23 states were granted a one-year extension of the waiver for school year 2018-2019, and 3 additional states were granted new waivers for school year 2018-2019. The National Center on Educational Outcomes (NCEO) tracks student participation in alternate assessments by state. The most recent NCEO publication reports on participation from school year 2015-2016, before the new alternate assessment requirements were in place. These data provide a baseline for expected rates of participation in alternate assessment in the short term. In general, most states reported alternate assessment participation rates between less than 1% and 2.5%; a participation rate of 2% is twice the allowable rate in statutory language. <7.2.5. Are states still permitted to identify students for alternate assessments based on modified achievement standards?> The ESEA, as amended by the ESSA, no longer allows the use of modified achievement standards (AA-MAS). Assessment options for students with disabilities have changed over the last several years. In the past, students with disabilities could participate in the general state assessment, alternate assessments based on alternate achievement standards (AA-AAS), or alternate assessments based on AA-MAS. States have been transitioning away from AA-MAS since around 2014. Therefore, students with disabilities who previously participated in AA-MAS are now required to participate either in the general state assessment or the AA-AAS (if they are determined to be students with the most significant cognitive disabilities and eligible to participate in an alternate assessment). The prohibition on the use of modified achievement standards (and therefore the AA-MAS option) may have led to an overidentification of students found eligible to participate in AA-AAS. As discussed above, approximately 40% of states have requested waivers to the 1% cap on AA-AAS, which may suggest that some of the students who were once eligible for AA-MAS are now eligible for AA-AAS. States may need to consider revising their definition of most significant cognitive disability and consider strategies for successfully transitioning students who took the AA-MAS to the general assessment. <7.2.6. Have any states applied for and received the innovative assessment authority?> As of September 2019, the Secretary has granted innovative assessment and accountability demonstration authority to four states: Georgia, Louisiana, New Hampshire, and North Carolina. , , Georgia is piloting two technology-based assessments designed to provide educators with data that can be used to target instruction during the school year. Louisiana is developing a new format for the Louisiana Educational Assessment Program (LEAP) in ELA and social studies. New Hampshire is building on its Performance Assessment for Competency Education (PACE) system. North Carolina is using a customized, end-of-year assessment (referred to as the "route"), which is developed for individuals based on their performance on two formative assessments administered during the school year. <7.2.7. What are some possible consequences if numerous students in a school, LEA, or state choose to opt out of the required assessments?> Excessive numbers of opt-outs may have consequences for both assessment and accountability purposes. In terms of assessment, excessive numbers of opt-outs may undermine the validity of the measurement of student achievement because they may create a scenario in which states are measuring student achievement that is not representative of the whole student population. When at least 95% of all students and 95% of students in each student subgroup participate in the assessments, the conclusions based on the results are more likely to be valid and reliable for differentiating schools based on academic achievement. In terms of accountability, excessive numbers of opt-outs may lead to states failing to meet the requirement that 95% of all students and 95% of students in each student subgroup are assessed in the Title I-A assessment and accountability system. The specific consequences for failing to meet this 95% threshold for accountability purposes are determined by the state. <7.3. Accountability Systems> This section includes FAQs that have arisen as SEAs, LEAs, and schools implement ESEA accountability requirements. They cover topics such as the use of student growth measures, the identification of schools for improvement, and whether accountability requirements can be waived. <7.3.1. Are SEAs required to use measures of student growth in their accountability system?> No, but states have the discretion to do so. Statutory language requires that the proficiency of students on the RLA and mathematics assessments be included as an indicator for all public schools in a state. It provides states with the option to use measures of student growth on the state assessments for high school students. The use of these growth measures would be in addition to the use of the proficiency measures. Public elementary and secondary schools that are not high schools are required to use, in addition to the proficiency measures, either a measure of student growth, "if determined appropriate by the state," or another "valid and reliable statewide indicator that allows for meaningful differentiation in school performance." Thus, the state also has the option to use student growth as measured by the RLA and mathematics assessments as an indicator for elementary and secondary schools that are not high schools. <7.3.2. Can an LEA use measures of student growth if they are not part of the state accountability system?> An LEA may use measures of student growth only for limited purposes if the state chooses not to use them. As previously discussed, the SEA is charged with developing and implementing the state accountability system, including selecting the indicators that will be included in the system. The use of student growth measures as indicators in the accountability system is left to the SEA's discretion. If an SEA does not choose to incorporate these measures into the accountability system that is used by the state to meaningfully differentiate schools and identify schools for CSI or TSI, then student growth is not an accountability system indictor. However, an LEA could choose to include student growth measures, for example, in the data that it uses at the LEA level for data analysis purposes or makes publicly available. <7.3.3. Can an LEA substitute its indicators for those used in the state accountability system?> An LEA may only use additional indicators for limited purposes. Statutory language requires SEAs to include specific indicators in the state accountability system and provides SEAs with some flexibility in including other indicators. The indicators included in the state accountability system are required to apply to all public schools in the state. The SEA is required to use its accountability system to determine which schools in the state will be identified for CSI or TSI. While an LEA could choose to add additional indicators, for example, in the data that it uses at the LEA level for data analysis purposes or makes publicly available, the LEA could not use these additional indicators as replacements for the SEA-selected indicators. <7.3.4. Can accountability requirements be waived?> Yes. Section 8401 provides the Secretary with the authority to waive various ESEA statutory and regulatory provisions. An SEA or Indian tribe that receives funds under any ESEA program may submit a request to the Secretary to waive any statutory or regulatory requirement pertaining to the ESEA, unless the Secretary is prohibited by law from waiving such provision. An LEA that receive funds under any ESEA program may also request a waiver of ESEA statutory and regulatory provisions, but the LEA must submit its request to its SEA. The SEA then has the option of submitting the LEA's waiver request if the SEA "determines the waiver appropriate." Thus, an SEA could request a waiver related to its accountability system. For example, an SEA could request that only measures of student growth rather than student proficiency be used in the accountability system or that the SEA be permitted to create a combined measure based on student proficiency and student growth. An LEA could submit a waiver request to operate under a modified accountability system, such as an accountability system where the LEA uses different indicators than those selected by the state. However, as the LEA waiver request would have to be approved by the SEA prior to being submitted to the Secretary, it is possible that an SEA would deny the request and require that all public schools be evaluated using the state established accountability system, as is currently required by statutory language. <7.3.5. Do SEAs have to include subgroup performance when identifying the lowest-performing 5% of Title I-A schools for CSI?> In identifying the lowest-performing 5% of Title I-A schools for CSI, statutory language requires each state to select these schools using a "state-determined methodology" that is based on the "system of meaningful differentiation." As there are no regulations clarifying the identification of schools for CSI, based on ED's approval of state plans it appears that a state can decide whether to use all of the data included in the system of meaningful differentiation, including data for subgroups, or use only selected elements from the system of meaningful differentiation in its state-determined methodology for identifying CSI schools. There are ED-approved state plans that include subgroup performance in the identification of the lowest performing 5% of schools for CSI and also approved state plans that do not include it. For example, the District of Columbia's state plan bases 25% of a school's overall accountability framework rating on student subgroup performance. Based on this accountability framework, the lowest performing 5% of schools are identified for CSI. On the other hand, North Carolina's state plan only considers a school's total score on the state accountability model for the all students group when identifying the lowest performing 5% of schools. <7.3.6. Do schools identified for ATSI during the 2019-2020 school year and subsequent school years have to be a subset of the schools identified for TSI?> For all years following the first school year in which schools are identified for ATSI, the methodology for identifying schools for TSI begins with an SEA's identification of schools with at least one subgroup that is "consistently underperforming, as determined by the state." As such, an SEA has the flexibility to define this group of schools as broadly or as narrowly as it chooses. This could result in a large group of schools being identified for TSI, of which only a subset will be identified for ATSI. It could also result in an SEA identifying schools for TSI in such a way that every one of these schools would also meet the requirements for being identified for ATSI. Because a school's designation for ATS I hinges on being identified for TSI afte r the first sc hool year in which schools are identified for ATSI , ATS I schools are a subset of TSI schools. Because the ESEA allows SEAs to define what a consistently underperforming subgroup of students means for designation as a TSI school, it appears that an SEA could use the ATS I criteria a school having at least one subgroup of students whose level of performance, if reflective of the entire school's performance, would cause the school to be among the lowest-performing 5% of schools receiving Title I-A funds in the state as its definition of a school having a consistently underperforming subgroup of student s. Under such circumstances, the SEA 's TSI and ATS I schools would be the same. A state could also choose to implement a more restrictive definition of a consistently underperforming subgroup of students than the ATSI definition, resulting in fewer schools being identified for ATSI than would otherwise be identified if schools did not have to be initially identified for TSI. <7.4. The Bureau of Indian Education> As previously discussed, there are special rules regarding standards, assessment, and accountability for schools operated or funded by the BIE that apply until the requirements of Section 8204 are met. Section 8204 requires the Department of the Interior to participate in the development of standards, assessments, and accountability systems in BIE-funded schools using a negotiated rulemaking process. The process was required to result in the development of regulations for the implementation of standards, assessments, and accountability systems no later than the 2017-2018 school year. <7.4.1. Has the BIE met the requirements of Section 8204?> On June 10, 2019, the Bureau of Indian Education proposed a rule developed using a negotiated rulemaking process as required by the ESEA to meet the Secretary of the Interior's obligation to define standards, assessments, and accountability system consistent with the ESEA for BIE-funded schools. Comments on the rule were due on August 9, 2019. A final rule had not been issued as of February 14, 2020. <7.5. Report Cards> This section includes two FAQs related to state and LEA report cards. <7.5.1. When do report cards first need to reflect the new ESSA requirements?> SEA and LEA report cards for the 2017-2018 school year must include the information required by ESSA with the exception of the per-pupil expenditures data. ED is allowing SEAs and LEAs to delay reporting per-pupil expenditures data until report cards for the 2018-2019 school year. SEAs and LEAs are required to explain the delay in reporting per-pupil expenditures if the data are not being reported until the 2018-2019 school year. In addition, while the per-pupil expenditures data do not have to be reported at the same time as other report card data are released, ED expects SEAs and LEAs to make these data public by the end of the school year during which the other report card data are released. <7.5.2. Do report cards have to indicate why a school was identified for improvement?> SEAs and LEAs are not required to say why a school was identified for CSI, TSI, or ATSI. For example, a report card does not have to indicate whether a school was identified for CSI because it was one of the lowest-performing 5% of Title I-A schools, had a graduation rate of 67% or less, or failed to exit ATSI status in a state-determined number of years. In its report card guidance, ED indicates that SEAs and LEAs "may wish" to provide this information on report cards and provides examples of the types of information that an SEA or LEA might consider including. For example, an SEA or LEA might indicate which subgroup(s) led to the school's identification for TSI. <7.5.2.1. Appendix. Glossary of Acronyms>

The Elementary and Secondary Education Act (ESEA), as amended by the Every Student Succeeds Act (ESSA; P.L. 114-95 ), provides federal aid for elementary and secondary education. The largest ESEA program is Title I-A, Improving the Academic Achievement of the Disadvantaged. As a condition of receiving Title I-A funds, states and local educational agencies (LEAs) must meet requirements related to academic standards, assessments, accountability, and reporting. Academic Standards Each state must adopt (1) challenging academic content standards in reading/language arts (RLA), mathematics, and science; and (2) achievement standards representing three levels of achievement. States must also adopt English language proficiency standards for English Learners (ELs), covering four domains: speaking, listening, reading, and writing. States may adopt alternate achievement standards for students with the most significant cognitive disabilities. Academic Assessments Each state must administer academic assessments in RLA, mathematics, and science. The state is required to administer RLA and mathematics assessments in grades 3 through 8 and once in high school, and it is required to administer science assessments once in each of three grade spans (3-5, 6-8, and 10-12). Each state may assess a certain percentage of students with the most significant cognitive disabilities with an alternate assessment based on alternate achievement standards. Each state must administer an annual assessment of English proficiency to all ELs. Accountability Systems Each state must submit a plan that describes its accountability system. Accountability systems must establish long-term goals and include indicators based on these long-term goals. The indicators must include (1) student performance on RLA and mathematics assessments in all public schools and may include a measure of student growth for public high schools, (2) a measure of student growth or another indicator that allows for meaningful differentiation in school performance for all public elementary and secondary schools that are not high schools, (3) graduation rates for public high schools, (4) progress in English language proficiency by English learners in all public schools, and (5) at least one indicator of student school quality or student success that allows for meaningful differentiation in all public schools. The accountability systems must provide data for all students and allow for the disaggregation of student performance by subgroups: (1) economically disadvantaged students, (2) students from major ethnic/racial groups, (3) children with disabilities, and (4) ELs. States must establish a system of meaningfully differentiating among all public schools in the state based on established indicators. The differentiation among schools must include any school in which any subgroup is consistently underperforming. Using the system of meaningful differentiation, a state must identify schools that require comprehensive support and improvement (CSI), including (1) the lowest performing 5% of all schools receiving Title I-A funds, (2) all public high schools failing to graduate 67% or more of their students, (3) schools required to implement additional targeted support and improvement that have not improved in a state-determined number of years, and (4) additional statewide categories of schools (at the state's discretion). Additionally, states are required to identify schools for targeted support and improvement (TSI), which includes any school in which a subgroup of students is consistently underperforming. Schools may also be identified for additional targeted support and improvement (ATSI), which includes any school in which one or more subgroups performs at a level that, if reflective of an entire school's performance, would result in its identification for CSI. Report Cards Each state is required to prepare and disseminate an annual r eport card . The report card must include (1) information about the s tate's accountability system; (2) schools identified for CSI or schools implementing TSI; (3) information on student performance dis aggregated by various subgroups; (4) teacher qualifications; (5) LEA- and school-level per pupil expenditures of federal, state, and local funds; and (5) additional information related to student assessments. Each LEA that receives Title I-A funds is required to prepare and disseminate an an nual LEA report card that includ es information on the LEA and each public school served by the LEA .

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<1. Context for Heightened U.S.-Iran Tensions> U.S.-Iran relations have been mostly adversarial since the 1979 Islamic Revolution in Iran. U.S. officials and official reports consistently identify Iran's support for militant armed factions in the Middle East region a significant threat to U.S. interests and allies. Attempting to constrain Iran's nuclear program took precedence in U.S. policy after 2002 as that program advanced. The United States also has sought to thwart Iran's purchase of new conventional weaponry and development of ballistic missiles. In May 2018, the Trump Administration withdrew the United States from the 2015 nuclear agreement (Joint Comprehensive Plan of Action, JCPOA), asserting that the accord did not address the broad range of U.S. concerns about Iranian behavior and would not permanently preclude Iran from developing a nuclear weapon. Senior Administration officials explain Administration policy as the application of "maximum pressure" on Iran's economy to (1) compel it to renegotiate the JCPOA to address the broad range of U.S. concerns and (2) deny Iran the revenue to continue to develop its strategic capabilities or intervene throughout the region. Administration officials deny that the policy is intended to stoke economic unrest in Iran. As the Administration has pursued its policy of maximum pressure, including imposing sanctions beyond those in force before JCPOA went into effect in January 2016, bilateral tensions have escalated significantly. Key developments that initially heightened tensions include the following. On April 8, 2019, the Administration designated the Islamic Revolutionary Guard Corps (IRGC) as a Foreign Terrorist Organization (FTO), representing the first time that an official military force was designated as an FTO. The designation stated that "The IRGC continues to provide financial and other material support, training, technology transfer, advanced conventional weapons, guidance, or direction to a broad range of terrorist organizations, including Hezbollah, Palestinian terrorist groups like Hamas and Palestinian Islamic Jihad, Kata'ib Hezbollah in Iraq, al-Ashtar Brigades in Bahrain, and other terrorist groups in Syria and around the Gulf.... Iran continues to allow Al Qaeda (AQ) operatives to reside in Iran, where they have been able to move money and fighters to South Asia and Syria." As of May 2, 2019, the Administration ended a U.S. sanctions exception for any country to purchase Iranian oil, aiming to drive Iran's oil exports to "zero." Since May 2019, the Administration has ended five out of the seven waivers under the Iran Freedom and Counter-Proliferation Act (IFCA, P.L. 112-239 ) waivers that allow countries to help Iran remain within limits set by the JCPOA. On May 5, 2019, citing reports that Iran or its allies might be preparing to attack U.S. personnel or installations, then-National Security Adviser John Bolton announced that the United States was accelerating the previously planned deployment of the USS Abraham Lincoln Carrier Strike Group and sending a bomber task force to the Persian Gulf region. On May 24, 2019, the Trump Administration notified Congress of immediate foreign military sales and proposed export licenses for direct commercial sales of defense articles training, equipment, and weapons with a possible value of more than $8 billion, including sales of precision guided munitions (PGMs) to Saudi Arabia and the United Arab Emirates (UAE). In making the 22 emergency sale notifications, Secretary of State Pompeo invoked emergency authority codified in the Arms Export Control Act (AECA), and cited the need "to deter further Iranian adventurism in the Gulf and throughout the Middle East." <1.1. Iran's Attacks on Tankers in mid-2019> Iran responded to the additional steps in the U.S. maximum pressure campaign in part by demonstrating its ability to harm global commerce and other U.S. interests and to raise renewed concerns about Iran's nuclear activities. Iran apparently has sought to cause international actors, including those that depend on stable oil supplies, to put pressure on the Trump Administration to reduce its sanctions pressure on Iran. On May 12-13, 2019, four oil tankers two Saudi, one Emirat i , and one Norwegian ship were damaged . Iran denied involvement, but a Defense Department (DOD) official on May 24, 2019, attributed the tanker attacks to the IRGC. A report to the United Nations based on Saudi, UAE, and Norwegian information found that a "state actor" was likely responsible, but did not name a specific perpetrator. On June 13, 2019, two Saudi tankers in the Gulf of Oman were attacked. Secretary of State Michael Pompeo stated, "It is the assessment of the U.S. government that Iran is responsible for the attacks that occurred in the Gulf of Oman today .based on the intelligence, the weapons used, the level of expertise needed to execute the operation, recent similar Iranian attacks on shipping, and the fact that no proxy group in the area has the resources and proficiency to act with such a high degree of sophistication.... " <1.2. Actions by Iran's Regional Allies> Iran's allies in the region have been conducting attacks that might be linked to U.S.-Iran tensions, although it is not known definitively whether Iran directed or encouraged each attack (see Figure 1 for a map of Iran-supported groups). Trump Administration officials, particularly Secretary of State Pompeo, has stated that the United States will hold Tehran responsible for the actions of its regional allies. Some of the most significant actions by Iran-linked forces during mid-2019 are the following: On May 19, 2019, a rocket was fired into the secure "Green Zone" in Baghdad but it caused no injuries or damage. Iran-backed Iraqi militias were widely suspected of the firing and U.S. Defense Department officials attributed it to Iran. The incident came four days after the State Department ordered "nonemergency U.S. government employees" to leave U.S. diplomatic facilities in Iraq, claiming a heightened threat from Iranian allies. An additional rocket attack launched from Iraq included a May 2019 attack on Saudi pipeline infrastructure in Saudi Arabia with an unmanned aerial aircraft, first considered to have been launched from Yemen. Further attacks, discussed below, have led to U.S.-Iran hostilities. In June 2019 and periodically thereafter, the Houthis, who have been fighting against a Saudi-led Arab coalition that intervened in Yemen against the Houthis in March 2015, claimed responsibility for attacks on an airport in Abha, in southern Saudi Arabia, and on Saudi energy installations and targets. The Houthis claimed responsibility for the large-scale attack on Saudi energy infrastructure on September 14, 2019, but, as discussed below, U.S. and Saudi officials have concluded that the attack did not originate from Yemen. In a June 13, 2019, statement, Secretary of State Pompeo asserted Iranian responsibility for a May 31, 2019, car bombing in Afghanistan that wounded four U.S. military personnel. Administration reports have asserted that Iran was providing materiel support to some Taliban militants, but outside experts asserted that the Iranian role in that attack is unlikely. <1.3. Tensions turn to Hostilities> In subsequent weeks, U.S.-Iran tensions erupted into direct hostilities as well as further Iranian actions against U.S. partners. <1.3.1. Iran and U.S. Downing of Drones> On June 20, 2019, Iran shot down an unmanned aerial surveillance aircraft (RQ-4A Global Hawk Unmanned Aerial Vehicle) near the Strait of Hormuz, claiming it had entered Iranian airspace over the Gulf of Oman. U.S. Central Command officials stated that the drone was over international waters. Later that day, according to his posts on the Twitter social media site, President Trump ordered a strike on three Iranian sites related to the Global Hawk downing, but called off the strike on the grounds that it would have caused Iranian casualties and therefore been "disproportionate" to the Iranian shoot down. The United States did reportedly launch a cyberattack against Iranian equipment used to track commercial ships. On July 18, 2019, President Trump announced that U.S. forces in the Gulf had downed an Iranian drone via electronic jamming in "defensive action" over the Strait of Hormuz (see Figure 3 ). Iran denied that any of its drones were shot down. <1.3.2. UK-Iran Tensions and Iran Tanker Seizures> U.S.-Iran tensions spilled over into confrontations between Iran and the UK. On July 4, 2019, authorities from the British Overseas Territory Gibraltar, backed by British marines, impounded an Iranian tanker, the Grace I , off the coast of Gibraltar for allegedly violating an EU embargo on the provision of oil to Syria. Iranian officials termed the seizure an act of piracy, and in subsequent days, the IRGC Navy sought to intercept a UK-owned tanker in the Gulf, the British Heritage , but the force was reportedly driven off by a British warship. On July 19, the IRGC Navy seized a British-flagged tanker near the Strait of Hormuz, the Stena Impero , claiming variously that it violated Iranian waters, was polluting the Gulf, collided with an Iranian vessel, or that the seizure was retribution for the seizure of the Grace I . On July 22, 2019, the UK's then-Foreign Secretary Jeremy Hunt explained the government's reaction to the Stena Impero seizure as pursuing diplomacy with Iran to peacefully resolve the dispute, while at the same time sending additional naval vessels to the Gulf to help secure UK commercial shipping. On August 15, 2019, following a reported pledge by Iran not to deliver the oil cargo to Syria, a Gibraltar court ordered the ship (renamed the Adrian Darya 1) released. Gibraltar courts turned down a U.S. Justice Department request to impound the ship as a violator of U.S. sanctions on Syria and on the IRGC, which the U.S. filing said was financially involved in the tanker and its cargo. The ship apparently delivered its oil to Syria despite the pledge and, as a consequence, the United States imposed new sanctions on individuals and entities linked to the ship and to the IRGC. On September 22, 2019, Iran released the Stena Impero . Separate from the UK-Iran dispute over the Grace I and the Stena Impero , Iran seized an Iraqi tanker on August 5, 2019, for allegedly smuggling Iranian diesel fuel to "Persian Gulf Arab states." <1.3.3. Attack on Saudi Energy Infrastructure in September 201926> Iran appeared to escalate tensions significantly by conducting an attack, on September 14, 2019, on multiple locations within critical Saudi energy infrastructure sites at Khurais and Abqaiq. The Houthi movement in Yemen, which receives arms and other support from Iran, claimed responsibility but Secretary of State Pompeo stated "Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world's energy supply. There is no evidence the attacks came from Yemen." Press reports stated that U.S. intelligence indicates that Iran itself was the staging ground for the attacks, in which cruise missiles, possibly assisted by unmanned aerial vehicles, struck nearly 20 targets at those Saudi sites. Iranian officials denied responsibility for the attack. The attack shut down a significant portion of Saudi oil production and, whether conducted by Iran itself or by one of its regional allies, escalated U.S.-Iran and Iran-Saudi tensions and demonstrated a significant capability to threaten U.S. allies and interests. President Trump stated on September 16, 2019, that he would "like to avoid" conflict with Iran and the Administration did not retaliate militarily. U.S. officials did announce modest increases in U.S. forces in the region and some new U.S. sanctions on Iran. The attacks on the Saudi infrastructure raised several broad questions, including What is the extent and durability of the long-standing implicit and explicit U.S. security guarantees to the Gulf states? Have Iran's military technology capabilities advanced further than has been estimated by U.S. officials and the U.S. intelligence community? <1.4. U.S. Sanctions Responses to Iranian Provocations> As tensions with Iran increased, the Trump Administration increased economic pressure on Iran to weaken it strategically, and compel it to negotiate a broader resolution of U.S.-Iran differences. On May 8, 2019, the President issued Executive Order 13871, blocking U.S.-based property of persons and entities determined to have conducted significant transactions with Iran's iron, steel, aluminum, or copper sectors. On June 24, 2019, President Trump issued Executive Order 13876, blocking the U.S.-based property of Supreme Leader Ali Khamene'i and his top associates. Sanctions on several senior officials, including Iran's Foreign Minister Mohammad Javad Zarif, have since been imposed under that Order. On September 4, 2019, the State Department Special Representative for Iran and Senior Advisor to the Secretary of State Brian Hook said the United States would offer up to $15 million to any person who helps the United States disrupt the financial operations of the IRGC and its Qods Force the IRGC unit that assists Iran-linked forces and factions in the region. The funds are to be drawn from the long-standing "Rewards for Justice Program" that provides incentives for persons to help prevent acts of terrorism. On September 20, 2019, the Trump Administration imposed additional sanctions on Iran's Central Bank by designating it a terrorism supporting entity under Executive Order 13224. The Central Bank was already subject to a number of U.S. sanctions, rendering unclear whether any new effect on the Bank's ability to operate would result. Also sanctioned was an Iranian sovereign wealth fund, the National Development Fund of Iran. In early 2020, U.S. officials indicated that they would use all available options to achieve an extension of the arms transfer ban on Iran provided by U.N. Security Council Resolution 2231, and which expires on October 18, 2020. U.S. officials insisted that the ban be extended in order to prohibit Russia and China from proceeding with planned arms sales to Iran, which would have the effect of increasing the conventional military threat from Iran. See CRS In Focus IF11429, U.N. Ban on Iran Arms Transfers , by Kenneth Katzman. <1.5. JCPOA-Related Iranian Responses30> Since the Trump Administration's May 2018 announcement that the United States would no longer participate in the JCPOA, Iranian officials repeatedly have rejected renegotiating the agreement or discussing a new agreement. Tehran also has conditioned its ongoing adherence to the JCPOA on receiving the agreement's benefits from the remaining JCPOA parties, collectively known as the "P4+1." On May 10, 2018, Iranian Foreign Minister Mohammad Javad Zarif wrote that, in order for the agreement to survive, "the remaining JCPOA Participants and the international community need to fully ensure that Iran is compensated unconditionally through appropriate national, regional and global measures." He added that Iran has decided to resort to the JCPOA mechanism [the Joint Commission established by the agreement] in good faith to find solutions in order to rectify the United States' multiple cases of significant non-performance and its unlawful withdrawal, and to determine whether and how the remaining JCPOA Participants and other economic partners can ensure the full benefits that the Iranian people are entitled to derive from this global diplomatic achievement. Tehran also threatened to reconstitute and resume the country's pre-JCPOA nuclear activities. Several meetings of the JCPOA-established Joint Commission since the U.S. withdrawal have not produced a firm Iranian commitment to the agreement. Tehran has argued that the remaining JCPOA participants' efforts have been inadequate to sustain the agreement's benefits for Iran. In May 8, 2019, letters to the other JCPOA participant governments, Iran announced that, as of that day, Tehran had stopped "some of its measures under the JCPOA," though the government emphasized that it was not withdrawing from the agreement. Specifically, Iranian officials said that the government will not transfer low enriched uranium (LEU) or heavy water out of the country in order to maintain those stockpiles below the JCPOA-mandated limits. A May 8, 2019, statement from Iran's Supreme National Security Council explained that Iran "does not anymore see itself committed to respecting" the JCPOA-mandated limits on LEU and heavy water stockpiles. Beginning in July 2019, the International Atomic Energy Agency (IAEA) verified that some of Iran's nuclear activities were exceeding JCPOA-mandated limits; the Iranian government has since increased the number of such activities. Specifically, according to IAEA reports, Iran has exceeded JCPOA-mandated limits on its heavy water stockpile, the number of installed centrifuges in Iran's pilot enrichment facility, Iran's LEU stockpile, and the LEU's concentration of the relevant fissile isotope uranium-235. In addition, Tehran is conducting JCPOA-prohibited research and development activities, as well as centrifuge manufacturing, and has also begun to enrich uranium at its Fordow enrichment facility. The Iranian government announced in a January 5, 2020, statement "the fifth and final step in reducing" Tehran's JCPOA commitments, explaining that Tehran would "set aside the final operational restrictions under the JCPOA which is 'the restriction on the number of centrifuges.' " The statement provided no details regarding concrete changes to Iran's nuclear program, but the term "restrictions" may refer to the JCPOA-mandated limits on installed centrifuges at the country's commercial enrichment facility. According to a March report from the IAEA Director General., Iran has not exceeded these limits. The January 5 announcement added that "[i]n case of the removal of sanctions and Iran benefiting from the JCPOA," Iran "is ready to resume its commitments" pursuant to the agreement. In a May 6 speech, Iranian President Hassan Rouhani characterized Tehran's aforementioned actions as a withdrawal from the government's JCPOA commitments "in an equal scale," Whenever the United States and P4+1 "are ready to observe their full commitments under the JCPOA," Iran "will return to the JCPOA the same day," he added. According to an article published May 6, Iran's Permanent Representative to the IAEA Kazzem Gharibabdi stated that Iran could reduce or end its cooperation with the IAEA if the United States and P4+1 continue actions which, Tehran argues, damage the JCPOA. <1.6. Conflict Erupts (December 2019-January 2020)> In early December 2019, press reports and U.S. officials indicated that Iran was supplying short- range missiles to allied forces inside Iraq. A series of indirect fire attacks in mid-December 2019 targeted Iraqi military facilities where U.S. forces are co-located. In response, Secretary Pompeo issued a statement saying, "We must also use this as an opportunity to remind Iran's leaders that any attacks by them, or their proxies of any kind, that harm Americans, our allies, or our interests will be answered with a decisive U.S. response." Secretary of Defense Mark Esper stated that he urged then-Iraqi Prime Minister Adel Abd Al Mahdi to "take proactive actions to get that under control." On December 27, 2019, a rocket attack on a base near Kirkuk in northern Iraq killed a U.S. contractor and wounded four U.S. service members and two Iraqi service members. Two days later, the U.S. launched retaliatory airstrikes on five facilities (three in Iraq, two in Syria) used by the Iran-backed Iraqi armed group Kata'ib Hezbollah (KH), a U.S.-designated Foreign Terrorist Organization to which the U.S. attributed the attack. KH leader and leading figure in the Iraqi-state affiliated Popular Mobilization Forces Abu Mahdi al Muhandis said dozens of fighters were killed and injured and promised a "very tough response" on U.S. forces in Iraq. Iraqi leaders, including those who want to maintain good relations with both the United States and Iran, criticized the strikes as a "violation of Iraqi sovereignty." The hostilities came as Iran sought to preserve its political influence amidst large-scale demonstrations in which hundreds of protestors were killed by security forces and which contributed to Abd Al Mahdi's resignation that month. He continues to serve in a caretaker role while Iraqi political leaders negotiate a transition. In a December 6, 2019 press briefing announcing sanctions designations of several Iran-linked Iraqi groups and individuals, Assistant Secretary of State for Near Eastern Affairs David Schenker said the United States Government will work with anyone in the Iraqi Government who is willing to put Iraqi interests first.... This is a sine qua non . But we see in the process of establishing a new government or determining who the next prime minister will be that [IRGC-QF commander] Qasem Soleimani is in Baghdad working this issue. It seems to us that foreign terrorist leaders, or military leaders, should not be meeting with Iraqi political leaders to determine the next premier of Iraq, and this is exactly what the Secretary says about being perhaps the textbook example of why Iran does not behave and is not a normal state. This is not normal. This is not reasonable. This is unorthodox and it is incredibly problematic, and it is a huge violation of Iraqi sovereignty. On December 31, 2019, two days after the U.S. airstrikes against KH targets in Iraq and Syria, supporters of KH and other Iran-backed Iraqi militias surrounded and then entered the U.S. Embassy in Baghdad, setting some outer buildings on fire. The militiamen withdrew after their leaders said they obtained acting Prime Minister Abdul Mahdi's promise for "serious work" on a parliamentary vote to expel U.S. forces from the country, a long-sought goal of Iran and its Iraqi allies. President Trump tweeted that Iran, which "orchestrat[ed the] attack," would "be held fully responsible for lives lost, or damage incurred, at any of our facilities. They will pay a very BIG PRICE!" <2. U.S. Escalation and Aftermath: Drone Strike Kills Qasem Soleimani> On January 3, 2020, Iraq time, a U.S. military armed drone strike killed IRGC-QF Commander Major General Qasem Soleimani in what the Defense Department termed a "defensive action." The statement cited Soleimani's responsibility for "the deaths of hundreds of Americans and coalition service members" and his approval of the Embassy blockade, and stated that he was "actively developing plans to attack American diplomats and service members in Iraq and throughout the region." The strike, conducted while Soleimani was leaving Baghdad International Airport, also killed KH leader Abu Mahdi al-Muhandis, who also headed the broader Popular Mobilization Forces (PMF) made up mostly of militia fighters, and other Iranian and Iraqi figures. Iraq's Council of Representatives (CoR) on January 5, 2020, voted to direct the government "to work towards ending the presence of all foreign troops on Iraqi soil," according to the media office of the Iraqi Parliament. Soleimani was widely regarded as one of the most powerful and influential figures in Iran, with a direct channel to Khamene'i, who serves as Commander-in-Chief of all Iranian armed forces. One expert described him as "the military center of gravity of Iran's regional hegemonic efforts" and "an operational and organization genius who likely has no peer in the upper ranks of the Islamic Revolutionary Guard Corps." Others contend that "he was only the agent of a government policy that preceded him and will continue without him." <2.1. Iranian Responses and Subsequent Hostilities> Secretary of State Pompeo underscored that the United States is not seeking further escalation, but Iran's leaders, including Supreme Leader Ali Khamene'i, threatened to retaliate for the Soleimani killing. That retaliation, codenamed "Operation Martyr Soleimani" came on January 8, 2020, in the form of an Iranian ballistic missile strike on two Iraqi bases Ayn al-Asad in western Iraq and an airbase near Irbil, in Kurdish-controlled northern Iraq. The United States reported no "casualties," according to a statement by President Trump on January 8, 2020, and the United States reportedly had some advanced warning of the attack, via Iraqi officials. The President added that "Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world," and there was no U.S. military retaliation for Iran's missile strike. Still, over the coming weeks, about 110 U.S. military personnel were diagnosed with various forms of traumatic brain injury, mostly concussions from the blast. Iran's ability to hit Ayn al-Asad with some degree of precision indicated growing capability in Iran's missile capabilities. For the past several years, the U.S. intelligence community, in its annual worldwide threat assessment briefings for Congress, has assessed that Iran has "the largest inventory of ballistic missiles in the region," and the 2019 version of the annual, congressionally-mandated report on Iran's military power by the Defense Intelligence Agency indicated that Iran is advancing its drone technology and the precision targeting of the missiles it provides to its regional allies. Israel asserts that these advances pose a sufficient threat to justify Israeli attacks against Iranian and Iran-allied targets in the region, including in Lebanon, Syria, and Iraq. <2.1.1. Tensions Resurface in Spring 2020: Iraq and the Gulf> After about two months marked only by casualty-free occasional rocket attacks in Iraq by Iran-backed factions, U.S.-Iran tensions began to rise again in March 2020. On March 11, 2020, a rocket attack on Camp Taji in Iraq, allegedly by KH, killed two U.S. military personnel and one British medic serving with the U.S.-backed coalition fighting the Islamic State organization. On March 13, 2020, the commander of U.S. Central Command (CENTCOM), Gen. Kenneth McKenzie, said the United State used manned aircraft to strike several sites near Baghdad that KH uses as storage areas for advanced conventional weapons, heavy rockets, and associated propellant. According to McKenzie: "We also assessed that the destruction of these sites will degrade Kata'ib Hezbollah's ability to conduct future strikes." However, the deterrent effect of the U.S. strikes appear limited. On March 15, 2020, according to the Defense Department, three U.S. service personnel were injured in another rocket attack on the same location, Camp Taji, of which two were seriously wounded. Some Iraqi military personnel were also wounded. The United States did not retaliate. The new hostilities in Iraq came amid Iraq's struggles to establish a government to succeed that of Adel Abdul Mahdi, who remains a caretaker prime minister. Soleimani's successor, Esmail Qaani, made his first reported visit to Iraq in late March, reportedly in an effort to unite Iran-backed factions on a successor to Abdul Mahdi. The Iraqi political struggles to form a new government reflect the continuing Iranian and U.S. effort to limit each other's influence on Iraqi politics. Several weeks after the Iraq rocket attacks, Iran resumed some provocations in the Persian Gulf. On April 14, 2020, the IRGC Navy forcibly boarded and steered into Iranian waters a Hong Kong-flagged tanker. The next day, eleven IRGC Navy small boats engaged in what the State Department called "high speed, harassing approaches" of five U.S. naval vessels conducting routine exercises in the Gulf." The United States, either separately or as part of the IMSC Gulf security mission discussed above, did not respond militarily to the Iranian actions. However, on April 22, President Trump posted a message on Twitter saying: "I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea." U.S. defense officials characterized the President's message as a warning Iran against further such actions, but they stressed that U.S. commanders have discretion about how to respond to future provocative actions by Iran. Also on April 22, the IRGC announced that it had launched a "military satellite" into orbit. Secretary of State Pompeo reacted by stating "I think today's launch proves what we've been saying all along here in the United States [that Iran's space launches are not for purely commercial purposes]." On May 6, 2020, the Chairman of the Joint Chiefs of Staff Gen. Mark Milley stated "Well, let me put it this way, they launched a satellite vehicle, I think we publicly had stated it was tumbling. So the satellite itself, not overly concerned about it, but the missile technology, the secondary and second and third order missile technology and the lesson learned from that, that is a concern because, you know, different missiles can do different things and one can carry a satellite, another can carry some sort of device that can explode. So, the bottom line is yes, it is a security concern any time Iran is testing any type of long-range missile." <2.2. Efforts to De-Escalate Tensions> U.S. partner countries and U.N. officials have consistently called for the de-escalation of tensions and the avoidance of war. The EU countries have refused to join the U.S. maximum pressure campaign as a consequence of Iran's provocative acts, although the UK, France, and Germany have urged Iran to negotiate a new JCPOA that includes limits on Iran's missile development. Some U.S. allies have joined a U.S. effort to deter Iran from further attacks on shipping in the Gulf. EU officials have said that they still hope to preserve the JCPOA could be preserved. The United States and Iran do not have diplomatic relations and there have been no known high-level talks between Iran and Administration officials since the Trump Administration withdrew from the JCPOA. Prior to the Soleimani killing, various third country leaders, such as Japanese Prime Minister Shinzo Abe in mid-2019 and again in a visit to Iran in December 2019, have sought to move Tehran and Washington toward direct talks. Several Gulf countries have sent delegations to Iran to try to ease U.S.-Iran tensions that the Gulf leaders say could lead to severe destruction in the Gulf states themselves in the event of conflict. A UAE delegation that visited Tehran in late July 2019 undertook the first UAE security talks with Iran since 2013. In late 2019, Saudi Arabia reportedly sought help from Pakistan and Iraq in undertaking talks with Iran to lower tensions. In August 2019, French President Macron appeared to make progress but ultimately did not produce U.S.-Iran talks. While hosting the G-7 summit in Biarritz, Macron invited Foreign Minister Zarif to meet with him there. No Trump-Zarif meeting took place in Biarritz but, at a press conference at the close of the summit, President Trump reiterated his willingness, in principle, to meet with Iranian President Hassan Rouhani, presumably during the U.N. General Assembly meetings in New York in September. President Trump reportedly considered supporting a French proposal to provide Iran with a credit line as an incentive for Iran to meet with him. However, in the wake of the September 14, 2019 attacks in Saudi Arabia and since, the Supreme Leader has stated that there would be no U.S.-Iran talks and Rouhani and Zarif have since repeatedly restated the view that U.S. sanctions be lifted before any such talks. <3. Iran-Focused Additional U.S. Military Deployments> For the stated purpose of trying to deter further Iranian attacks and protecting U.S. forces already in the region, the United States added forces and military capabilities in the region. As of early 2020, approximately 14,000 U.S. military personnel had been added to a baseline of more than 60,000 U.S. forces in and around the Persian Gulf, which include those stationed at military facilities in the Arab states of the Gulf Cooperation Council (GCC: Saudi Arabia, Kuwait, UAE, Qatar, Oman, and Bahrain), and those in Iraq and Afghanistan. Defense Department officials indicated that the additional deployments mostly restored forces who were redeployed from the region a few years ago, and did not represent preparation for any U.S. offensive against Iran. Among the additional deployments, the United States sent additional Patriot and Terminal High Altitude Area Defense (THAAD) missile defense systems in the region. Some of the additional forces sent deployed to Prince Sultan Air Base in Saudi Arabia, which is south of Riyadh. U.S. forces used the base to enforce a no-fly zone over southern Iraq during the 1990s, but left there after Saddam Hussein was ousted by Operation Iraqi Freedom in 2003. As 2020 progressed, some U.S. deployments changed. In March 2020, hundreds of U.S forces in Iraq were redeployed from smaller bases in Iraq to larger ones, and some were withdrawn to locations elsewhere in the region. The redeployments reportedly were due to a waning threat in Iraq from the Islamic State organization as well as the apparent need to better defend U.S. forces from attacks by Iran-backed militias. In early May 2019, it was reported that the United States had withdrawn some Patriot air defenses and combat aircraft from Saudi Arabia and other locations in the Gulf, although U.S. officials denied that the deployments signaled an altered assessment of the Iran threat or would degrade U.S. capabilities to deter Iran. <3.1. Gulf Maritime Security Operation> Iran's naval actions in the Gulf in mid-2019 prompted the formation of a new, U.S.-led military operation to protect commercial shipping in the Gulf. The maritime security and monitoring initiative for the Gulf, the Bab el-Mandeb Strait, and the Suez Canal was termed "Operation Sentinel." Operation Sentinel began activities in August 2019 and was then formally inaugurated as the International Maritime Security Construct (IMSC) in Bahrain in November 2019. It consists of: the United States, the UK, the UAE, Saudi Arabia, Bahrain, Qatar, Kuwait, Albania, and Australia) operating four sentry ships at crucial points in the Gulf. Additionally, Israeli Foreign Minister Yisrael Katz said Israel would join the coalition, but Defense Department officials have not listed Israel as a participant in IMSC to date. China's ambassador to the UAE said in early August 2019 that China was considering joining the mission, although no announcement of China's participation has since been made. The IMSC supplements longstanding multilateral Gulf naval operations that have targeted smuggling, piracy, the movement of terrorists and weaponry, and other potential threats in the Gulf. Other countries have started separate maritime security missions in the Gulf. France leads a maritime security mission, headquartered in Abu Dhabi, that began activities in early 2020. India has sent some naval vessels to the Gulf to protect Indian commercial ships. In December 2019, Japan sent vessels to protect Japanese shipping, also separate from the IMSC. <4. U.S. Military Action: Options and Considerations> The military is a tool of national power that the United States can use to advance its objectives, and the design of a military campaign and effective military options depend on the policy goals that U.S. leaders seek to accomplish. The Trump Administration has stated that its "core objective ... is the systemic change in the Islamic Republic's hostile and destabilizing actions, including blocking all paths to a nuclear weapon and exporting terrorism." As such, the military could be used in a variety of ways to try to contain and dissuade Iran from prosecuting its "hostile and destabilizing actions." These ways range from further increasing presence and posture in the region to use of force to change Iran's regime. As with any use of the military instrument of national power, any employment of U.S. forces in this scenario could result in further escalation of a crisis. U.S. military action may not be the appropriate tool to achieve systemic change within the Iranian regime, and may potentially set back the political prospects of Iranians sympathetic to a change of regime. Some observers question the utility of military power against Iran due to global strategic considerations. The 2017 National Security Strategy and 2018 National Defense Strategy both noted that China and Russia represent the key current and future strategic challenges to the United States. As such, shifting additional military assets into the United States Central Command (CENTCOM) area of responsibility requires diverting them from use in other theaters such as Europe and the Pacific, thereby sacrificing other long-term U.S. strategic priorities. Secretary of Defense Mark Esper and other U.S. officials have stated that the additional U.S. deployments since May 2019 are intended to deter Iran from taking any further provocative actions and position the United States to defend U.S. forces and interests in the region. Iranian attacks after previous U.S. deployments could suggest that deploying additional assets and capabilities might not necessarily succeed in deterring Iran from using military force. On the other hand, there are risks to military inaction that might potentially outweigh those associated with the employment of force. For example, should Iran acquire a nuclear weapons capability, U.S. options to contain and dissuade it from prosecuting hostile activities could be significantly more constrained than they are at present. For illustrative purposes only, below are some potential additional policy options related to the possible use of military capabilities against Iran. Not all of these options are mutually exclusive, nor do they represent a complete list of possible options, implications, and risks. Congress has assessed its role in any decisions regarding whether to undertake military action against Iran, as discussed later in this report. The following discussion is based entirely on open-source materials. Operations against Iranian a llies or proxies . The Administration might decide to take additional action against Iran's allies or proxies, such as Iran-backed militias in Iraq, Lebanese Hezbollah, or the Houthi movement in Yemen. Such action could take the form of air operations, ground operations, special operations, or cyber and electronic warfare. Further attacks on Iranian allies could be intended to seriously degrade the military ability of the Iranian ally in question and undertaken by U.S. forces, partner government forces, or both. At the same time, military action against Iran's allies could harm the prospects for resolution of the regional conflicts in which Iranian allies operate. Retaliatory Action against Iranian Key Targets and Facilities. The United States retains the option to undertake air and missile strikes, as well as special operations and cyber and electronic warfare against Iranian targets, such as IRGC Navy vessels in the Gulf, nuclear facilities, military bases, ports, oil installations, and any number of other targets within Iran itself. Iran's major Gulf ports are shown in Figure 2 . Blockade. Another option could be to establish a naval and/or air quarantine of Iran. Iran has periodically, including since mid-2019, threatened to block the vital Strait of Hormuz. Some observers have in past confrontations raised the prospect of a U.S. closure of the Strait or other waterways to Iranian commerce. Under international law, blockades are acts of war. Invasion. Although apparently far from current consideration because of the potential risks and costs, a U.S. invasion of Iran to oust its regime is among the options. Press reports in May 2019 indicated that the Administration was considering adding more than 100,000 military forces to the Gulf to deter Iran from any attacks. Such an option, if exercised, might be interpreted as potentially enhancing the U.S. ability to conduct ground attacks inside Iran, although military experts have indicated that a U.S. invasion and/or occupation of Iran would require many more U.S. forces than those cited. Iran's population is about 80 million, and its armed forces collectively number about 525,000, including 350,000 regular military and 125,000 IRGC forces. There has been significant antigovernment unrest in Iran over the past 10 years, but there is no indication that there is substantial support inside Iran for a U.S. invasion to change Iran's regime. <4.1. Resource Implications of Military Operations> Without a more detailed articulation of how the military might be employed to accomplish U.S. objectives vis-a-vis Iran, and a reasonable level of confidence about how any conflict might proceed, it is difficult to assess with any precision the likely fiscal costs of a military campaign, or even just heightened presence. Still, any course of action listed in this report is likely to incur significant additional costs. Factors that might influence the level of expenditure required to conduct operations include, but are not limited to, the following: The number of additional forces, and associated equipment, deployed to the Persian Gulf or the CENTCOM theater more broadly. In particular, deploying forces and equipment from the continental United States (if required) would likely add to the costs of such an operation due to the logistical requirements of moving troops and materiel. The mission set that U.S. forces are required to prosecute and its associated intensity. Some options leading to an increase of the U.S. posture in the Persian Gulf might require upgrading existing facilities or new construction of facilities and installations. By contrast, options that require the prosecution of combat operations would likely result in significant supplemental and/or overseas contingency operations requests, particularly if U.S. forces are involved in ground combat or post-conflict stabilization operations. The time required to accomplish U.S. objectives. As demonstrated by operations in Iraq and Afghanistan, the period of anticipated involvement in a contingency is a critical basis for any cost analysis. On one hand, a large stabilizing or occupying ground force to perform stabilization and reconstruction operations, for example, would likely require the expenditure of significant U.S. resources. At the same time, there is potential for some U.S. costs to be offset by contributions. The Persian Gulf states and other countries have a track record of offsetting U.S. costs for Gulf security. In the current context, President Trump stated in October 2019 that Saudi Arabia would pay for the deployment of additional U.S. troops and capabilities to assist with the territorial defense of Saudi Arabia and the deterrence of Iranian aggression in the region overall, and subsequent reports indicate that U.S. and Saudi officials are negotiating a cost-sharing arrangement for the new deployments. <5. Congressional Responses> Members of Congress have responded in different ways to tensions with Iran and to related questions of authorization for the use of military force. Various instances of increased U.S.-Iran tensions in the past year have prompted some Members to express concern about or support for potential military operations against Iran. These episodes include the June 2019 attacks against tankers in the Gulf of Oman and Iran's shoot down of a U.S. military drone; the September 2019 attacks on Saudi oil facilities at Abqaiq and Khurais; and the buildup of U.S. forces in the region in response to Iranian activities. Throughout this period, Congress passed legislation with provisions specifying that authorization for the use of force against Iran is not granted. For instance, Section 1284 of the FY2020 NDAA ( P.L. 116-92 , December 2019) states that "Nothing in this Act, or any amendment made by this Act, may be construed to authorize the use of military force, including the use of military force against Iran or any other country." Similarly, Section 9024 of Division A of H.R. 1158 , the Consolidated Appropriations Act, 2020, ( P.L. 116-89 , December 2019) states that "Nothing in this Act may be construed as authorizing the use of force against Iran." However, Congress has not prohibited the use of funds for operations against Iran, despite the introduction of several standalone measures that would do so, such as the Prevention of Unconstitutional War with Iran Act of 2019 ( H.R. 2354 / S. 1039 ).While the House did pass legislation that included a prohibition on funding for the use of force against Iran, including Section 1229 of H.R. 2500 , the National Defense Authorization Act (NDAA) for FY2020, the Senate rejected by a 50-40 vote an amendment ( S.Amdt. 883 ) that would have added similar text to its version of the FY2020 NDAA, and the House-passed language was not included in conference text of the bill. In response to these moves, President Trump stated that he had wide-ranging authority to unilaterally initiate the use of military force, as successive Administrations have maintained. For instance, in a June 24 interview, President Trump reiterated that he believed he had the authority to order military action against Iran without congressional approval, adding, "I do like keeping them [Congress] abreast, but I don't have to do it, legally." Secretary Pompeo suggested in an April 2019 hearing that the 2001 authorization for use of military force (AUMF, P.L. 107-40 ) against those responsible for the September 11 terrorist attacks could potentially apply to Iran based on the country's ties with Al Qaeda. However, in a June 28, 2019, letter to House Foreign Affairs Committee Chairman Eliot Engel, Assistant Secretary of State for Legislative Affairs Mary Elizabeth Taylor stated that "the Administration has not, to date, interpreted either [the 2001 or 2002] AUMF as authorizing military force against Iran, except as may be necessary to defend U.S. or partner forces engaged in counterterrorism operations or operations to establish a stable, democratic Iraq." The killing of IRGC-QF Commander Soleimani in a U.S. drone strike in Baghdad in January 2020 dramatically increased congressional attention to U.S.-Iran tensions and specifically to the authority under which Soleimani was killed and whether that authority might be used to justify further military action. Immediately after the strike, House Speaker Nancy Pelosi said in a statement that the Administration launched the strike that killed Soleimani "without an Authorization for Use of Military Force (AUMF) against Iran" and "without the consultation of the Congress," and called for Congress to be "immediately briefed on this serious situation." Two days later, on January 4, 2020, President Trump submitted a notification to the Speaker of the House and President Pro Tempore of the Senate of the Soleimani drone strike, as pursuant to the War Powers Resolution ( P.L. 93-148 ), including the constitutional and legislative authority for the action. However, according to a media report, the notification "only contained classified information, according to a senior congressional aide, likely detailing the intelligence that led to the action." Speaker Nancy Pelosi criticized the decision to classify the notification in its entirety as "highly unusual." In statements after the strike, National Security Adviser Robert O'Brien asserted that the Authorization for Use of Military Force Against Iraq Resolution of 2002 ("2002 AUMF"; P.L. 107-243 ) provided the President authority to direct the strike against General Soleimani in Iraq. The House voted to repeal the 2002 AUMF on January 30, 2020, when it passed the No War Against Iran Act ( H.R. 550 ); no action has been taken by the Senate. In response to the strike, numerous pieces of legislation were introduced both commending and condemning the Administration for the action (for more, see CRS Report R46148, U.S. Killing of Qasem Soleimani: Frequently Asked Questions ). Perhaps most significant were two resolutions that would direct the President to terminate the involvement of U.S. forces in conflict with Iran. H.Con.Res. 83 , introduced by Representative Elissa Slotkin on January 8, 2020, pursuant to Section 5(c) of the War Powers Resolution. The resolution would direct the President "to terminate the use of United States Armed Forces to engage in hostilities in or against Iran or any part of its government or military," unless Congress specifically authorizes such use of the armed forces, or if such force is necessary and appropriate to defend the United States or its armed forces against "imminent attack." The House voted to adopt H.Con.Res. 83 by a 224-194 vote on January 9, 2020; no action has been taken by the Senate. Questions have been raised about the constitutionality and effect of Section 5(c) concurrent resolutions. S.J.Res. 68 , introduced by Senator Tim Kaine on January 9, 2020, pursuant to Section 1013 of the Department of State Authorization Act, Fiscal Years 1984 and 1985 (50 U.S.C. 1546a). The resolution would have directed the President to "terminate the use of U.S. armed forces for hostilities" with Iran (changed from an earlier version that would have required "removal" of U.S. armed forces, perhaps a reflection of concern that the original language might precipitate changes in current deployments). The Senate voted to adopt the resolution by a 55-45 vote on February 13, and the House passed it by a 227-186 vote on March 11. President Trump vetoed the resolution on May 6, 2020, describing it as an "insulting" election ploy by congressional Democrats. The statement also stated that the resolution's implication that "the President's constitutional authority to use military force is limited to defense of the United States and its forces against imminent attack" was "incorrect." The Senate failed to override the veto by a vote of 49-44 on May 7, 2020. <5.1. Possible Issues for Congress> Given ongoing tensions with Iran, Members are likely to continue to assess and perhaps try to shape the congressional role in any decisions regarding whether to commit U.S. forces to potential hostilities. In assessing its authorities in this context, Congress might consider, among other things, the following: Does the President require prior authorization from Congress before initiating hostilities with Iran? If so, what actions, under what circumstances, ought to be covered by such an authorization? If not, what existing authorities provide for the President to initiate hostilities? If the executive branch were to initiate and then sustain hostilities against Iran without congressional authorization, what are the implications for the preservation of Congress's role, relative to that of the executive branch, in the war powers function? How, in turn, might the disposition of the war powers issue in connection with the situation with Iran affect the broader question of Congress's status as an equal branch of government, including the preservation and use of other congressional powers and prerogatives? The Iranian government may continue to take aggressive action short of directly threatening the United States and its territories while it continues policies opposed by the United States. What might be the international legal ramifications for undertaking a retaliatory, preventive, or preemptive strikes against Iran in response to such actions without a U.N. Security Council mandate? Conflict with, or increased military activity in or around, Iran could generate significant costs, financial and otherwise. With that in mind, Congress could consider the following: The potential costs of heightened U.S. operations in the CENTCOM area of operations, particularly if they lead to full-scale war and significant postconflict operations. The need for the United States to reconstitute its forces and capabilities, particularly in the aftermath of a major conflict. The impact of the costs of war and post conflict reconstruction on U.S. deficits and government spending. The costs of persistent military confrontation and/or a conflict in the Gulf region to the global economy. The extent to which regional allies, and the international community more broadly, might contribute forces or resources to a military campaign or its aftermath.

Since May 2019, U.S.-Iran tensions have heightened significantly, and evolved into conflict after U.S. military forces killed Qasem Soleimani, the commander of the Iran's Islamic Revolutionary Guard Corps-Quds Force (IRGC-QF) and one of Iran's most important military commanders, in a U.S. airstrike in Baghdad on January 3, 2020. The United States and Iran have appeared to be on the brink of additional hostilities since, as attacks by Iran-backed groups on bases in Iraq inhabited by U.S. forces have continued. The background to the U.S.-Iran tensions are the 2018 Trump Administration withdrawal from the 2015 multilateral nuclear agreement with Iran (Joint Comprehensive Plan of Action, JCPOA), and Iran's responses to the U.S. policy of applying "maximum pressure" on Iran. Since mid-2019, Iran and Iran-linked forces have attacked and seized commercial ships, destroyed some critical infrastructure in the Arab states of the Persian Gulf, conducted rocket and missile attacks on facilities used by U.S. military personnel in Iraq, downed a U.S. unmanned aerial vehicle, and harassed U.S. warships in the Gulf. As part of an effort it terms "maximum resistance," Iran has also reduced its compliance with the provisions of the JCPOA. The Administration has deployed additional military assets to the region to try to deter future Iranian actions. The U.S.-Iran tensions still have the potential to escalate into all-out conflict. Iran's materiel support for armed factions throughout the region, including its provision of short-range ballistic missiles to these factions, and Iran's network of agents in Europe, Latin America, and elsewhere, give Iran the potential to expand confrontation into areas where U.S. response options might be limited. Iran has continued all its operations in the region despite wrestling with the COVID-19 pandemic that has affected Iran significantly. United States military has the capability to undertake a range of options against Iran, both against Iran directly and against its regional allies and proxies. A September 14, 2019, attack on critical energy infrastructure in Saudi Arabia demonstrated that Iran and/or its allies have the capability to cause significant damage to U.S. allies and to U.S. regional and global economic and strategic interests, and raised questions about the effectiveness of U.S. defense relations with the Gulf states. Despite the tensions and some hostilities with Iran since 2020 began, President Donald Trump continued to state that his policy goal is to negotiate a revised JCPOA that encompasses not only nuclear issues but also Iran's ballistic missile program and Iran's support for regional armed factions. High-ranking officials from several countries have sought to mediate to try to de-escalate U.S.-Iran tensions by encouraging direct talks between Iranian and U.S. leaders. President Trump has stated that he welcomes talks with Iranian President Hassan Rouhani without preconditions, but Iran insists that the United States lift sanctions as a precondition for talks, and no U.S.-Iran talks have been known to take place to date. Members of Congress have received additional information from the Administration about the causes of the U.S.-Iran tensions and Administration responses. They have responded in a number of ways; some Members have sought to pass legislation requiring congressional approval for any decision by the President to take military action against Iran. Additional detail on U.S. policy options on Iran, Iran's regional and defense policy, and Iran sanctions can be found in CRS Report RL32048, Iran: Internal Politics and U.S. Policy and Options , by Kenneth Katzman; CRS Report RS20871, Iran Sanctions , by Kenneth Katzman; CRS Report R44017, Iran's Foreign and Defense Policies , by Kenneth Katzman; and CRS Report R43983, 2001 Authorization for Use of Military Force: Issues Concerning Its Continued Application , by Matthew C. Weed.

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<1. Introduction> The Social Security program, or Old-Age, Survivors, and Disability Insurance (OASDI), pays monthly benefits to retired or disabled workers and their families and to the family members of deceased workers. The OASDI program's ability to meet scheduled benefit payments rests upon sufficient revenues from payroll taxes, taxation on Social Security benefits, and interest earned on trust funds assets. The year 2020 marks the first since 1982 in which the OASDI program's total cost is projected to be greater than its total income. Because of annual cash surpluses amassed in the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund in the period spanning 1983 through 2019, the OASDI program is able to meet its benefit obligations by drawing on these assets to supplement annual revenues. The Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds estimates that drawing down the trust funds can augment OASDI program revenues and allow it to pay full benefits until 2035. Should the trust funds be depleted in 2035, as the trustees project, the OASDI program would have tax revenues sufficient to pay about 80% of scheduled benefits. The OASDI program, and its financing, are affected by economic, program-specific, and demographic factors. Economic factors include issues such as productivity, price inflation, unemployment, and gross domestic product; program-specific factors include issues such as covered and taxable earnings, revenues from taxation of benefits, and average benefits indexed to growth in average national wages. Demographic factors include fertility, mortality, and immigration. This report focuses on two demographic factors specifically fertility and mortality and how they interact to affect the program's ability to pay full scheduled benefits. The trustees' 2019 Annual Report states the following: Projected OASDI cost increases more rapidly than projected non-interest income through 2040 primarily because the retirement of the baby-boom generation will increase the number of beneficiaries much faster than the number of covered workers increases, as subsequent lower-birth-rate generations replace the baby-boom generation at working ages. From 2040 to 2051, the cost rate (the ratio of program cost to taxable payroll) generally declines because the aging baby-boom generation is gradually replaced at retirement ages by subsequent lower-birth-rate generations. Thereafter, increases in life expectancy cause OASDI cost to increase generally relative to non-interest income, but more slowly than between 2010 and 2040. A remaining demographic factor immigration is not examined in this report because the Board of Trustees analysis shows that combined changes in fertility and mortality are the leading causes of financial pressure on the OASDI program. The Social Security population, both covered workers paying into the system and those collecting benefits, is experiencing shifts in age distribution. Decreased fertility rates for generations after the baby boomers (those born between 1946 and 1964) are contributing to an overall older population. In addition, increases in average life expectancy are also contributing to the aging of the U.S. population. The combination of decreasing fertility and longer life expectancies results in higher costs, as presented in Figure 1 , which shows OASDI costs increasing as a percentage of taxable payroll. As costs remain above income, the trust funds' assets are used to fulfill scheduled monthly benefit payments. The Board of Trustees projects this process will continue into 2034, after which the trust funds' assets are exhausted and reserves no longer exist. The OASDI program can pay scheduled benefits while operating with a cash flow deficit (i.e., costs exceed revenues) during periods of positive trust funds balances because assets held in the trust funds can be redeemed to augment continuing income. However, this process cannot last indefinitely. As shown in Figure 1 , a cash flow deficit is projected to persist throughout the 75-year projection period (2019-2093). This report presents data showing that the projected deficits are the result of rising costs associated with demographic changes, outlines how these demographic changes will impact the OASDI program's ability to fulfill benefit payments, and discusses some options policymakers have to address the program's financial shortfall. <2. The Social Security Population Is Growing Older> Driven by reduced fertility rates and increasing longevity, the Social Security population is aging. In other words, the percentage of the Social Security population at the older end of the age distribution is increasing. This point is underscored by considering three broad age subgroups: (1) those aged 65 and older ; (2) those aged 20 through 64 ; and (3) those under age 20 . Analyzing the population using these broad age groups highlights the concentration of those likely to be retired or close to retirement (i.e., aged 65 and older), those in ages commonly seen as prime working years (i.e., aged 20 through 64), and those generally considered not yet in the paid workforce (i.e., under age 20). Table 1 shows population growth rates for the 70-year period from 1945 to 2015, the first and the most recent years, respectively, for which the trustees publish historical data. It also shows the trustees' projections for growth in the population, and its subgroups, for the ensuing 70-year period of 2015 through 2085. From 1945 through 2015, the Social Security population more than doubled. Table 1 shows that, although the population grew by 120% over this period, growth in major age groups varied. On a percentage-change basis, the largest growth was observed in the 65 and over age group. From 1945 through 2015, this age group grew by 338%, indicating that the number of people in the United States aged 65 and older more than tripled. This demographic trend underscores the degree to which the United States is growing older; in 1945, those 65 and older accounted for 7% of the total population, whereas in 2015, those 65 and older accounted for about 15% of the total population. This trend has implications for the Social Security program's ability to meet all of its projected scheduled benefits as the younger and slower-growing age groups of working age (i.e., those aged 20 to 64) are paying into the system while the older and faster-growing age groups (i.e., those aged 65 and older) are likely to be collecting benefits. The right-hand column in Table 1 shows that the trustees projected future years will continue to see growth in the 65 and older age group outpace that of the overall population. By 2085, the 65 and older age group is projected to make up about 22% of the total population. As this trend persists, which it is projected to do under the trustees' intermediate assumptions, it will cause OASDI program costs to rise more rapidly than revenues, thereby degrading the program's ability to pay full scheduled benefits. Table 1 also shows how the working-age population is projected to be a smaller percentage of the overall population. This is an essential consequence of an aging population. That is, as the percentage of those aged 65 and older is increasing, the percentages in the other age group (i.e., working ages between 20 and 64) are decreasing. This point is reinforced by examining dependency ratios. <3. Dependency Ratios> The changes in the Social Security population's composition can also be expressed as dependency ratios. Dependency ratios indicate a dependent population's burden on the working-age population. Table 1 shows that in 1945, about 59% of the total population was working age, between the ages of 20 and 64. The next-largest age group was the under 20 age group, which accounted for about 33% of the population. In 1945, the United States could be described as youth dependent because the working-age population was supporting the next-larger, under 20 population. The same could be said for the United States in 2015, when the 20 to 64 age group was about 59% of the total population and those in the under 20 age group accounted for 26% of the total population ( Table 1 ). That is, from 1945 to 2015, the United States became less youth dependent. Over this time period, the percentage of the total population aged 65 and older increased from 7% to 15%, indicating that the United States was becoming more aged dependent . The United States is projected to age from a youth-dependent population to an aged-dependent population, where the working-age population will be supporting the next-larger, 65 and older population. The transition to a more aged-dependent population is important for Social Security purposes because the program's ability to continue to pay beneficiaries relies on taxes paid by current workers. As discussed, the dependency ratios have changed over time and are projected to continue to change. Figure 2 presents a more detailed look at the dependency ratios and shows how they have changed in a historical context and how they are projected to change throughout the trustees' 75-year projection period. <3.1. Youth Dependency> Figure 2 shows the youth dependency ratio, which is the ratio of the population under 20 to the population aged 20-64. It is an approximate measure of how many young persons are supported by those in working ages. For instance, in 1945 the youth dependency ratio was 56%, suggesting that every 100 people in working ages were supporting 56 youths. From 1945 to 1965, the youth population increased relative to the working-age population, resulting in an increasing youth dependency ratio. As the baby boom generation attained working ages (the oldest of the baby boom generation turned 20 in 1966), the working-age population increased relative to the youth population and this ratio began to decrease. By 1985, when all of the baby boom generation had reached working age (the youngest of the baby boom generation turned 20 in 1984), this ratio had decreased to 51%, a level comparable to that observed prior to the baby boomers (i.e., in 1945 the youth dependency ratio was 56%). <3.2. Aged Dependency> Figure 2 also shows the aged dependency ratio. The aged dependency ratio is the ratio of the population aged 65 and older to the population aged 20-64. Although the age at which a beneficiary can collect Social Security benefits varies by birth year, this ratio is an approximate indicator of the number of people likely to be collecting benefits relative to those still working. For instance, in 1945 the aged dependency ratio was 12%, suggesting that for every 100 working-age people there were 12 people collecting benefits. The increase in this ratio highlights the aging of the population. As shown, this ratio increased from 12% in 1945 to 25% in 2015. That is, the number of people collecting benefits versus the number of people still working doubled over this period. Throughout the trustees' 75-year projection period, this ratio will continue to increase under the intermediate projections, due in large part to the baby boomers' continued retirement from the work force, relative to the numbers in the working-age population. The trustees project the aged dependency ratio to exceed 35% by 2025 and 40% by 2065. This projected tripling of the aged dependency ratio reflects the aged population's faster growth compared with that of the working-age population. <3.3. Total Dependency> The total dependency ratio is the ratio of those aged 65 and above and those aged under 20 to those aged 20-64. Thus, the ratio is an approximate measure of the number of people not of working age to the number of working-age people. The beginning of the baby boom generation is indicated by the rising total dependency ratio as shown in Figure 2 . The total dependency ratio remained relatively stable from the mid-1980s to the early 2010s as the baby boomers remained in working ages. The oldest baby boomers reached full retirement age in 2012, making it the first year that a baby boomer could retire with full benefits. Thus, as the baby boom generation began to exit the paid labor force in the 2010s, the ratio can be seen to rise slightly. The ratio is projected to increase as more of that generation enters retirement age. Owing to the sustained decrease in total fertility rates since the 1970s, the aged dependency and total dependency ratios are projected to increase even after the last baby boomers have reached full retirement age in 2031. The demographic trends that created the baby boomers led to an imbalance between the number of people who have or will retire (i.e., present and potential beneficiaries) and the number of people in working ages (i.e., present and potential covered workers). Specifically, as the baby boom generation ages, those aged 65 and older will make up a larger portion of the total population. The transition from a youth-dependent population to an aged-dependent population means the number of beneficiaries will increase faster than the number of covered workers. As a result, the trustees project that OASDI costs will rise relative to revenues. <4. Decreasing Fertility Rates> The aging of the Social Security population is partially driven by a decline in the total fertility rate after 1965. The total fertility rate (TFR) is the average number of children that would be born to a woman throughout her lifetime if she were to experience, at each age of her life, the birth rate observed in that year. In 1920, the TFR was 3.26 children per woman. By 1940, the TFR was comparatively lower, at a rate of 2.23 children per woman; this was the lowest TFR that had been observed to date. This decrease was reversed within the decade when a period of high fertility created the baby boom generation, those born between 1946 and 1964 ( Appendix A ). This period of high fertility is shown in Figure 3 and is marked on either side by periods of low fertility. In fact, fertility rates after 1964 (i.e., immediately following the baby boomers) decreased to the lowest levels recorded in the United States. Much of what makes the baby boom generation so impactful is that the cohort was both preceded and followed by low fertility rates. Figure 3 shows the historical fertility rates as measured by the National Center for Health Statistics (Centers for Disease Control and Prevention) and the trustees, as well as the trustees' projected fertility rates under their intermediate assumptions. The U.S. TFR reached a minimum of 1.77 children per woman in 1975. The TFR has remained at relatively low levels in the years that followed, a trend that is projected to continue. The Board of Trustees projects that the TFR will remain close to 2.0 children per woman throughout the 75-year projection period. <4.1. Causes for the Decrease in Fertility Rates> Research suggests that there are many contributing factors for the decline in fertility rates. For instance, changes in fertility rates have been closely linked to changes in personal income and changes in the employment rate. This perhaps explains why a decrease in fertility coincided with the 2008-2009 financial crisis, before which the fertility rate was increasing. Additional research reinforces economic and financial uncertainty's effect on fertility and birth rates. Studies have shown that those who worried more frequently about future job prospects were more likely to have doubts about having children and expected to have them later in life. Research has also suggested that a mother's postponement of childbearing increases her children's socioeconomic opportunities. Costs associated with raising children may have effects as well. From 1960 to 2015, the average cost of raising a single child from birth to age 17 for a middle-income, married couple increased 16% in real terms. Over this period, the portions of costs attributable to housing, food, transportation, and clothing have decreased. However, costs associated with healthcare doubled as a percentage of total cost and costs associated with child care and education increased from 2% of total costs to 16%. To the degree parents contribute to the costs of higher education, the increasing trend in child care costs may be understated. The decision to have children later in life is reflected in historical data. Specifically, the decline in fertility among women has not been shared uniformly across age groups. In fact, since the mid-1970s fertility among women aged 30-34 and 34-39 has been increasing ( Figure B-1 ). These data suggest that although the desire to have children remains, the age at which it is done has increased. This postponement of childbearing results in a lower overall fertility rate. <5. Decreasing Mortality and Longer Life Expectancy> On average, the Social Security population is living longer. This demographic trend is observed in two complementary measures: a decreasing mortality rate and increasing life expectancy. More individuals within the Social Security population are surviving to retirement age, and once in retirement they are collecting benefits for a greater number of years than previous generations of beneficiaries. For instance, in 1945, one year before the baby boom began, a male at birth could expect to live on average for 62.9 years. In 1965, one year after the baby boom ended, a male at birth could expect to live 66.8 years on average, an increase of almost 4 years. During that same period, the average life expectancy for a female at birth increased by 5.4 years. <5.1. Causes of Death> The trustees cite several developments over the past century that contributed to the lower mortality rates, including access to primary medical care for the general population, discovery and general availability of antibiotics and immunizations, clean water supply and waste removal, and the rapid rate of growth in the general standard of living. Changes in the leading causes of death support the effectiveness of the developments cited by the trustees. In 1900, the leading cause of death in the United States was infectious diseases, such as influenza or tuberculosis (see Appendix C ). From 1900 to 1940, the decline in infectious disease as a major cause of death was largely attributed to nutritional improvements and public health measures; the subsequent development of medical treatments further reduced infectious disease as a leading cause of death. As deaths due to infectious diseases declined, deaths due to diseases of old age increased. From 1900 to 1940, diseases associated with old age cardiovascular disease and cancer became the two leading causes of death. By 1950, cardiovascular disease alone led to more deaths than the next four leading causes. However, owing to improvements in medical treatments and access to those treatments, the age-adjusted death rate for cardiovascular disease decreased by more than 70% by 2015. In addition, this time period overlaps with the 1965 creation of Medicare, which has provided older Americans with better access to health care. <5.2. Decreasing Mortality> Figure 4 shows how the developments cited by the trustees combined to decrease mortality rates in the Social Security population. From 1945 to 2015, the death rate declined from 1,716.6 persons per 100,000 to 815.8 persons per 100,000, an approximate decline of 52%. This trend underscores the aging of the Social Security population, that is, more and more people covered by Social Security are surviving to retirement age. The trustees project this trend of decreasing mortality rates will continue throughout the projection period. Figure 4 shows historical death rates as measured by the National Center for Health Statistics (Centers for Disease Control and Prevention) and the trustees, and the trustees' projected death rates under their intermediate assumptions. <5.3. Longer Life Expectancy at Retirement> The decrease in mortality rates from 1945 to 2015 translated into higher average life expectancies for Social Security-covered individuals, both those currently working and those collecting benefits. A main measure of life expectancy is period life expectancy: an individual's expected average remaining life at a selected age, assuming no future changes in death rates. In 1945, the period life expectancy at birth was 62.9 years for a male and 68.4 years for a female. This indicates that in 1945, shortly after Social Security began regular monthly payments, the average newborn male was not expected to reach full retirement age and the average female was not expected to live more than a few years beyond full retirement age (in 1945 the full retirement age was 65, see Table 2 ). In 2015, the period life expectancy at birth was 76.2 years for a male and 81.0 years for a female. Thus, males and females born in 2015 can expect at birth to live approximately 13 years longer than those born in 1945. Decreasing age-specific mortality rates at the older ages also translate into longer period life expectancy at age 65, an age commonly associated with retirement. In 1945, shortly after Social Security began regular monthly payments, a 65-year-old female could expect to live another 14.4 years on average and a 65-year-old male could expect to live another 12.6 years. In 2015, those life expectancies were 20.4 years and 17.8 years, respectively. In 2015, more of the population survived to the age at which they were eligible for Social Security benefits than in 1945. In addition, individuals reaching eligibility age in 2015 exhibited longer period life expectancies than in 1945. As shown in Figure 5 , the trustees project this trend to continue throughout the projection period, thereby contributing to the OASDI program's rising costs. <6. Rising Costs and Program Financial Shortfalls> Population aging has consequences for the Social Security system's financial sustainability. As a result of lower fertility rates and increased life expectancy, in 2035 the Social Security system is projected to experience aged dependency ratios ( Figure 2 ) not observed during the program's history. The aged dependency ratios are projected to trend higher as the baby boom generation retires. In 2018, approximately 10,200 baby boomers per day attained age 65; this figure is expected to reach 11,000 per day by 2029. This demographic trend suggests that the ratio of persons collecting benefits or soon to be to those paying into Social Security will increase. The more this ratio increases, the more strain is placed on the OASDI program's financial position. <6.1. An Increasing Number of Beneficiaries per Covered Worker> An alternative measure of OASDI program sustainability is the ratio of beneficiaries per 100 covered workers. For example, a ratio of 30 indicates that for every 30 beneficiaries (i.e., individuals collecting benefits) there are 100 workers in covered employment (i.e., individuals subject to the payroll tax). Increases in this ratio suggest that those in covered employment are supporting an increasing number of people collecting benefits. Figure 6 displays ratios of historical and projected beneficiaries per 100 covered workers. The ratio of beneficiaries per 100 covered workers through year 2031 will be largely influenced by the baby boom generation. The oldest of the baby boomers turned 20 in 1966 and started to enter the paid labor force, becoming covered employees. From 1970 to 2008, a period in which most baby boomers were working age, the ratio of beneficiaries per 100 covered workers remained around 30. In this period, the ratio never fell below 27 or rose above 31. From 2009 to 2017, the period in which the oldest of the baby boomers reached full retirement age, the number of beneficiaries per 100 covered workers increased from 31 to 35. The trustees project this ratio to rise steadily, reaching 44 in 2031, the year in which the youngest baby boomers will reach full retirement age. When the youngest baby boomers, those born in 1964, reach 70 years of age in 2035, the ratio of beneficiaries per 100 covered workers is projected to be 46. Previous research suggested that under the current tax rates and benefit schedule, the OASDI program requires a ratio of 35 beneficiaries to 100 covered workers to maintain itself as a pay-as-you-go program. <6.2. Rising Costs and the Program's Funding Challenge> The line representing the ratio of beneficiaries per 100 covered workers in Figure 6 corresponds to the OASDI cost as a percentage of taxable payroll line shown in Figure 1 . The trustees state the following: This similarity emphasizes the extent to which the cost rate [annual cost as a percentage of taxable payroll] is determined by the age distribution of the population. The cost rate is essentially the product of the number of beneficiaries and their average benefit, divided by the product of the number of covered workers and their average taxable earnings. When these lines are graphed together, this relationship becomes more evident. Figure 7 highlights how the rise in the number of beneficiaries per 100 covered workers closely mirrors that of OASDI annual costs. Both measures remained relatively stable from the 1970s through the 2000s, a period in which a majority of the baby boomers were considered to be of prime working ages. Both measures have increased in the 2010s, and they are projected to continue to do so as the baby boomers transition from prime working ages into retirement. The effects of aging on the Social Security program are already evident when considering only the Disability Insurance (DI) program. In a 2014 testimony before Congress, the Chief Actuary stated that the effects of aging had already contributed to rising costs in the DI program. As they entered young adulthood, more baby boomers entered the workforce than received disability benefits. This trend reversed as the baby boomers entered the disability-prone ages of 45 to 64. The trend is projected to continue as baby boomers approach retirement. As explained by the Board of Trustees, From 2019 to 2038, the OASI cost rate [annual cost as a percentage of taxable payroll] rises rapidly because the retirement of the baby-boom generation will continue to increase the number of beneficiaries much faster than the number of workers increases, as subsequent lower-birth-rate generations replace the baby-boom generation at working ages. Figure 1 graphs OASDI annual costs along with annual income, expressed as a percentage of taxable payroll. Figure 1 shows that costs are rising while incomes are relatively stable and that costs are projected to exceed income for the duration of the projection period. The persistence of this imbalance will strain the OASDI program's long-range financial position. As a primarily pay-as-you-go program, the OASDI is self-financing. It is funded primarily through a payroll tax on covered earnings up to an annual limit and by federal income taxes paid by some beneficiaries on a portion of their OASDI benefits. In addition, from 1984 through 2009, annual income from tax revenues exceeded annual costs. This resulted in annual cash surpluses that were invested in federal government securities held in the OASDI Trust Funds, where they earned interest, thus providing the system a third income source. A program with contingency reserves may experience periods of cash deficits, in which annual costs are greater than annual income. With sufficient reserves, such a program need not operate as a strict pay-as-you-go program. However, a pay-as-you-go program cannot operate with indefinite annual cash deficits. As shown in Figure 1 , annual costs are projected to exceed annual income throughout the 75-year projection period. Although the OASDI program can draw upon assets in the trust funds to fulfill scheduled payments temporarily, the program cannot do so indefinitely. The trustees project there to be sufficient trust funds reserves to augment tax revenues and pay all scheduled benefits through 2034. The trustees estimate that trust funds reserves will be exhausted sometime in 2035. Once the trust funds are exhausted, the program must operate as a strict pay-as-you-go system, meaning it will only be able to pay out in benefits what it receives in revenues. At the point of OASDI Trust Funds depletion, program revenues will provide the OASDI program funding to pay only 80% of scheduled benefits. <7. Demographically Driven Policy Options to Address the Financial Shortfall> Policy measures seeking to improve trust funds solvency can generally be categorized as reducing benefits or increasing revenues. For illustrative purposes, the trustees estimate changes to the current payroll tax rates and benefit schedule that would maintain trust funds solvency throughout the 75-year projection period. To give a sense of the funding shortfall's magnitude, if measures to maintain trust funds solvency were enacted in 2019, they would require a permanent increase in the payroll tax from its current rate of 12.40% to 15.10%, or a reduction in scheduled benefits of 17% for all current and future beneficiaries, or a combination of both. The increasing costs associated with the OASDI program indicate that more substantial measures are necessary as time elapses. If similar policies were enacted in 2035, the projected year of trust funds depletion, the permanent payroll tax rate needed to restore solvency would increase to 16.05%. Similarly, the necessary permanent reduction of scheduled benefits would increase to 23%. Lawmakers have a wide range of policy options at their disposal to address the projected funding shortfall. This section highlights several policy options that address the funding shortfall's demographic drivers. <7.1. Extend Social Security Benefits for Childcare> As discussed, research suggests that economic and financial uncertainty may be a large driver behind many people's decision to postpone childbearing, thus reducing fertility. Social Security is designed as a social insurance program that protects workers and their families against a loss in earnings due to old age, disability, and death. Understanding the large financial burden that childbearing requires, some proposals argue for Social Security benefits to be extended to cover childcare in times of birth or adoption. While not specifically intended to increase fertility, these proposals recognize the hardships that accompany childbearing and aim to reduce financial pressures around that decision. By seeking to reduce one of the larger impediments to fertility financial stress such proposals could result in increased fertility. <7.2. Incorporate Childcare in the Social Security Benefit Formula> The Social Security benefit formula is used to compute a worker's Primary Insurance Amount (PIA), which is the worker's basic monthly benefit amount payable at the full retirement age. To compute the PIA, the formula first indexes a worker's lifetime covered earnings to reflect changes in national wage levels, as measured by the Social Security Administration's average wage index (AWI). The indexing process ensures a worker's or family member's benefit will reflect increases in average wage growth observed over the worker's earning history. After indexing, the highest 35 years of earnings are summed, and the total is divided by 420 (the number of months in 35 years) to determine a worker's average indexed monthly earnings (AIME). Brackets of a worker's AIME are replaced at different rates, the sum of which is the PIA. Exiting the paid workforce to have children can impact a worker's future Social Security benefit. For instance, if a worker has fewer than 35 years of covered earnings, years of zero earnings are entered in the calculation. That is, if a worker forgoes covered earnings to have children, the worker's earnings record will reflect no income for that time. Recognizing the benefit formula's adverse effect for years of no earnings due to childcare, some proposals would reduce the number of computation years used in the benefit formula. Such a proposal would allow one parent per household to claim dropout years for years in which that parent had no earnings and provided care for a child under 6 years of age. For example, the benefit formula for a parent with no earnings for two years due to childcare would use the highest 33 years of earnings in the calculation. Childcare credits are another option that would incorporate childcare into the Social Security benefit formula. Proponents of this method argue that childcare is essentially unpaid work and seek to ensure parents with young children are credited for their caregiving. Under such a proposal, wage credits would be set at one-half the average wage index for that year (e.g., one-half of the AWI for 2018 is $25,947). Parents earning less than the childcare credit level would have their earnings records increased to that level. Parents earning more than the childcare credit level would not receive any credit. The effects of policy changes that may result in increased fertility are uncertain. As shown in Figure 3 , the projected fertility rate is expected to be stable around 2 children per woman. Under current law and the trustees' intermediate assumptions, each increase of 0.1 in the fertility rate decreases the projected funding shortfall by about 7.6%. This suggests a 65% increase in childbearing (i.e., to approximately 3.3 children per woman) would be needed, absent other changes, to avoid trust fund depletion. <7.3. Increase the Full Retirement Age> Some policymakers have proposed increasing the eligibility ages to address changing demographics and their effects on the OASDI program's solvency. For instance, a policy measure that increases the full retirement age (FRA) would be categorized as a provision that reduces benefits, as beneficiaries would then collect benefits for a shorter duration of time or accept a higher actuarial reduction in their monthly benefits by claiming at the age they originally intended. Previous Congresses have addressed increasing the FRA. Facing a funding shortfall, Congress gradually raised the FRA, from age 65 to age 67, as part of the Social Security Amendments of 1983 ( P.L. 98-21 ). Increasing the earliest eligibility age (EEA), a benefit-reducing mechanism, was one of many measures included in this legislation that sought to address previous solvency issues. The Social Security Amendments of 1983 also enacted measures that increased revenues, including provisions that increased the payroll tax and made a portion of Social Security benefits themselves subject to taxation. Table 2 shows the gradual increase in the FRA depending on year of birth. The Social Security program is once again facing projected long-range funding shortfalls. Similar to 1983, a common proposal is to increase the EEA or to further increase the FRA. On one hand, some argue that the average increases in life expectancies indicate that people work until older ages, and thus collect benefits at an older age. On the other hand, those opposed to raising the FRA argue that increases in average life expectancies are not shared equally among covered workers. The SSA's Office of the Chief Actuary (OCACT) publishes estimates for policy provisions that affect claiming ages and are routinely included in legislative proposals. These policy options include provisions that would affect the FRA and provisions that would affect both the FRA and the EEA. Each provision's efficacy can be assessed by its effect on the projected solvency date and its reduction in the long-range actuarial balance , shown for each option in its respective table. For illustrative purposes, a provision that would gradually increase the full retirement age to 68 is estimated to improve the long-range actuarial balance by 16% (compared to current law) and extend solvency to 2035, one year later than under current law. OCACT projects none of the numerous policy provisions raising eligibility ages to result in trust funds solvency throughout the projection period or to completely eliminate the long-range funding shortfall. A 2015 CBO report found similar results in its analysis of four policy measures: (1) an increase in the FRA of one year; (2) an increase in the FRA of three years; (3) an increase in the FRA by one month per birth year; and (4) an increase in the FRA and EEA by one month per birth year. CBO's findings largely mirror OCACT's in showing that an increase in either one or both of the FRA and EEA reduces Social Security program costs. However, a policy measure adjusting only the age at which benefits could be claimed would not be sufficient to offset the funding shortfall. This outcome suggests that policy measures only addressing demographic changes via eligibility ages are limited in their ability to resolve the effects of rising OASDI program costs. Research suggests that raising the FRA or EEA would negatively affect certain segments of the population. Although average life expectancy in the United States is increasing, the increases are not equally shared among the population. For instance, women have a longer life expectancy than men and whites have a longer life expectancy than blacks. Life expectancy is also stratified by income level. Numerous studies show that life expectancy is positively related to income and that the gap itself the difference in life expectancies between high earners and low earners is also increasing. Social Security benefits are based on the overall population's average life expectancies, suggesting that groups with longer average life expectancies (e.g., higher-income individuals) will collect more lifetime benefits than groups with shorter average life expectancies (e.g., lower-income individuals). Any provision to increase claiming ages may very well exacerbate this difference in lifetime benefits. A method of increasing the FRA could be to index the FRA for changes in life expectancies. One possible approach would be to index the FRA to maintain a constant ratio of expected retirement years (i.e., life expectancy at FRA) to potential work years (i.e., FRA less 20 years). Another policy option would be to simply adjust the FRA so as to hold the number of expected retirement years constant based on projected life expectancies. As discussed above, life expectancies across different segments of the population can differ by factors such as gender, race, and income. In pursuing options involving indexing the FRA, policymakers would need to address differences in projected life expectancies. Policy options that would index the FRA can be categorized as cost-reduction measures, because they would decrease total benefits as a means to account for longer life expectancies. Although both options discussed above would reduce the projected funding shortfall, neither would eliminate it completely. Similar to options that may address fertility or a straightforward increase in the FRA, the projected effects of indexing the FRA for changes in life expectancies alone would not eliminate the projected funding shortfall. <7.4. Encourage Delayed Claiming> A range of policy options exists that would address the increases in longevity by encouraging delayed claiming. One such option would be to increase the number of years used in the benefit formula. For instance, under current law, the benefit formula uses a worker's highest 35 years of earnings to compute the primary insurance amount (PIA). Including more years of earnings in the benefit formula (e.g., 40 years) would likely include years of low earnings from the start of a worker's earning history or years of no earnings. Under such a policy, a worker could choose to work for more years (i.e., to replace years of low earnings with years of high earnings) or take advantage of delayed retirement credits to attain a PIA that would have been earned had the benefit formula not changed. That is, to maintain the benefit scheduled under current law a person would need to work longer, delay claiming, or a combination of both. Under current law, workers can receive their full PIA once they reach FRA. However, a worker can elect to delay payment of benefits and, in doing so, collect delayed retirement credits. For those born in 1960 and later, a credit is worth 8% of a worker's PIA for each year of delayed claiming. For instance, a worker born in 1960 who reaches FRA at 67 is entitled to 100% of his or her PIA. That same worker could collect 124% of his or her PIA if claiming is delayed three years (at age 70). Any reduction in the benefit formula that would result in a decrease of benefits would then require some use of delayed claiming so as to collect the same PIA as under current law. A provision that would incentivize workers to delay claiming, perhaps through an increase in the number of computation years, could have a negative earnings impact on some workers. For instance, such a provision would favor those earning at high levels later in their careers (so as to replace years of low earnings with years of higher earnings). In addition to possibly favoring higher earners, such a provision could adversely affect certain types of labor. That is, such a policy proposal would essentially favor those who could still work. Workers with careers in more arduous work who were unable to continue working beyond the current FRA would receive a lower PIA under such a proposal. <8. Conclusion> On average, increases in life expectancy have allowed current Social Security beneficiaries to collect benefits for a longer period of time. However, the increase in life expectancies, when paired with low fertility rates, will negatively impact the program's long-range financial position and weaken its ability to pay all scheduled benefits as projected under current law. These demographic trends increasing life expectancy and decreasing fertility have resulted in an aging Social Security population. As the baby boom generation retires, the ratio of beneficiaries relative to people in covered employment will grow. As this ratio rises, Social Security costs rise as well. The rising ratio of beneficiaries to covered workers can exist so long as trust funds assets remain to supplement the program's annual tax revenues. Rising costs are projected to deplete trust funds reserves in 2035. After such time, Social Security program revenues will no longer be sufficient to pay full benefits. Under current law, the Social Security program's sustainability, and its ability to pay full benefits, is largely a demographic issue. Policy measures aimed at addressing the changing demographics, specifically those increasing retirement ages to reflect increasing life expectancy, improve the program's solvency and long-range financial status. Such policy measures are estimated to reduce program costs. However, the reduction in benefits implied by such measures would not be evenly distributed across all segments of the population. In addition, increasing eligibility ages (i.e., reducing costs) alone is not projected to restore solvency throughout the projection period. Given the magnitude of the OASDI program's projected long-range funding shortfall, policy measures that include both a revenue-increasing and a benefit-reducing mechanism to restore solvency increase the likelihood that full benefits will be maintained. Appendix A. The Baby Boomers in the United States The first baby boomers were born in 1946; the last baby boomers were born in 1964. The period of 1946-1964 is marked on either side by low birth rates. As a result of the low fertility rates that followed the baby boomers, they are being replaced in the workforce by cohorts resulting from lower fertility rates. The baby boom's births spanned nearly two decades, denoted with I in Figure A-1 . The older baby boomers started to enter the workforce as the youngest were just being born (II in the figure below). Time period III denotes the stage at which all baby boomers are at least 20 years of age, an age commonly associated with working age. In period IV, baby boomers are attaining full retirement age and beginning to exit the workforce. In period V, all baby boomers are eligible for retirement with full benefits. In 1945, a year before the first baby boomer was born, 7.3% of the Social Security population was aged 65 or older. In 2035, after all baby boomers are eligible for Social Security, 20.5% of the population will be aged 65 or older. The demographic forces that created an aging population evolved over decades. This is important to policymakers because demographic trends in the Social Security population are contributing to rising costs. These demographic trends result in an imbalance between costs and revenues and are projected to continue beyond the baby-boom generation. This imbalance can also be thought of as a persistent imbalance between those in covered employment and those collecting benefits. Appendix B. Birth Rates, by Age Group Appendix C. Causes of Death

The Social Security program pays monthly benefits to retired or disabled workers and their families and to the family members of deceased workers. Social Security, or Old-Age, Survivors, and Disability Insurance (OAS DI), is intended to operate primarily as a pay-as-you-go system, where program revenues cover program costs. The OASDI program's revenues and costs are largely determined by economic and demographic factors. The Social Security program is experiencing rising costs and relatively stable income, a trend that is projected to continue for several decades. Although economic and program-specific factors affect the balance between program revenues and costs, research has shown demographic factors to be one of the leading contributors to the increasing imbalance between costs and revenues. The U.S. population has been experiencing a shift in age structure toward older ages and an increase in the median age, termed demographic aging . Two demographic effects have contributed to this aging over time: decreasing fertility and increasing longevity. While aging reflects a society's shared advances in medical, social, and economic matters, it strains the very social insurance systems that provide social support to the aging population. The post-World War II baby boom generation's effect on OASDI highlights this point. Baby boomers, the relatively large cohort resulting from higher fertility rates from 1946 through 1964, have started to exit the paid labor force and collect Social Security benefits. They are being replaced in the workforce by relatively smaller cohorts resulting from lower fertility rates in subsequent generations. Program costs are also rising as an increasing number of retirees collects benefits for longer time periods. According to the Board of Trustees of the OASDI Trust Funds, costs are expected to rise throughout the 75-year projection period, 2019-2093. The Social Security population's changing age distribution is creating a situation in which fewer workers in covered employment are supporting a growing number of people collecting benefits. This relationship is temporarily sustainable, as the OASDI program can draw upon the $2.89 trillion in asset reserves held in the trust funds to augment annual program revenues and fulfill all scheduled benefit payments. However, the OASDI program's ability to pay 100% of scheduled benefits becomes unsustainable when these asset reserves are depleted. The Board of Trustees, which oversees the OASDI Trust Funds, projects the funds' assets to be depleted in 2035 due in part to the cumulative strain placed upon the system by an older age distribution. After this, the OASDI program would operate as a strict pay-as-you-go system that can only pay out in benefits what it receives in revenue. Under current laws and projections, the trustees estimate sufficient revenues to be able to pay about 80% of scheduled benefits after asset reserves are depleted. The Social Security program's ability to cover 100% of scheduled benefits depends upon a combination of increased revenues and decreased benefits. One set of policy options to address the funding shortfall includes increasing the full retirement age (the age at which a beneficiary is entitled to full benefits) or the earliest eligibility age (the age at which a beneficiary is first entitled to benefits). This set of policy options uses a demographic solution for a largely demographic issue: the projected imbalance between program costs and income. Measures that include increasing the retirement ages are estimated to improve the program's long-range financial status but not to prevent trust funds depletion by themselves. Although these adjustments help to reduce rising costs, those costs would still be projected to exceed revenues. This suggests that efforts to avoid depleting the OASDI Trust Funds throughout the trustees' projection period would also be improved by including a revenue-increasing mechanism. In addition, increases in life expectancy are not shared equally within the population; disparities exist when life expectancies are analyzed by sex, race, and income levels. A policy measure that increases Social Security eligibility ages may disproportionally help some beneficiaries and disadvantage others.

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<1. Introduction> The Financial Services and General Government (FSGG) appropriations bill includes funding for more than two dozen independent agencies. These agencies perform a wide range of functions, including the management of federal real property, the regulation of financial institutions and markets, and mail delivery. This report focuses on funding for those independent agencies in Title V of the FSGG appropriations bill. It also addresses general provisions that apply government-wide, which appear in Title VII, and provisions on Cuba sanctions, which would typically appear in Title I. In addition, the FSGG bill funds agencies not covered in this report the Department of the Treasury (Title I), the Executive Office of the President (EOP; Title II), the judiciary (Title III), and the District of Columbia (Title IV). The bill typically funds mandatory retirement accounts in Title VI, which also contains general provisions applying to the FSGG agencies. The FSGG bill occasionally addresses other issues, particularly those involving financial regulation, in additional titles. Although financial services are a major focus of the bill, the FSGG appropriations bill does not fund many financial regulatory agencies, which are instead funded outside of the appropriations process. The FSGG bill has existed in its current form since the 2007 reorganization of the House and Senate Committees on Appropriations. The House and Senate FSGG bills fund the same agencies, with one exception. Funding for the Commodity Futures Trading Commission (CFTC) is considered through the Agriculture appropriations bill in the House and the FSGG bill in the Senate. In this report, the CFTC funding is generally included in the combined funding totals for FSGG independent agencies. <2. Administration and Congressional Action> <2.1. 115th Congress> President Trump submitted his FY2019 budget request on February 12, 2018. The request included a total of $2.3 billion for independent agencies funded through the FSGG appropriations bill, including $282 million for the CFTC. The House Committee on Appropriations reported a Financial Services and General Government Appropriations Act, 2019 ( H.R. 6258 , H.Rept. 115-792 ) on June 15, 2018. Total FY2019 funding in the reported bill would have been approximately $1.2 billion for the FSGG independent agencies, with another $255 million for the CFTC included in the Agriculture appropriations bill ( H.R. 5961 , H.Rept. 115-706 ). The combined total of $1.4 billion would have been about $0.9 billion below the President's FY2019 request, with the largest difference in the funding for the General Services Administration (GSA). Title IX of H.R. 6258 contained a number of legislative provisions involving financial regulation. This included a provision bringing the Bureau of Consumer Financial Protection (CFPB) into the appropriations process after 2020. H.R. 6258 was included as Division B of H.R. 6147 , the Interior appropriations bill, when it was considered by the House of Representatives beginning on July 17, 2018. The bill was amended numerous times, shifting funding among FSGG agencies but not changing the FSGG totals. H.R. 6147 passed the House on July 19, 2018. The Senate Committee on Appropriations reported a Financial Services and General Government Appropriations Act, 2019 ( S. 3107 , S.Rept. 115-281 ) on June 28, 2018. Funding in S. 3107 totaled $2.3 billion for the FSGG independent agencies, approximately the same overall as the President's FY2019 request, but with differences in funding for the individual components, notably the GSA. The Senate began floor consideration of H.R. 6147 on July 24, 2018, including the text of S. 3107 as Division B of the amendment in the nature of a substitute ( S.Amdt. 3399 ). The amendment also included three other appropriations bills. The amended version of H.R. 6147 was passed by the Senate on August 1, 2018. Among the various funding differences, which are detailed in Table 3 below, the Senate version of the bill did not include the Title IX legislative provisions, such as the shift in CFPB funding. The conference committee on H.R. 6147 convened on September 13, 2018. No conference report was reported, however, prior to the end of the fiscal year. Instead, Division C of P.L. 115-245 , enacted on September 28, 2018, generally provided for continuing appropriations at FY2018 levels for the FSGG agencies through December 7, 2018. A further continuing resolution ( P.L. 115-298 ) was passed providing funding through December 21, 2018. No additional appropriations were passed in the 115 th Congress, leading to a funding lapse for the FSGG agencies as well as those funded in six other appropriations bills beginning on December 22, 2018. <2.2. 116th Congress> The House of Representatives passed two consolidated appropriations bills in January 2019. H.R. 21 , passed on January 3, 2019, contained six full FY2019 appropriations bills, including FSGG provisions nearly identical to those passed by the Senate in the 115 th Congress. H.R. 21 would have provided a total of $2.3 billion for the FSGG agencies, with the CFTC funding included in the FSGG division, following the Senate structure. On January 23, 2019, the House passed H.R. 648 , also containing the same six full FY2019 appropriations bills, which was reportedly based on a potential conference report from the 115 th Congress. H.R. 648 would have provided $2.5 billion for the FSGG agencies, with the FSGG portion, including CFTC funding, in Division C. Neither of these bills included the financial regulatory provisions in Title IX of the House-passed bill in the 115 th Congress. The Senate did not act on either of these bills. On February 14, 2019, both the House and the Senate agreed to a conference report ( H.Rept. 116-9 ) on H.J.Re s . 31 , the Consolidated Appropriations Act, 2019, containing seven appropriations bills. This act provides full FY2019 funding for the government's operations that had not been previously funded, including FSGG provisions nearly identical to H.R. 648 with notable exceptions in the Treasury's asset forfeiture fund and the GSA. The President signed the resolution on February 15, 2019, enacting it into law as P.L. 116-6 . P.L. 116-6 , Division D provided $1.9 billion for the FSGG independent agencies, including the funding for the CFTC. It did not include the Title IX financial regulatory provisions passed by the House in the 115 th Congress. The final total was approximately $0.6 billion less than the President's request, with most of the difference coming from funding for the GSA. The conference report provided that language from the previous appropriations committees reports ( H.Rept. 115-792 and S.Rept. 115-281 ) should be considered as indicating congressional intent unless specifically addressed to the contrary in H.Rept. 116-9 . Table 1 below reflects the status of FSGG appropriations measures at key points in the appropriations process across the 115 th and 116 th Congress. Table 2 lists the broad amounts requested by the President and included in the various FSGG bills, largely by title, and Table 3 details the amounts for the independent agencies. Specific columns in Table 2 and Table 3 are FSGG agencies' enacted amounts for FY2018, the President's FY2019 request, the FY2019 amounts from the 115 th Congress bills ( H.R. 6147 as passed by the House, and H.R. 6147 as passed by the Senate), the FY2019 amounts from the 116 th Congress House-passed bills ( H.R. 21 and H.R. 648 ), and the final FY2019 enacted amounts from P.L. 116-6 . <3. Independent Agencies> <3.1. Commodity Futures Trading Commission14> The Commodity Futures Trading Commission is the independent regulatory agency charged with oversight of derivatives markets. The CFTC's functions include oversight of trading on the futures exchanges, oversight of the swaps markets, registration and supervision of futures industry personnel, self-regulatory organizations and major participants in the swaps markets, prevention of fraud and price manipulation, and investor protection. Although most futures trading is now related to financial variables, such as interest rates, currency prices, and stock indexes, congressional authorization jurisdiction remains vested in the House and Senate agriculture committees because of the market's historical origins as an adjunct to agricultural markets. Appropriations for the CFTC are under the jurisdiction of the Agriculture Appropriations Subcommittee in the House and the Financial Services and General Government Appropriations Subcommittee in the Senate. The location of the final enacted amounts for the CFTC typically switches from year to year between the Agriculture and FSGG bills. Following the financial crisis of 2008, concerns over the largely unregulated nature of the over-the-counter swaps markets led to various reforms passed in Title VII of the Dodd-Frank Wall Street and Consumer Protection Act. This act brought the bulk of the previously unregulated over-the-counter swaps markets under CFTC jurisdiction, as well as the previously regulated futures and options markets. Passage of the Dodd-Frank Act resulted in the CFTC's oversight of the economically significant swaps markets with an estimated notional value of roughly $240 trillion in the United States. This newly regulated market comes on top of the CFTC's prior jurisdiction over the futures and options markets, with an estimated $34 trillion notional value in the United States. The President requested $281.5 million for the CFTC in FY2019, an increase of $32.5 million from FY2018. In the 115 th Congress, H.R. 5961 as reported by the House Agriculture Committee, which was not considered by the full House, would have appropriated $255 million, whereas H.R. 6147 as passed by the Senate would have appropriated $281.5 million. In the 116 th Congress, H.R. 21 would have appropriated $281.5 million, while H.R. 648 would have appropriated $268 million. P.L. 116-6 appropriated $268 million. <3.2. Consumer Product Safety Commission18> The Consumer Product Safety Commission (CPSC) is a federal regulatory agency whose mission is to reduce consumers' risk of harm from the use of a wide array of products. In carrying out its statutory responsibilities, the commission creates mandatory safety standards; works with industries to develop voluntary safety standards; bans products it deems unsafe when other options are not feasible; monitors the recall of defective products; informs and educates consumers about product hazards; conducts research on and develops testing methods for product safety; collects and publishes for public use a host of data on injuries and product hazards; and collaborates with state and local governments to establish uniform domestic product regulations. The Administration requested $123.5 million in appropriations for the commission in FY2019, or $2.5 million less than the enacted amount for FY2018. According to the CPSC's budget request for FY2019, $5.6 million of that amount would be channeled into workforce development, $72.6 million into preventing hazardous products from reaching consumers, $37.2 million into responding quickly to evidence that certain products can be harmful to consumers, and $8.1 million into communicating information about hazardous products to consumers and makers and sellers of such products. Employee compensation accounts for nearly two-thirds of the FY2019 budget request. H.R. 6147 as passed by the House would have provided $127 million in appropriations for the CPSC in FY2019, or $3.5 million more than the budget request. An administrative provision in the bill (Section 501) would have barred the commission from using any of the appropriated funds to "finalize or implement" a safety standard for off-road vehicles (ORVs) that was published in the Federal Register on November 19, 2014 (79 Fed. Reg. 68964) until two conditions were met. First, the National Academy of Sciences (in consultation with the Department of Defense and National Highway Traffic Safety Administration) completed a study that addresses (1) the feasibility of certain technical requirements proposed in the standard, (2) the number of rollovers that would be prevented if the requirements were adopted, and (3) the impact of the standard on ORVs used by the military. Second, the results were "delivered" to the House and Senate Appropriations Committees, the Senate Committee on Commerce, Science, and Transportation, and the House Committee on Energy and Commerce. In the 115 th Congress, H.R. 6147 as passed by the Senate would have appropriated $126 million, or $2.5 million more than the budget request. It included the same administrative provision (Section 501) dealing with ORVs as the House version of H.R. 6147 . In the 116 th Congress, H.R. 21 would have appropriated $126 million, whereas H.R. 648 would have appropriated $127 million. P.L. 116-6 appropriated $127 million for the CPSC and included the Section 501 administrative provision dealing with ORVs. In addition, $800,000 of the appropriated amount is to remain available until expended to carry out the grant program mandated by Section 1405 of the Virginia Graeme Baker Pool and Spa Safety Act. <3.3. Election Assistance Commission20> The Election Assistance Commission (EAC) is an independent agency that is charged with helping improve the administration of federal elections. Established by the Help America Vote Act of 2002 (HAVA), the EAC is responsible for managing election administration grants and payments; providing for federal voting system standards, testing, and certification; adopting voluntary guidance for national election administration requirements; conducting election administration research; and facilitating information exchanges among election administration stakeholders. The EAC was not given new regulatory authority under HAVA, but the law transferred certain responsibilities for the National Voter Registration Act of 1993 (NVRA), including certain rulemaking authority, from the Federal Election Commission (FEC) to the EAC. The Department of Justice has enforcement authority under HAVA. The President's budget request for FY2019 included $9.2 million for the EAC. In the 115 th Congress, H.R. 6147 as passed by the House would have appropriated $10.1 million, whereas H.R. 6147 as passed by the Senate would have appropriated $9.2 million. Each of those figures included $1.5 million to be transferred to the National Institute of Standards and Technology (NIST) for work NIST performs under HAVA. In the 116 th Congress, H.R. 21 and H.R. 648 would have appropriated $9.2 million for the EAC, the same figure as was enacted in P.L. 116-6 . The funding in H.R. 21 would have included $1.5 million for transfer to NIST, and the funding in H.R. 648 would have included $1.25 million. The enacted bill included $1.25 million for NIST. <3.4. Federal Communications Commission23> The Federal Communications Commission (FCC) is an independent federal agency established by the Communications Act of 1934 and charged with regulating interstate and international communications by radio, television, wire, satellite, and cable. Its five commissioners are appointed by the President, subject to confirmation by the Senate. Since 2009, the FCC's entire budget is derived from regulatory fees collected by the agency rather than through a direct appropriation. The fees, often referred to as "Section (9) fees," are collected from license holders and certain other entities (e.g., cable television systems) and deposited into an FCC account. The law gives the FCC authority to review the regulatory fees and to adjust the fees to reflect changes in its appropriation from year to year. For FY2019, P.L. 116-6 provides the FCC with $339 million for salaries and expenses, all derived from offsetting collections, resulting in no net appropriation. The law also directs the FCC to take specific actions regarding its parental rating system and transmission of local television programming. Oversight Monitoring and Rating System: The FCC is directed to report to the Senate and House Committees on Appropriations within 90 days on the extent to which the rating system matches the video content that is being shown and the ability of the TV Parental Guidelines Oversight Monitoring Board to address concerns expressed by the public. Transmissions of Local Television Programming: With respect to the Satellite Television Extension and Localism Reauthorization (STELAR) Act of 2014, the FCC is directed to provide a full analysis to ensure decisions on market modification are comprehensively reviewed and STELAR's intent to promote localism is retained. The FCC is directed to adhere to statutory requirements and congressional intent when taking administrative action under STELAR. P.L. 116-6 also contains an administrative provision (Section 510) that prohibits the FCC from changing rules governing the Universal Service Fund regarding single connection or primary line restrictions. <3.5. Federal Deposit Insurance Corporation's Office of the Inspector General25> The Federal Deposit Insurance Corporation (FDIC) Office of the Inspector General's (OIG's) mission is to audit, investigate, and review the FDIC's operations and programs. The FDIC in general is funded through deposit insurance funds outside of the appropriations process. Its OIG is also funded from deposit insurance funds, but the amount is directly appropriated (through a transfer) to ensure the independence of the OIG. The President's request included $43.0 million for the FDIC OIG in FY2019. In the 115 th Congress, H.R. 6147 as passed by the House and H.R. 6147 as passed by the Senate would both have appropriated the requested $43.0 million. In the 116 th Congress, P.L. 116-6 appropriated $43.0 million, the same amount as provided for in H.R. 21 and H.R. 648 . <3.6. Federal Election Commission26> The Federal Election Commission (FEC) is an independent agency that administers and enforces civil compliance with the Federal Election Campaign Act (FECA) and campaign finance regulations. The agency does so through educational outreach, rulemaking, enforcement and litigation, and advisory opinion issuances. The FEC also administers the presidential public financing system. For FY2019, the agency requested $71.3 million. In the 115 th Congress, H.R. 6147 as passed by the House and H.R. 6147 as passed by the Senate would have appropriated the requested $71.3 million. As in previous years, other sections of the FSGG legislation contained provisions related to campaign finance policy: Section 628 of the House-passed H.R. 6147 would have prohibited the Securities and Exchange Commission (SEC) from issuing rules "regarding the disclosure of political contributions" or payments for trade-association dues. The Senate-passed bill retains this language in Section 629. Section 630 of the House-passed H.R. 6147 would have prohibited spending appropriated funds to enforce a FECA provision known as the "prior approval" rule. This provision limits the number of trade associations that may solicit member-companies' employees. This language does not appear in the Senate-passed bill. Section 734 of the House-passed H.R. 6147 would have prohibited reporting certain political contributions or expenditures as a condition of the government-contracting process. The Senate-passed bill retains this language in Section 735. In the 116 th Congress, P.L. 116-6 appropriated $71.3 million, the same amount as included in H.R. 21 and H.R. 648 . General provisions in P.L. 116-6 prohibit spending appropriated funds on additional SEC disclosure ( 629) or contractor disclosure ( 735), as noted above, but do not include any prohibitions relating to the "prior approval" rule. In addition, report language accompanying P.L. 116-6 directs the FEC to update congressional appropriators on the agency's ongoing rulemaking on disclaimers for certain online political advertisements. <3.7. Federal Trade Commission32> The Federal Trade Commission (FTC) has two primary responsibilities: (1) to protect consumers from deceptive or illegal business practices, and (2) to maintain or enhance competition in a broad range of industries. The FTC enforces laws prohibiting anticompetitive, deceptive, or unfair business practices; issues new and revised regulations; and educates consumers and business owners to foster informed consumer choices, improved compliance with the law, and vigorous competition in free and open markets. Operating funds for the agency come from three sources, listed in descending order of importance: (1) direct appropriations, (2) premerger filing fees under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, and (3) Do-Not-Call (DNC) Registry fees. Under the President's FY2019 budget request, the FTC would have received $156.7 million in direct appropriations, and as much as $136 million in HSR filing fees and $17 million in DNC registry fees, for a total budget of $309.7 million. Enacted direct appropriations for the FTC in FY2018 totaled $164.3 million, and its total budget came to $306.3 million, or $3.4 million below the budget request. In FY2019, 55% of the requested appropriations were to go to activities intended to protect consumers, and the remaining 45% would have been used to promote competition in domestic markets. In the 115 th Congress, H.R. 6147 as passed by the House would have set the FTC's total budget in FY2019 at $311.7 million, or $2 million above the budget request. This assumed that the agency would collect no more than $136 million in HSR filing fees and $17 million in DNR fees, leaving a direct appropriation of $158.7 million. Under the bill, none of the funds available to the FTC in FY2019 could have been used to carry out its full responsibilities under Section 151 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). (The budget request included the same restriction.) Like the budget request, the Senate-passed version of H.R. 6147 would have provided the FTC with a total budget of $309.7 million. This assumed, as in the House version of the bill, that the FTC would collect $136 million in HSR filing fees and $17 million in DNR fees, leaving a direct appropriation of $156.7 million. As with the House version of the bill, none of the funds could have been used to implement FTC's full responsibilities under Section 151 of the FDICIA. In the 116 th Congress, P.L. 116-6 provided the FTC with a total budget of $309.7 million. This assumes that the FTC will collect $136 million in HSR filing fees and $17 million in DNR fees, leaving a direct appropriation of $156.7 million. As with the 115 th Congress bills, none of the funds can be used to implement FTC's full responsibilities under Section 151 of the FDICIA. ( H.R. 21 and H.R. 641 contained identical provisions.) <3.8. General Services Administration35> The General Services Administration (GSA) administers federal civilian procurement policies pertaining to the construction and management of federal buildings, disposal of real and personal property, and management of federal property and records. It is also responsible for managing the funding and facilities for former Presidents and presidential transitions. GSA's real property activities are funded through the Federal Buildings Fund (FBF). The FBF is a revolving fund into which rental payments are deposited from federal agencies that lease GSA space. The fund's revenue is then made available by Congress each year to pay for specific activities: construction or purchase of new space, repairs and alterations to existing space, rental payments for space that GSA leases, installment payments, and other building operations expenses. These amounts are referred to as limitations because GSA may not obligate FBF funds in excess of that permitted by Congress, regardless of how much revenue is available for obligation. Certain debts may also be paid for with FBF funds. A negative total for the FBF occurs when the amount of funds made available for expenditure in a fiscal year is less than the amount of new revenue expected to be deposited. A negative total does not mean that no funds are available from the FBF, but that there is a net gain to the fund under the proposed spending levels. GSA's operating accounts are funded through direct appropriations, separate from the FBF. GSA's total funding amount is calculated by adding the net FBF appropriations made available and appropriations provided to the operating accounts. Table 4 details GSA's enacted amounts for FY2018, the President's FY2019 request, and the FY2019 amounts from H.R. 6147 as passed by the House and the Senate. As shown in Table 4 , the President proposed a limit of $10.132 billion from the FBF's available revenue for GSA's real property activities for FY2019, an increase of $1.058 billion more than the amount provided in FY2018. In the 115 th Congress, the House-passed H.R. 6147 included a limit of $8.623 billion, a decrease of $451 million from FY2018-enacted appropriations and $1.509 billion less than the President's request for FY2019. The Senate-passed H.R. 6147 included a limit of $9.633 billion, $559 million more than the FY2018-enacted amount and $499 million less than the President requested. In the 116 th Congress, H.R. 21 would have provided a limit of $9.633 billion, whereas H.R. 648 would have provided a limit of $9.847 billion. P.L. 116-6 ultimately included a limit of $9.285 billion. The President also requested $551 million for GSA's operating accounts, an increase of $216 million more than the FY2018-enacted level. The President's request included $31 million for the Asset Proceeds and Space Management Fund (APSMF). Appropriations in the APSMF are to be used to carry out actions pursuant to the recommendations of the Public Buildings Reform Board, which was established by the Federal Assets Sale and Transfer Act of 2016 (FASTA). The President's request also included $6 million for the Environmental Review Improvement Fund, which would support activities related to reforming the environmental review process and the work of the Federal Permitting Improvement Steering Council. The council addresses issues surrounding modernization of federal permitting for major infrastructure projects and helps implement the FASTA. Finally, the President requested $210 million for the Technology Modernization Fund to support improvements in agency information technology systems. In the 115 th Congress, the House-passed H.R. 6147 included $432 million for GSA's operating accounts, $97 million more than the FY2018-enacted amounts and $119 million less than the President requested. The Senate-passed H.R. 6147 included $267 million for GSA's operating accounts, $68 million less than the FY2018-enacted amounts and $284 million less than the President requested. In the 116 th Congress, H.R. 21 would have provided $267 million for GSA's operating accounts, and H.R. 648 would have provided $299 million. P.L. 116-6 ultimately appropriated $299 million for GSA's operating accounts. <3.9. Independent Agencies Related to Personnel Management Appropriations> The Financial Services and General Government (FSGG) Appropriations Act includes funding for four agencies with personnel management functions: the Federal Labor Relations Authority (FLRA), the Merit Systems Protection Board (MSPB), the Office of Personnel Management (OPM), and the Office of Special Counsel (OSC). Table 5 lists the FY2018 enacted appropriations, the FY2019 budget request, the FY2019 House-passed H.R. 6147 , and the FY2019 Senate-passed H.R. 6147 . <3.9.1. Federal Labor Relations Authority37> The Federal Labor Relations Authority (FLRA) is an independent federal agency that administers and enforces Title VII of the Civil Service Reform Act of 1978. Title VII is called the Federal Service Labor-Management Relations Statute (FSLMRS). The FSLMRS gives federal employees the right to join or form a union and to bargain collectively over the terms and conditions of employment. Employees also have the right not to join a union that represents employees in their bargaining unit. The statute excludes specific agencies and gives the President the authority to exclude other agencies for reasons of national security. Agencies that are specifically excluded by law are the Federal Bureau of Investigation (FBI), Central Intelligence Agency (CIA), Government Accountability Office (GAO), National Security Agency (NSA), Tennessee Valley Authority (TVA), FLRA, Federal Service Impasses Panel (FSIP), and U.S. Secret Service. The FLRA is composed of a three-member authority, the Office of General Counsel, and the FSIP. The three members of the authority and the General Counsel are appointed to five-year terms by the President with the advice and consent of the Senate. The members of the FSIP are appointed by the President for five-year terms. The FLRA resolves disputes over the composition of bargaining units, charges of unfair labor practices, objections to representation elections, and other matters. The General Counsel's office conducts representation elections, investigates charges of unfair labor practices, and manages the FLRA's regional offices. The FSIP resolves labor negotiation impasses between federal agencies and labor organizations. For FY2019, the President requested appropriations of $26.2 million for the FLRA. This amount would fund 125 full-time equivalents (FTEs), 3 FTEs fewer than the FY2018 estimated level of 128 FTEs. In the 115 th Congress, H.R. 6147 as passed by the House and the Senate would have provided the same amount as the President requested. In the 116 th Congress, both H.R. 21 and H.R. 648 included the same $26.2 million, as did the enacted P.L. 116-6 . <3.9.2. Merit Systems Protection Board41> The Merit Systems Protection Board (MSPB) is an independent, quasi-judicial agency established to protect the civil service merit system. The MSPB adjudicates appeals primarily involving personnel actions, certain federal employee complaints, and retirement benefits issues. The President's budget requested FY2019 appropriations of $44.5 million (including $42.1 million for salaries and expenses) for the MSPB. This amount would fund 235 FTEs, the same as the FY2018 enacted level. The justification that accompanied the MSPB budget submission explained that the request "reflects the FTE level at 235; however, MSPB's revised FTE level is 226 to coincide with the personnel compensation and benefits decrease in [the] Congressional Budget Justification submission." It stated that, with the requested funding level, the agency would "continue [its] efforts to maintain MSPB resources dedicated primarily to our Title 5 statutory responsibilities of processing appeals from Federal employees involving, among others, adverse actions, whistleblower claims and veterans concerns, and issuing study reports related to the civil service." In the 115 th Congress, H.R. 6147 as passed by the House and the Senate would have provided funding of $46.8 million (including $44.5 million for salaries and expenses). This amount is $2.3 million more than the President requested. In the 116 th Congress, both H.R. 21 and H.R. 648 included $46.8 million for the MSPB, as did the enacted P.L. 116-6 . <3.9.3. Office of Personnel Management45> The Office of Personnel Management (OPM) is responsible for the personnel management of the federal government's civil service. The President's budget requested FY2019 appropriations of $132.2 million for OPM salaries and expenses. This amount included $14 million to remain available until expended for information technology (IT) infrastructure modernization and Trust Fund Federal Financial System migration or modernization. It also included $639,018 to strengthen the capacity and capabilities of the acquisition workforce, including the recruitment, hiring, training, and retention of the acquisition workforce, and to modernize IT in support of acquisition workforce effectiveness or management. The budget also requested appropriations of $133.5 million for trust fund transfers, $5 million for OPM OIG salaries and expenses, and $25.3 million for OIG trust fund transfers for FY2019. OPM requested an FTE employment level of 6,255 for FY2019, a decrease of 108 FTEs from the FY2018 enacted level of 6,363 FTEs. The agency's budget submission stated that the request "will enable OPM to continue to address critical information technology (IT) infrastructure and investments necessary to maintain its security posture and respond to changing business needs and Federal mandates." In addition, the request is to allow the OPM OIG to conduct "agency-wide audits, investigations, evaluations, and administrative sanctions which help to prevent and detect fraud, waste, abuse, and mismanagement" and continue to provide oversight for "OPM's agency-wide information technology (IT) infrastructure project, including data center consolidation and potential mainframe migrations." In the 115 th Congress, H.R. 6147 as passed by the House and the Senate would have provided funding for OPM salaries and expenses, trust fund transfers for salaries and expenses, OIG salaries and expenses, and OIG trust fund transfers in the same amounts as requested by the President. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 also included the requested amounts, which totaled $295.9 million. The 115 th Congress reports that accompanied H.R. 6258 and S. 3107 included several directives to OPM as follows: Federal Retirement Processing Modernization The House committee expressed the expectation that OPM will "continue to make retirement processing and disability processing a priority and move to a fully-automated electronic filing system." It directed OPM to continue to provide monthly reports to the House and Senate Appropriations Committees on progress in addressing backlogs. The Senate committee directed OPM to continue to provide information on progress made. OPM Organizational Changes The House committee reminded OPM of the obligation to notify the House and Senate Appropriations Committees about "any reorganizations, restructurings, new programs or elimination of programs," including "changes that could impact the National Bureau of Investigations and the Human [Resources] Solutions program." The committee encouraged the OPM Inspector General (IG) "to keep a pulse on" and update the initiatives in reports to Congress. Critical Functions The House committee reminded OPM "to not lose sight of its mission" related to "directing human resources and employee management services, and administering retirement benefits, managing healthcare and insurance programs, overseeing merit-based and inclusive hiring in to the civil service, and providing a secure employment process" as the agency "responds to critical IT challenges." Recruitment The House committee encouraged OPM "to seek input from hiring managers on what challenges they face and what improvements could be made to make the federal hiring process more efficient and effective." It directed the agency to submit a report "on a plan to reduce barriers to Federal employment, reduce delays in the hiring process, and how it intends to improve the overall federal recruitment and hiring process," to the House and Senate Appropriations Committees within 90 days after the act's enactment. In addition, the committee encouraged federal agencies "to increase recruitment efforts within the United States and the territories and at Hispanic Serving Institutions and Historically Black Colleges and Universities." Federal Pay The House committee directed the OPM Director and the Chief Human Capital Officers Council to "track government-wide data to establish a baseline and analyze the extent to which" special pay "authorities are effective in improving employee recruitment and retention, and determine what potential changes may be needed to improve" their "effectiveness." Federal Telework Programs Stating its support for "cost savings and productivity improvements from well-managed telework programs," the House committee urged the federal sector to "continue to track successes, compile best practices, and expand upon telework programs where appropriate." The Senate committee encouraged OPM to work with agencies to improve data collection methods, provide training on effective teleworking, set goals for telework results, and prepare progress assessments. National Background Investigations Bureau (NBIB) The Senate committee directed OPM and the bureau to provide quarterly updates to the House and Senate Appropriations Committees on developments in transitioning responsibility for Department of Defense (DOD) background investigations to DOD, and OPM's assessment of the transition's impact and implications on the agency. Official Time The Senate committee directed OPM to "assist agencies in strengthening internal controls and increasing transparency and accountability for monitoring and reporting on" official time. Information Technology ( IT Modernization ) The Senate committee directed OPM to implement recommendations made in GAO and IG reports on information security and provide quarterly briefings to the House and Senate Appropriations Committees on its progress on the IT Transformation and Cybersecurity Strategy. Trust Fund Federal Financial System (FFS) The Senate committee directed OPM to provide a spending plan to the House and Senate Appropriations Committees "for the $18,400,000 dedicated to the FFS initiative; the options the agency is pursuing to modernize FFS; and a timeline for completion of the modernization of FFS," within 30 days of the act's enactment. Federal Security Clearances The Senate committee referenced the Title VI general provision that prevents "contractors from conducting quality reviews of their own work" and directed OPM to "ensure that internal controls are implemented to prevent investigations from being closed prematurely." OIG's Semiannual Report to Congress The Senate committee encouraged the semiannual report to include "OPM's efforts to improve and address cybersecurity challenges including steps taken to prevent, mitigate, and respond to data breaches involving sensitive personnel records and information; OPM's cybersecurity policies and procedures in place, including policies and procedures relating to IT best practices such as data encryption, multifactor authentication, and continuous monitoring; OPM's oversight of contractors providing IT services; and OPM's compliance with government-wide initiatives to improve cybersecurity." The 116 th Congress conference report ( H.Rept. 116-9 ) did not change any of these committee directives. The conference report included the following additional directive to OPM. Relocation of Human Resources Solutions (HRS) The conference committee directed OPM to submit a report to the House and Senate Appropriations Committees within 30 days after the act's enactment on "the budgetary implications of moving HRS to [the General Services Administration] (GSA) and the legal authority under which it proposes to transfer the HRS function within the OPM Revolving Fund established by 5 U.S.C. 1304(e)(1) to GSA." The conferees directed OPM "to provide quarterly updates to the Committees on the status of the HRS program relocation and any other OPM program and office relocations." Section 619(a)(3), (4), and (5) of H.R. 6147 as passed by the House and the Senate in the 115 th Congress would have provided the mandatory appropriations for the health benefits, life insurance, and retirement accounts. According to the House Committee on Appropriations report that accompanied H.R. 6258 , "these are accounts where authorizing language requires the payment of funds." The House report stated that the Congressional Budget Office (CBO) estimated $13.5 billion for the Government Payment for Annuitants, Employee Health Benefits; $49 million for the Government Payment for Annuitants, Employee Life Insurance; and $8 billion for Payment to the Civil Service Retirement and Disability Fund. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included identical sections, resulting in a total of $21.628 billion in outlays. <3.9.4. Office of Special Counsel56> The Office of Special Counsel (OSC) is an independent federal investigative and prosecutorial agency whose mission is to safeguard the merit system by protecting federal employees and applicants from prohibited personnel practices, especially reprisal for whistleblowing. The President's budget requested FY2019 appropriations of $26.3 million for the OSC. The agency's FTE employment level was estimated to be 144 for FY2019, an increase of 13 FTEs above the FY2018 enacted level of 131 FTEs. "For 2018 and 2019," the agency projected "intakes for whistleblower disclosure, Hatch Act, and prohibited personnel practice cases to follow recent trends and stabilize at around 6,000 total new cases received each year." The funding was requested to "enable OSC to meet rising demand for [the agency's] services, protect the growing number of whistleblowers in the VA [Veterans Affairs] and other agencies, protect the employment rights of returning service members, manage continually rising case levels, and protect the federal merit system from prohibited personnel and political practices." In the 115 th Congress, H.R. 6147 as passed by the House would have provided the funding requested by the President. As passed by the Senate, H.R. 6147 would have provided funding of $26.5 million, $283,000 more than the President's request. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included $26.5 million in funding for the OSC. The 115 th Congress Senate committee report that accompanied S. 3107 included the following directive: Veterans Affairs (VA) C ases Noting the significant increase in cases over the past several fiscal years and that "three-fourths of OSC's whistleblower disclosures that are substantiated in full or in part are from the VA," the committee expressed the expectation that, as the agency "continues to move toward a more cohesive internal structure through its 'One OSC' initiative," personnel resources could be allocated more effectively to address the caseload. The 116 th Congress conference report ( H.Rept. 116-9 ) did not change this directive. <3.10. National Archives and Records Administration61> The National Archives and Records Administration (NARA) is an independent agency created to preserve the U.S. government's records, oversee recordkeeping in various government agencies, and make government records publicly available. The Administration requested $376.8 million for NARA for FY2019. In the 115 th Congress, H.R. 6147 as passed by the House would have appropriated $390.7 million, whereas H.R. 6147 as passed by the Senate would have appropriated $393.4 million. In the 116 th Congress, H.R. 21 would have appropriated $393.4 million, whereas H.R. 648 would have appropriated $391.3 million. P.L. 116-6 appropriated $391.3 million. Approximately $27.2 million of NARA's funding is dedicated to paying down debt due to the construction of the Archives II facility, resulting in lower net total figures appearing in the committee reports. <3.11. National Credit Union Administration64> The National Credit Union Administration (NCUA) is an independent federal agency funded largely by the credit unions it charters, insures, and regulates. The NCUA manages the Community Development Revolving Loan Fund (CDRLF), established in 1979, to assist officially designated low-income credit unions in providing basic financial services to low-income communities. Low-interest loans and grants are made available to assist these credit unions. Loans are normally repaid in five years, although shorter repayment periods may be considered. Grants have been provided for a variety of purposes including improving operations and technical assistance. In addition to funds provided for specifically in appropriations acts, earnings generated from the CDRLF may be available to fund loans or grants. In the 115 th Congress, the President requested no money be appropriated for the CDRLF in FY2019, whereas House-passed H.R. 6147 and Senate-passed H.R. 6147 would both have appropriated $2 million, the same amount as appropriated in FY2018. In the 116 th Congress, H.R. 21 and H.R. 648 both included $2 million, as did the enacted P.L. 116-6 . <3.12. Office of Government Ethics65> The Office of Government Ethics (OGE) is an independent federal agency, established by the Ethics in Government Act of 1978, charged with promulgating rules and regulations pertaining to financial disclosure, conflict of interest, and ethics in the executive branch. OGE is headed by a director who is appointed to a five-year term by the President with Senate confirmation. OGE provides education and training to executive branch ethics officials. According to OGE, it "does not adjudicate complaints, investigate matters within the jurisdiction of Inspectors General and other authorities, or prosecute ethics violations." For FY2019, the President's request for OGE was $16.3 million, a $0.1 million decrease from the FY2018 enacted amount. In the 115 th Congress, the House-passed H.R. 6147 would have appropriated $17 million and the Senate-passed H.R. 6147 would have appropriated $16.4 million. In the 116 th Congress, H.R. 21 would have appropriated $16.4 million, whereas H.R. 648 would have appropriated $17 million. P.L. 116-6 ultimately appropriated $17 million for OGE. <3.13. Privacy and Civil Liberties Oversight Board68> The Privacy and Civil Liberties Oversight Board (PCLOB) was originally established in 2004 by the Intelligence Reform and Terrorism Prevention Act as an agency within the Executive Office of the President. PCLOB was reconstituted as an independent agency within the executive branch by the Implementing Recommendations of the 9/11 Commission Act of 2007. The five-member board assumed its new status on January 30, 2008; its FY2009 appropriation was its first funding as an independent agency. The board is directed to (1) ensure that privacy and civil liberties concerns are appropriately considered in the development and implementation of laws, regulations, and executive branch policies related to protecting the nation against terrorism; (2) review the implementation of laws, regulations, and executive branch policies related to protecting the nation from terrorism, including information-sharing guidelines; and (3) analyze and review actions the executive branch takes to protect the nation from terrorism, ensuring that the need for such actions is balanced with the need to protect privacy and civil liberties. In addition, the board is directed to (1) advise the President and the heads of executive branch departments and agencies on issues concerning, and findings pertaining to, privacy and civil liberties; and (2) provide annual reports to Congress detailing the board's activities during the year. Upon request, board members appear and testify before congressional committees. For FY2019, the President requested $5 million for the PCLOB, compared with $8 million appropriated in FY2018. In the 116 th Congress, the House-passed H.R. 6147 and the Senate-passed H.R. 6147 both included the requested $5 million, as did H.R. 21 and H.R. 648 in the 116 th Congress. The enacted P.L. 116-6 appropriated the requested $5 million for the PCLOB. <3.14. Public Company Accounting Oversight Board72> The Public Company Accounting Oversight Board (PCAOB) was created by the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) as a nonprofit corporation to provide independent oversight of audits of companies listed on public exchanges. Amendments in the Dodd-Frank Act provided that the PCAOB is generally funded outside the appropriations process through the annual accounting support fees assessed on public companies and other issuers, as well as fees on brokers and dealers registered with the SEC. Sarbanes-Oxley created a merit scholarship for undergraduate and graduate students enrolled in accredited accounting degree programs that was to be funded by monetary penalties imposed by the PCAOB, notwithstanding other requirements of the act. The scholarship program is administered by an outside vendor under the rules established by the PCAOB. For FY2018, P.L. 115-141 , Division B, Section 620 specified that not more than $1 million should be spent on such scholarships. In the 115 th Congress, Section 620 of the Senate-passed version of H.R. 6147 would have provided for an "amount not exceeding the amount of funds collected by the Board as of December 31, 2018, including accrued interest, as a result of the assessment of monetary penalties" for these scholarships in FY2019. The committee report on this language estimated this amount at $1 million. The Administration did not submit any funding request for these scholarships in FY2019, nor was any included in H.R. 6147 as passed by the House. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 all include the same Section 620 language noted above, and H.Rept. 116-9 attributes the same $1 million in spending resulting from it in FY2019. <3.15. Securities and Exchange Commission76> The SEC administers and enforces federal securities laws to protect investors from fraud, to ensure that corporate securities' sellers disclose accurate financial information, and to maintain fair and orderly trading markets. The SEC's budget is set through the normal appropriations process, but, under the Dodd-Frank Act, the agency's appropriations are offset by fees it collects from securities exchanges on stock sales and certain other securities transactions on those exchanges. The collections go directly to the Treasury Department. To achieve the offset, the act requires the agency to adjust its fees, making the agency's budget deficit-neutral. The President's FY2019 request for the SEC totaled $1.699 billion, with $40.8 million of that intended for lease costs for the relocation of the SEC's New York Regional Office headquarters. In the 115 th Congress, H.R. 6147 as passed by the House would have appropriated a total of $1.696 billion, as would H.R. 6147 as passed by the Senate; both would have included $37.2 million for leasing the new headquarters. In the 116 th Congress, H.R. 21 would have appropriated $1.696 billion, whereas H.R. 648 would have appropriated $1.712 billion. P.L. 116-6 appropriated $1.712 billion, including $37.3 million for the New York Regional Office lease. In addition to amounts approved in the regular appropriations process, the Dodd-Frank Act also established an SEC reserve fund to enable the agency to plan for certain long-term expenses, potentially freeing up other funds for agency use in areas such as enforcement and regulation. The reserve fund is funded by the agency's traditional collections on registration fees. In any single fiscal year, the fund cannot exceed $100 million nor can the SEC collect more than $50 million in fees for the fund. Any excess collections go to the Treasury Department. For FY2019, the President requested $25 million be rescinded from the reserve fund. In the 115 th Congress, neither H.R. 6147 as passed by the House nor H.R. 6147 as passed by the Senate would have rescinded any monies from the reserve fund. In the 116 th Congress, the House-passed bills did not include such rescission language and neither did the enacted P.L. 116-6 . <3.16. Selective Service System77> The Selective Service System (SSS) is an independent federal agency operating with permanent authorization under the Military Selective Service Act. It is not part of the Department of Defense, but its mission is to serve the military's emergency manpower needs by conscripting personnel when directed by Congress and the President. Most males aged 18 through 25 and living in the United States are required to register with the SSS. The induction of men into the military via Selective Service (i.e., the draft) terminated in 1973 and has not been renewed. In January 1980, President Carter asked Congress to authorize standby draft registration of both men and women. Congress approved funds for male-only registration in June 1980. Women are now allowed to serve in combat units and occupations, which may lead to the modification of registration to include women. SSS's funding has remained relatively stable over previous years in terms of absolute dollars, but it has decreased in terms of inflation-adjusted funding. For FY2019, the President requested $26.4 million in funding. The 115 th Congress House-passed and Senate-passed versions of H.R. 6147 would have appropriated $26 million, and the same amount was included in the 116 th Congress H.R. 21 and H.R. 648 . P.L. 116-6 appropriated $26 million for SSS. This represents a $3.1 million increase over the $22.9 million appropriated for SSS in FY2018. <3.17. Small Business Administration80> The Small Business Administration (SBA) administers a number of programs intended to assist small businesses. For example, the SBA (1) guarantees loans made by banks and other financial institutions to small businesses; (2) makes low-interest loans to small businesses, nonprofit organizations, and households that are victims of natural disasters and acts of terrorism; (3) finances training and technical assistance programs for small business owners and prospective owners; (4) oversees several small business federal contracting programs, and (5) serves as an advocate for small business within the federal government. The President requested an appropriation of $834.1 million for the SBA for FY2019 ($628.9 million if recommended increases in fees and a $50 million rescission is approved). The request included $265 million for salaries and expenses, $192.5 million for entrepreneurial development and noncredit programs, $155.2 million for business loan administration, $4 million for business loan subsidy costs, $21.9 million for the Office of the Inspector General, $9.1 million for the Office of Advocacy, and $186.5 million for disaster assistance. The Administration also requested authorization levels of $30 billion for the 7(a) loan guaranty program, $7.5 billion for the 504/CDC loan guaranty program, $4 billion for the Small Business Investment Company (SBIC) program, and $12 billion for SBA-guaranteed trust certificates for the SBIC program. In addition, the Administration requested a number of program revisions, including (1) authorization to increase SBA loan guarantee program levels that are established in the act and do not require budget authority by not more than 15% after notifying, in writing, the Committees on Appropriations and Small Business of both Houses of Congress at least 15 days in advance; (2) a permanent rescission of $50 million in prior year unobligated subsidy balances from the 504/CDC loan guarantee program; (3) an "update" of fee structures to offset $155 million in business loan administration expenses, including increases in the 7(a) loan guarantee program's upfront and annual servicing fees; and (4) an increase in the SBAExpress program's maximum loan amount from $350,000 to $1 million. The 115 th Congress House-passed H.R. 6147 would have appropriated $741.88 million for the SBA for FY2019, $92.2 million less than the Administration's request. Of the appropriated amount, $268.5 million was for salaries and expenses, $251.9 million was for entrepreneurial development and noncredit programs, and $31.308 million was for disaster assistance. The remaining budget account amounts, authorization levels, and rescission followed the request. The House-passed bill also would have repealed an expedited disaster assistance program authorized under the Food, Conservation, and Energy Act of 2008. It would not have authorized the SBA to increase loan guarantee program authorization levels beyond those established in the act, nor authorized changes to SBA fee structures, nor increased the SBAExpress program's maximum loan amount. The 115 th Congress Senate-passed H.R. 6147 would have appropriated $699.3 million for the SBA for FY2019, $134.8 million less than the Administration's request. Of the appropriated amount, $267.5 million was for salaries and expenses, $241.6 million was for entrepreneurial development and noncredit programs, and no funding was provided for disaster assistance. The remaining budget account amounts and authorization levels followed the request. It did not address the rescission, authorize the SBA to increase loan guarantee program authorization levels beyond those established in the act, increase SBA fee structures, or increase the SBAExpress program's maximum loan amount. The Senate-passed H.R. 6147 would have prohibited SBA assistance to businesses headquartered in the People's Republic of China or for which more than 25% of the company's voting stock is owned by affiliates that are citizens of the People's Republic of China; required the SBA to study whether the provision of matchmaking services with various outside entities would enhance existing SBA veterans entrepreneurship programs; and required the SBA to work with federal agencies to review each Office of Small and Disadvantaged Business Utilization's efforts to comply with the requirements under Section 15(k) of the Small Business Act (relating to assisting small businesses obtain federal contracts). In the 116 th Congress, P.L. 116-6 appropriated $715.37 million for the SBA, $134.8 million less than the Administration's request (with the difference primarily due to lower appropriations for disaster assistance). The act provided $267.5 million for salaries and expenses, $247.7 million for entrepreneurial development and noncredit programs, $155.15 million for business loan administration, $4 million for business loan credit subsidies (for the Microloan program), $21.9 million for Office of Inspector General, $9.12 million for the Office of Advocacy, and $10 million for disaster assistance. The act also set authorization levels of $30 billion for the 7(a) loan guaranty program, $7.5 billion for the 504/CDC loan guaranty program, $4 billion for the Small Business Investment Company (SBIC) program, and $12 billion for SBA-guaranteed trust certificates for the SBIC program, as requested by the Trump Administration. In addition, the act included a permanent rescission of $50 million in prior-year unobligated subsidy balances from the 504/CDC loan guarantee program, repealed the expedited disaster assistance loan program, and established a System Modernization and Working Capital Fund (IT WCF) to, among other goals, improve, retire, or replace existing information technology systems to enhance cybersecurity and transition to other innovative commercial platforms and technologies. The SBA was authorized to transfer, after receiving advance approval of the House and Senate Committees on Appropriations, not more than 3% of its funding under the salaries and expenses and business loans program accounts to the IT WCF. The amounts transferred to the IT WCF shall remain available for obligation through September 30, 2022. <3.18. United States Postal Service84> The U.S. Postal Service (USPS) generates almost all of its funding nearly $70 billion annually by charging mail users for the costs of the services it provides. Congress, however, does provide annual appropriations to compensate USPS for revenue it forgoes in providing free mailing privileges to the blind and overseas voters. Congress authorized appropriations for these purposes in the 1993 Revenue Forgone Reform Act (RFRA). This act also permitted Congress to provide USPS with a $29 million annual reimbursement until 2035 to compensate for lost revenue providing additional below-cost postal services during the RFRA's phase-in period. Funds appropriated to the USPS for the annual reimbursement and revenue forgone are deposited in the Postal Service Fund (PSF), which is an off-budget revolving fund comprised of revenue from the sale of postal products and services. The PSF is used to pay the operating expenses of USPS, the U.S. Postal Service Office of Inspector General (USPSOIG), and the Postal Regulatory Commission (PRC). The Postal Accountability and Enhancement Act (PAEA), which was enacted on December 20, 2006, first affected the postal appropriations process in FY2009. Under the PAEA, both the USPSOIG and the PRC must submit their budget requests directly to Congress and to OMB. The law requires that funding for these two agencies must be provided out of the Postal Service Fund. The law further requires that USPSOIG's budget be treated as a component of USPS's budget, whereas the PRC's budget, like the budgets of other independent regulators, is treated separately. Table 6 summarizes the different appropriations for the USPS. <3.18.1. Payment to the Postal Service Fund for Revenue Forgone> For FY2019, the President requested $55.2 million for the Postal Service Fund, which is about $2.9 million less than the USPS's FY2018 appropriation. In the 115 th Congress, H.R. 6147 as passed by the House would have appropriated 58.1 million, whereas H.R. 6147 as passed by the Senate would have appropriated $55.2 million. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included $55.2 million for the Postal Service Fund. <3.18.2. U.S. Postal Service Office of Inspector General> For FY2019, the President requested $234.7 million for the USPSOIG, which is about $10.4 million less than the USPSOIG's FY2018 appropriation. In the 115 th Congress, H.R. 6147 as passed by the House and as passed by the Senate would both have appropriated $250 million. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included $250 million for the USPSOIG. <3.18.3. Postal Regulatory Commission> For FY2019, the President requested $15.1 million for the PRC, which is about $0.1 million less than the PRC's FY2018 appropriation. In the 115 th Congress, both the House- and Senate-passed versions of H.R. 6147 would have appropriated $15.2 million, the same as the PRC's FY2018 appropriation. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included $15.2 million for the PRC. <3.18.4. USPS Policy Provisions> The President's FY2019 Budget contained several "operational reforms to reduce costs and improve revenue," including discontinuing six-day mail delivery and reducing delivery frequency to five days where there is a business case to do so; allowing USPS to shift to centralized and curbside delivery where appropriate; authorizing a one-time postal rate increase; and ensuring flexibility of the rate-setting process. In the 115 th Congress, the House-passed and Senate-passed versions of H.R. 6147 included several long-standing postal policy provisions. For example, the bills both would have required USPS to continue six-day mail delivery; required USPS to continue providing mail for overseas voting and mail for the blind free of charge; prohibited appropriated funds from being used to charge a fee to a child support enforcement agency seeking the address of a postal customer; and prohibited funds from being used to consolidate or close small rural and other small post offices. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included the same long-standing postal policy provisions as the House- and Senate-passed versions of H.R. 6147 , but did not include the policy reforms requested in the President's FY2019 Budget. <3.19. United States Tax Court100> A court of record under Article I of the Constitution, the United States Tax Court (USTC) is an independent judicial body that has jurisdiction over various tax matters as set forth in Title 26 of the United States Code . The court is headquartered in Washington, DC, but its judges conduct trials in many cities across the country. The USTC was appropriated $50.7 million in FY2018. The President requested $55.6 million for FY2019. In the 115 th Congress, both the House- and Senate-passed versions of H.R. 6147 would have appropriated $51.5 million. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included $51.5 million for the USTC. <4. General Provisions Government-Wide101> The FSGG Appropriations Act includes general provisions applying government-wide. Most of the provisions include language that has appeared under the General Provisions title for several years because Congress has decided to reiterate the language rather than make the provisions permanent. An Administration's proposed government-wide general provisions for a fiscal year are generally included in the Budget Appendix. Among the new provisions proposed for FY2019 were the following: If new budget authority provided in FY2019 appropriations acts exceeds the discretionary spending limit for any category set forth in Section 251(c) of the Balanced Budget and Emergency Deficit Control Act of 1985 because of estimating differences with CBO, the OMB Director will make an adjustment to the FY2019 discretionary spending limit in such category in the amount of the excess. The total of all such adjustments would not exceed 0.2% of the sum of the adjusted FY2019 discretionary spending limits for all categories. (Section 736, FY2019 budget proposal, Section 745 of H.R. 6147 as passed by the House, Section 748 of H.R. 6147 as passed by the Senate, Section 748 of H.R. 21 as passed by the House, Section 747 of H.R. 648 as passed by the House, and Section 747 of P.L. 116-6 .) The head of a covered agency that has established an Information Technology System Modernization and Working Capital Fund (IT Fund) may transfer funds appropriated in this or any other act that become available upon or after this act's enactment date to such agency's IT Fund for the purposes specified in Section 1077 of P.L. 115-91 . Requirements for notification about the transfer apply. Amounts transferred to an agency's IT Fund would remain available for three fiscal years. (Section 737 of the FY2019 budget proposal. Not included in H.R. 21 as passed by the House, H.R. 648 as passed by the House, and P.L. 116-6 .) None of the funds made available by this act could be used to implement, administer, or enforce a rule issued pursuant to Section 13(p) of the Securities Exchange Act of 1934, which requires the SEC to promulgate rules requiring issuers with conflict minerals that are necessary to the functionality or production of a product manufactured by such person to disclose annually whether any of those minerals originated in the Democratic Republic of the Congo or an adjoining country. (Section 747 of H.R. 6147 as passed by the House. Not included in H.R. 21 as passed by the House, H.R. 648 as passed by the House, and P.L. 116-6 .) A pay adjustment of 1.9% for 2019 was authorized for federal civilian employees paid under the General Schedule, allocated as 1.4% base pay adjustment and 0.5% locality pay adjustment. (Section 749 of H.R. 6147 as passed by the Senate, Section 749 of H.R. 21 as passed by the House, Section 748 of H.R. 648 as passed by the House, Section748 of P.L. 116-6 .) <5. Cuba Sanctions106> The Treasury Department's Office of Foreign Assets Control (OFAC) administers the main body of Cuba embargo regulations, the Cuban Assets Control Regulations, which were first issued in 1963, and have been amended many times over the years to reflect changes in U.S. policy toward Cuba. In the 115 th Congress, H.R. 6147 as passed by the House included two FSGG provisions in Division B that would have tightened U.S. economic sanctions on Cuba. Section 128 provided that no funds made available by the act could have been used to approve, license, facilitate, authorize, or otherwise allow the use, purchase, trafficking, or import of property confiscated by the Cuban government. The provision appears to have been aimed at prohibiting the importation of rum and tobacco products by authorized U.S. travelers as accompanied baggage. Section 129, which relates to trade sanctions on Cuba, provided that no funds made available by the act could have been used to authorize a general license or approve a specific license with respect to a mark, trade name, or commercial name that is substantially similar to one that was used in connection with a business or assets that were confiscated by the Cuban government unless the original owner expressly consented. The provision, which would have prohibited OFAC from licensing the payment of trademark registration fees, relates to a long-standing dispute between a Cuban company and the Bermuda-based Bacardi Limited over the Havana Club trademark. In January 2016, OFAC issued a specific license for the Cuban company to make payments related to the renewal of the Havana Club trademark, and the U.S. Patent and Trademark Office subsequently renewed the Havana Club trademark until 2026. Both Cuba provisions had been included in House Appropriations Committee version of the FY2018 FSGG appropriations bill, H.R. 3280 , but were not included in the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ). H.R. 6147 as passed by the Senate did not include either Section 128 or Section 129. In the 116 th Congress, neither H.R. 21 nor H.R. 648 included either section and nor did the enacted P.L. 116-6 .

The Financial Services and General Government (FSGG) appropriations bill includes funding for more than two dozen independent agencies. Among them are the Consumer Product Safety Commission (CPSC), Election Assistance Commission (EAC), Federal Communications Commission (FCC), Federal Election Commission (FEC), Federal Labor Relations Authority (FLRA), Federal Trade Commission (FTC), General Services Administration (GSA), National Archives and Records Administration (NARA), Office of Personnel Management (OPM), Privacy and Civil Liberties Oversight Board (PCLOB), Securities and Exchange Commission (SEC), Selective Service System (SSS), Small Business Administration (SBA), and United States Postal Service (USPS). President Trump's FY2019 budget request included a total of $3 billion for the independent agencies funded through the FSGG appropriations bill, including $282 million for the Commodity Futures Trading Commission (CFTC) (which is considered through the Agriculture appropriations bill in the House and the FSGG bill in the Senate). In the 115th Congress, the House and Senate Committees on Appropriations reported FSGG appropriations bills (H.R. 6258, H.Rept. 115-792 and S. 3107, S.Rept. 115-281) and both houses passed different versions of a broader bill (H.R. 6147) that would have provided FY2019 appropriations. The House-passed H.R. 6147 would have provided a combined total of $1.4 billion for the FSGG agencies, while the Senate-passed H.R. 6147 would have provided $2.3 billion. In both cases, the largest differences compared to the President's request were in the funding for the General Services Administration (GSA). No full-year FY2019 FSGG bill was enacted prior to the end of FY2018. The FSGG agencies were provided continuing appropriations through December 7, 2018, in P.L. 115-245 and through December 21, 2018, in P.L. 115-298. No final bill, however, was enacted and funding for FSGG agencies along with much of the rest of the government lapsed on December 22, 2018. No further FY2019 appropriations occurred prior to the 116th Congress. In the 116th Congress, the House of Representatives passed H.R. 21 and H.R. 648, both containing six full FY2019 appropriations bills, including FSGG provisions. H.R. 21 was identical to the Senate-passed H.R. 6147, while H.R. 648 was based on a prospective conference report from the 115th Congress and contained $2.5 billion for the FSGG independent agencies. The Senate did not act on either of these bills. On February 14, 2019, both the House and the Senate agreed to a conference report (H.Rept. 116-9) for H.J.Res. 31, containing seven appropriations bills providing full FY2019 funding for the government's operations that had not been previously funded. This included FSGG provisions nearly identical to H.R. 648. The President signed the resolution on February 15, 2019, enacting it into law as P.L. 116-6. P.L. 116-6 provides a total of $1.9 billion in appropriations for FSGG independent agencies.

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<1. Introduction> This report describes and analyzes annual appropriations for the Department of Homeland Security (DHS) for FY2020. It compares the enacted FY2019 appropriations for DHS, the Donald J. Trump Administration's FY2020 budget request, and the appropriations measures developed and ultimately enacted in response to it. This report identifies additional informational resources, reports, and products on DHS appropriations that provide context for the discussion. A list of Congressional Research Service (CRS) policy experts with whom congressional clients may consult on specific topics may be found in CRS Report R42638, Appropriations: CRS Experts . The suite of CRS reports on homeland security appropriations tracks legislative action and congressional issues related to DHS appropriations, with particular attention paid to discretionary funding amounts. These reports do not provide in-depth analysis of specific issues related to mandatory funding such as retirement pay nor do they systematically follow other legislation related to the authorizing or amending of DHS programs, activities, or fee revenues. Discussion of appropriations legislation involves a variety of specialized budgetary concepts. The Appendix to this report explains several of these concepts, including budget authority, obligations, outlays, discretionary and mandatory spending, offsetting collections, allocations, and adjustments to the discretionary spending caps under the Budget Control Act (BCA; P.L. 112-25 ). A more complete discussion of those terms and the appropriations process in general can be found in CRS Report R42388, The Congressional Appropriations Process: An Introduction , coordinated by James V. Saturno, and the Government Accountability Office's A Glossary of Terms Used in the Federal Budget Process . <1.1. Note on Data and Citations> All amounts contained in CRS reports on homeland security appropriations represent budget authority. For precision in percentages and totals, all calculations in these reports use unrounded data, which are presented in each report's tables. Amounts in narrative discussions may be rounded to the nearest million (or 10 million, in the case of numbers larger than 1 billion), unless noted otherwise. Data used in this report for FY2019 annual appropriations are derived from the conference report accompanying P.L. 116-6 , the Consolidated Appropriations Act, 2019. Division A of P.L. 116-6 is the Department of Homeland Security Appropriations Act, 2019. FY2019 supplemental appropriations data are drawn directly from two enacted measures: P.L. 116-20 , the Additional Supplemental Appropriations Act, 2019, which included funding for response and recovery from a range of natural disasters; and P.L. 116-26 , the Emergency Supplemental Appropriations for Humanitarian Assistance and Security at the Southern Border Act, 2019, which included funding for security and humanitarian needs at the U.S.-Mexico border. Data for the FY2020 requested levels and House Appropriations Committee-recommended levels of annual appropriations are drawn from H.Rept. 116-180 , which accompanied H.R. 3931 . Data for the Senate Appropriations Committee-recommended levels of annual appropriations are drawn from S.Rept. 116-125 , which accompanied S. 2582 . Data for the FY2020 enacted levels are drawn from the explanatory statement accompanying P.L. 116-93 , Division D of which is the FY2020 Department of Homeland Security Appropriations Act. Scoring methodology is consistent across this report, relying on data provided by the Appropriations Committees that has been developed with Congressional Budget Office (CBO) methodology. CRS does not attempt to compare this data with Office of Management and Budget (OMB) data because technical scoring differences at times do not allow precise comparisons. Note: Previous CRS reports on DHS appropriations at times used OMB data on mandatory spending for the Federal Emergency Management Agency and the U.S. Secret Service that was not listed in appropriations committee documentation for consistency, OMB data on mandatory spending is no longer included in this report. <2. Legislative Action on FY2020 DHS Appropriations> This section provides an overview of the legislative process thus far for appropriations for the Department of Homeland Security for FY2020, from the Administration's initial request, through enactment of annual appropriations in Division D of P.L. 116-93 . <2.1. Annual Appropriations> <2.1.1. Trump Administration FY2020 Request> On March 18, 2019, the Trump Administration released its detailed budget request for FY2020. A lapse in FY2019 annual appropriations from December 22, 2018, until January 25, 2019, delayed the full budget proposal's release past the first Monday in February, the deadline outlined in the Budget Act of 1974. The Trump Administration requested $51.68 billion in adjusted net discretionary budget authority for DHS for FY2020, as part of an overall budget that the Office of Management and Budget estimated to be $92.08 billion (including fees, trust funds, and other funding that is not annually appropriated or does not score against discretionary budget limits). The request amounted to a $2.27 billion (4.6%) increase from the $49.41 billion in annual net discretionary budget authority in appropriations enacted for FY2019 through the Department of Homeland Security Appropriations Act, 2019 ( P.L. 116-6 , Division A). The Trump Administration also requested discretionary funding that does not count against discretionary spending limits set by the Budget Control Act (BCA; P.L. 112-25 ) for two DHS components and is not reflected in the above totals. The Administration requested an additional $14.08 billion for the Federal Emergency Management Agency (FEMA) in disaster relief funding, as defined by the BCA, and in the budget request for the Department of Defense, $190 million in Overseas Contingency Operations/Global War on Terror designated funding (OCO), to be transferred to the Coast Guard from the Navy. <2.1.2. House Committee Action> On June 11, 2019, the House Appropriations Committee marked up H.R. 3931 , the Department of Homeland Security Appropriations Act, 2020. H.Rept. 116-180 was filed on July 24, 2019. As reported by the committee, H.R. 3931 included $52.80 billion in adjusted net discretionary budget authority. This was $1.12 billion (2.2%) above the level requested by the Administration, and $3.39 billion (6.9%) above the enacted level of annual appropriations for FY2019. The House committee bill included $14.08 billion in disaster relief-designated funding, reflecting the level in the Administration's modified request, and the House Appropriations Committee-reported Defense Appropriations bill included OCO funding to be transferred to the Coast Guard. As a result of amendments adopted in full committee markup, the initial CBO scoring of the bill exceeded the subcommittee allocation by more than $3 billion. (CBO later revised the scoring of those provisions to $1.9 billion.) <2.1.3. Senate Committee Action> On September 26, 2019, the Senate Appropriations Committee marked up S. 2582 , its version of the Department of Homeland Security Appropriations Act, 2020. S.Rept. 116-125 was filed the same day. As reported by the committee, S. 2582 included $53.18 billion in adjusted net discretionary budget authority. This was $1.50 billion (2.9%) above the level requested by the Administration, and $3.77 billion (7.6%) above the enacted annual level for FY2019. Much of this latter increase was due to the inclusion of $5 billion in funding for border barrier construction as opposed to $1.38 billion in the FY2019 act. Both the House and Senate committees included more discretionary funding for the Coast Guard, Transportation Security Administration, and FEMA than had been requested by the Administration. The Senate committee bill also included $17.35 billion of disaster relief-designated funding $3.28 billion (23.3%) more than the Administration's modified request and $190 million in OCO-designated funding for the Coast Guard. <2.1.4. Continuing Resolution> No annual appropriations for FY2020 had been enacted by late September as FY2019 was drawing to a close, so on September 27, 2019, Congress passed a continuing resolution (CR) ( P.L. 116-59 ), temporarily extending funding at the FY2019 rate for operations through November 21. This CR was subsequently extended through December 20. P.L. 116-59 included four provisions specifically addressing needs of DHS under a CR: Section 132 provides a special apportionment of CR funds to cover Secret Service expenses related to the FY2020 presidential campaign; Section 133 allows for an accelerated rate of apportionment for the Disaster Relief Fund (DRF) to ensure that the programs it funds can be carried out; Section 134 extends the authorization for the National Flood Insurance Program to issue new policies; and Section 135 allows funds to be allocated in accordance with a planned restructuring of some DHS management activities. In addition, Section 101(6) extends by reference some immigration provisions that have been linked to the appropriations cycle. For further information on the FY2020 continuing resolutions, see CRS Report R45982, Overview of Continuing Appropriations for FY2020 (P.L. 116-59) . <2.1.5. Enactment> On December 16, 2019, the text and explanatory statements for two consolidated appropriations bills were released on the House Rules Committee website. One, which used H.R. 1158 as a legislative shell, included four appropriations measures, including the FY2020 DHS annual appropriations measure as Division D. Division D included $50.47 billion in adjusted net discretionary budget authority. This was $1.22 billion (2.4%) below the level requested by the Administration, and $1.06 billion (2.1%) above the enacted annual level for FY2019. The act included $17.35 billion for the Federal Emergency Management Agency (FEMA) in disaster relief funding, as defined by the Budget Control Act ( P.L. 112-25 ; BCA), and $190 million in Overseas Contingency Operations designated funding (OCO) in an appropriation to the Coast Guard. The House passed the measure by a vote of 280-138 on December 17, and the Senate did so by a vote of 81-11 on December 19. The bill was signed into law of December 20, 2019, and enacted as P.L. 116-93 . <3. Summary of DHS Appropriations> Generally, the homeland security appropriations bill includes all annual appropriations provided for DHS, allocating resources to every departmental component. Discretionary appropriations provide roughly two-thirds to three-fourths of the annual funding for DHS operations, depending how one accounts for disaster relief spending and funding for OCO. The remainder of the budget is a mix of fee revenues, trust funds, and mandatory spending. Annual appropriations measures for DHS typically have been organized into five titles. The first four are thematic groupings of components, while the fifth provides general direction to the department, and sometimes includes provisions providing additional budget authority. <3.1. The DHS Common Appropriations Structure (CAS)> When DHS was established in 2003, components of other agencies were brought together over a matter of months, in the midst of ongoing budget cycles. Rather than developing a new structure of appropriations for the entire department, Congress and the Administration continued to provide resources through existing account structures when possible. At the direction of Congress, in 2014 DHS began to work on a new Common Appropriations Structure (CAS), which would standardize the format of DHS appropriations across components. In an interim report in 2015, DHS noted that operating with "over 70 different appropriations and over 100 Programs, Projects, and Activities ... has contributed to a lack of transparency, inhibited comparisons between programs, and complicated spending decisions and other managerial decision-making." After several years of work and negotiations with Congress, DHS made its first budget request in the CAS for FY2017, and implemented it while operating under a CR in October 2016. Under the CAS, legacy appropriations structures were largely converted to a four-category structure: 1. Operations and Support , which covers operating salaries and expenses; 2. Procurement , Construction, and Improvements , which funds planning, operational development, engineering, purchase, and deployment of assets to support component missions; 3. Research and Development , which provides resources needed to identify, explore, and demonstrate new technologies and capabilities to support component missions; and 4. Federal Assistance , which supports grant funding managed by DHS components. All components have an Operations and Support (O&S) appropriation. All operational components and some support and headquarters components have a Procurement, Construction, and Improvements (PC&I) appropriation. Research and Development (R&D) appropriations are even less common, and only FEMA, the Countering Weapons of Mass Destruction Office (CWMD), and U.S. Citizenship and Immigration Services (USCIS) have federal assistance appropriations. Even with the implementation of the CAS structure, some appropriations are not included in those four categories: Federal Protective Service: The Federal Protective Service, which has been a part of several different components of DHS, does not have an appropriation of an explicit amount. Rather, the appropriations measure has language directing that funds credited to the FPS account may be spent by FPS to carry out its mission. It therefore has a net-zero impact on the total net discretionary spending in the bill. USCG's Retired Pay: The Coast Guard's Retired Pay appropriation supports the costs of the USCG retired personnel entitlements, including pensions, Survivor Benefits Plans, and medical care of retired USCG personnel and their dependents. This appropriation is categorized as appropriated mandatory spending: while the U.S. government has a legal obligation to make these payments, there is no permanent statutory mechanism in place to provide the funds. Because the government is required to make these payments, the Retired Pay appropriation does not count against the discretionary allocation of the bill. FEMA's Disaster Relief Fund: The Federal Emergency Management Agency (FEMA) receives a separate appropriation for its activities authorized under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.). This allows for more consistent tracking of FEMA's disaster assistance spending over time, and ensures more transparency into the availability of funds for disaster assistance versus FEMA's other grant activities, which are funded through the Federal Assistance appropriation. FEMA's National Flood Insurance Fund: The National Flood Insurance Program is largely mandatory spending. However, some program functions, including mission support, floodplain management, and flood mapping, are paid for through discretionary appropriations. Certain other program costs are paid for by fees collected by the government, which requires appropriations language to allow those resources to be spent. These include: Operating expenses and salaries and expenses associated with flood insurance operations; Commissions and taxes of agents; Interest on borrowings from the Treasury; and Flood mitigation actions and flood mitigation assistance. <3.1.1. Administrative and General Provisions> Prior to the FY2017 act, the provisos accompanying many appropriations included directions to components or specific conditions on how the budget authority it provided could be used. Similarly, general provisions provided directions or conditions to one or more components. In the FY2017 act, a number of these provisions within appropriations and component-specific general provisions were grouped at the ends of the titles where their targeted components are funded, and identified as "administrative provisions." This practice has continued in subsequent years. This report tracks changes in administrative and general provisions compared to the baseline of the prior year's enacted measure, noting provisions dropped, added, and modified. These changes from the baseline may take place for a variety of reasons. Due to the passage of time or enactment of permanent legislation, a provision may require adjustment or lose its relevance. Other provisions are the priority of members in one chamber or another, and as the enacted bill represents a compromise between those positions, the bills developed by a one chamber may not necessarily reflect the other chamber's priorities. <3.2. DHS Appropriations: Summary by Component Type> The following sections of the report discuss the appropriations provided for the department by type of component. It groups the 15 components of DHS into the following structure: Law Enforcement Operational Components (funded in Title II) U.S. Customs and Border Protection Immigration and Customs Enforcement Transportation Security Administration U.S. Coast Guard U.S. Secret Service Incident Response and Recovery Operational Components (Title III) Cybersecurity and Infrastructure Security Agency Federal Emergency Management Agency Support Components (Title IV) U.S. Citizenship and Immigration Services Federal Law Enforcement Training Center Science and Technology Directorate Countering Weapons of Mass Destruction Office Headquarters Components (Title I) Office of the Secretary and Executive Management Departmental Management Directorate Analysis and Operations Office of Inspector General Each group's and component's role is briefly described below, and their FY2019 enacted and FY2020 requested, recommended, and enacted appropriations are presented in tables arranged by grouped components. After each funding table, a brief analysis of selected administrative provisions for that group is provided. <3.2.1. Law Enforcement Operational Components> Funding for law enforcement operational components is generally provided in Title II of the annual DHS appropriations act. This is the largest title of the bill, although not all of DHS's largest components are included in it. <3.2.1.1. Components and Missions> U.S. Customs and Border Protection (CBP) : CBP is responsible for securing America's borders, coastlines, and ports of entry, preventing the illegal entry of persons and goods while facilitating lawful travel, trade, and immigration. Immigration and Customs Enforcement (ICE): ICE is the principal criminal investigative agency within DHS, and is charged with preventing terrorism and combating the illegal movement of people and goods. Transportation Security Administration (TSA): TSA provides security for the U.S. transportation system while ensuring the free and secure movement of people and goods. U.S. Coast Guard (USCG): The USCG is the principal federal agency responsible for maritime safety, security, and environmental stewardship in U.S. ports and inland waterways. The USCG is a hybrid of a law enforcement agency, regulatory agency, and first responder, as well as being a component of DHS, the intelligence community, and of the U.S. Armed Forces. U.S. Secret Service (USSS): The USSS is responsible for protecting the President, the Vice-President, their families and residences, past Presidents and their spouses, national and world leaders visiting the United States, designated buildings (including the White House and Vice President's Residence), and special events of national significance. The USSS also investigates and enforces laws related to counterfeiting and certain financial crimes. Table 1 includes a breakdown of budgetary resources provided to these components controlled through appropriations legislation. <3.2.1.2. Administrative Provisions> H.R. 3931 as reported by the House Appropriations Committee had 31 administrative provisions for Title II, 21 of which were unchanged from FY2019. The House committee bill dropped eight provisions which were in the FY2019 act, including Section 208 , which allowed ICE to reprogram funding to maintain detention of aliens that were prioritized for removal; Section 214 , which mandated TSA continue to monitor airport exit lanes; Section 223 , which allowed USCG to allocate its OCO funding within the Operations and Support appropriation; Section 225 , which authorized a TSA pilot program for screening services at locations other than primary passenger terminals; Section 227 , which requires the USCG maintain the mission and staffing of its Operations Systems Center; Section 228 , which prohibited competitions to privatize activities of the USCG National Vessel Documentation Center; Section 229 , which allowed funds in the bill to alter activities of the USCG Civil Engineering program, but not reduce them; and Section 232 , which required DHS collaboration with local governments on siting border barriers within their jurisdictions. Three previously carried administrative provisions were modified, and seven new provisions were added. S. 2582 as reported by the Senate Appropriations Committee, had 33 administrative provisions in Title II. Only one provision was dropped from the FY2019 act Section 225, described above. One previously carried provision was modified and three new provisions were added. P.L. 116-93 , Div. D, includes 36 administrative provisions in Title II. Sections 225 and 232 from the FY2019 act were dropped, four provisions were modified, and six new administrative provisions were included. Modified administrative provisions are outlined in Table 2 , while new administrative provisions proposed or included by the appropriations committees are outlined in Table 3 . <3.2.2. Incident Response and Recovery Operational Components> Funding for operational components which are focused on incident response and recovery is generally found in Title III of the annual DHS appropriations act. It includes funding for FEMA, which has the largest budget of any DHS component an appropriated budget largely driven by disaster programs authorized under the Stafford Act, and an overall budget which also includes non-appropriated funding for the National Flood Insurance Program. Title III also includes funding for the newly restructured Cybersecurity and Infrastructure Security Agency (CISA), formerly the National Protection and Programs Directorate. The reorganization included a shift of the Federal Protective Service from CISA to the Management Directorate, reducing the gross budgetary resources in this title. <3.2.2.1. Components and Missions> Cybersecurity and Infrastructure Security Agency (CISA): Formerly known as the National Protection and Programs Directorate (NPPD), CISA promotes information sharing to build resilience and mitigate risk from cyber and physical threats to infrastructure, and leads cross-government cybersecurity initiatives. Federal Emergency Management Agency (FEMA): FEMA leads the federal government's efforts to reduce the loss of life and property and protect the United States from all hazards, including natural disasters, acts of terrorism, and other disasters through a risk-based, comprehensive emergency management system of preparedness, protection, response, recovery, and mitigation. Table 4 includes a breakdown of budgetary resources for these components controlled through appropriations legislation. As some annually appropriated resources were provided for FEMA from outside Title III in FY2019, by transfer and by appropriation, a separate line is included for FEMA showing a total for what is provided solely within Title III, then the non-Title III funding, followed by the total annual appropriation for FEMA. The table only reflects the impact of transfers in the discretionary funding and budgetary resource totals. <3.2.2.2. Administrative Provisions> H.R. 3931 as reported by the House Appropriations Committee had eight administrative provisions in Title III, five of which were unchanged from FY2019. Two provisions were dropped from the FY2019 act: Section 301, which required a report on revised methods to assess and allocate costs for countermeasures used by the Federal Protective Service; and Section 309, which raised the federal share of costs for essential assistance and debris removal for wildfire major disasters declared in calendar year 2018 from 75% to 90%. Two previously carried administrative provisions were modified, and one new provision was added, which would allow governors to resubmit and FEMA to reconsider requests for Stafford Act individual assistance for certain disasters. S. 2582 as reported by the Senate Appropriations Committee had six administrative provisions in Title III. The Senate Appropriations Committee chose to drop three administrative provisions from this title that were included in the FY2019 act the two described above, and Section 307, which provided certain waivers for SAFER Act grants. No previously carried provisions were substantively modified and no new provisions were added. P.L. 116-93, Div. D, includes seven administrative provisions in Title III. Sections 301 and 309 from the FY2019 act as described above were dropped, two provisions were modified, and the new provision proposed in the House Appropriations Committee bill was not included. Modified administrative provisions are tracked in Table 5 . <3.2.3. Support Components> Funding for support components is generally found in Title IV of the annual DHS appropriations bill. The relatively small size of some of these appropriations makes changes in their funding appear more significant if expressed on a percentage basis. <3.2.3.1. Components and Missions> U.S. Citizenship and Immigration Services (USCIS): USCIS administers U.S. immigration laws that govern temporary admission and permanent immigration to the United States. Federal Law Enforcement Training Center (FLETC): FLETC is a technical training school for law enforcement professionals, meeting the basic and specialized training needs of approximately 100 federal agencies, as well as state and local organizations. Science and Technology Directorate (S&T): S&T leads and coordinates research, development, testing, and evaluation work for DHS, and supports departmental acquisitions. Countering Weapons of Mass Destruction Office (CWMD): CWMD leads DHS's efforts to develop and enhance programs and capabilities that defend against weapons of mass destruction, and includes the Department's Chief Medical Officer, who serves as the principal advisor to DHS leadership on medical and public health issues. Table 6 includes a breakdown of budgetary resources provided to these components controlled through appropriations legislation. <3.2.3.2. Administrative Provisions> H.R. 3931 as reported by the House Appropriations Committee included eight administrative provisions in Title IV, six of which were unchanged from FY2019. It dropped two: Section 402, which barred USCIS from providing immigration benefits unless it had received a background check that did not preclude providing such a benefit; and Section 408, which provided budgetary flexibility to support the transfer of the National Bio- and Agrodefense Facility to the U.S. Department of Agriculture. H.R. 3931 included two new provisions. S. 2582 as reported by the Senate Appropriations Committee had nine administrative provisions in Title IV. The Senate Appropriations Committee chose to drop one provision from this title that was included in the FY2019 act Section 408, described above. No previously carried provisions were substantively modified and two new provisions were added. P.L. 116-93 , Div. D, includes seven administrative provisions in Title IV. Sections 402 and 408 from the FY2019 act as described above were dropped. One new provision was added. New administrative provisions proposed or included by the appropriations committees are outlined in Table 7 . <3.2.4. Headquarters Components> Funding for headquarters components is traditionally found in Title I of the annual DHS appropriations act, although some initiatives have been funded in the past through general provisions. <3.2.4.1. Components and Missions> Office of the Secretary and Executive Management (OSEM): OSEM provides central leadership, management, direction and oversight for all DHS components. Departmental Management Directorate (DM): DM provides DHS-wide mission support services. Analysis and Operations (A&O): A&O covers two separate offices: The Office of Intelligence and Analysis (I&A), which integrates and shares intelligence with DHS components and stakeholders to allow them to identify, mitigate, and respond to threats; and the Office of Operations Coordination (OPS), which provides operations coordination, information sharing, and the common operating picture for DHS, and helps ensure DHS continuity and resilience. Office of Inspector General (OIG): The OIG is an independent, objective audit, inspection, and investigative body that reports to the Secretary and to Congress on DHS efficiency and effectiveness, and works to prevent waste, fraud, and abuse. Table 8 provides a breakdown of the budgetary resources provided to these components controlled through appropriations legislation. As resources were requested or provided for the Management Directorate from outside Title I, separate lines are included for each of those components showing a total for what is provided solely within Title I, then the individual items funded outside the title, followed by the total annual appropriation for the components. The table only reflects the impact of transfers in the discretionary funding and budgetary resource totals. <3.2.4.2. Administrative Provisions> The title funding DHS headquarters components in H.R. 3931 (Title I) had five administrative provisions, three of which are unchanged from FY2019. Two administrative provisions were dropped: Section 101, a requirement for a monthly budget and staffing report; and Section 106, a reporting requirement on visa overstay data. One previously carried administrative provision was modified to bar the use of Treasury Forfeiture Fund resources to build border security infrastructure. One new provision was added in the House bill, to create an Immigration Detention Ombudsman. Senate Appropriations Committee-reported S. 2582 had six administrative provisions in Title I. The Senate Appropriations Committee retained all six previously enacted provisions without substantive modifications, and no new provisions were added. P.L. 116-93 , Div. D, includes seven administrative provisions in Title I. No provisions were dropped. The new provision proposed in the House Appropriations Committee bill creating the Immigration Detention Ombudsman was included with minor modifications. <3.2.5. General Provisions> As noted earlier, the fifth title of the annual DHS appropriations act contains general provisions, the impact of which may reach across the government, apply to the entire department, affect multiple components, or focus on a single activity. Most general provisions remain functionally unchanged from year to year, providing guidance to DHS or structure to DHS appropriations with little more than updates to effective dates or amounts. The FY2019 DHS appropriations act included 40 such general provisions. H.R. 3931 , as reported by the House Appropriations Committee, carried 36 such provisions, including four added to the committee's initial draft in full committee markup. Four of the 36 were modified versions of FY2019 general provisions providing policy direction, while four were new. Six provisions carried in the FY2019 act were not retained in House committee version of H.R. 3931 : Section 516 , which restricted transfer or release of detainees from Guantanamo Bay; Section 518 , which restricted the use of funds in the bill to hire unauthorized workers; Section 521 , which provided funding for financial systems modernization activities; Section 522 , which required reductions in administrative spending from certain accounts; Section 536 , which barred the use of funds to implement the Arms Trade Treaty prior to its ratification; and Section 537 , which required the Administration to provide a list of spending cuts as alternatives to proposed fee increases that had not been authorized before the beginning of the budget year. S. 2582 , as reported by the Senate Appropriations Committee, had 36 general provisions in Title V, 32 of which were unchanged from FY2019. One provision was added, and one was modified. Three provisions carried in the FY2019 act that reduced budget authority available to DHS were modified in the Senate committee's bill: the DHS-wide reduction in total Operations and Support appropriations (originally Section 522, now Section 521), and rescissions of prior-year appropriations (originally Section 538 and 539, now Section 536). Three other provisions carried in the FY2019 act were dropped: Section 521 , which provided $51 million for DHS financial systems modernization; Section 531 , which provided $41 million in grants for local law enforcement costs for Presidential protection; and Section 535 , which prohibited using funds for a Principal Federal Official during a declared Stafford Act major disaster or emergency, with certain exceptions. P.L. 116-93 , Div. D, included 40 general provisions in Title V. Two provisions were dropped from the FY2019 DHS Appropriations Act Sections 521 and 522 described above. No new policy-related general provisions were added, although the last four general provisions provided rescissions of various types: Section 537 rescinds $233 million in emergency designated supplemental appropriations for CBP from P.L. 116-26 , which are reappropriated in Title II of this act; Section 538 rescinds $202 million in unobligated balances from across DHS; Section 539 rescinds almost $19 million in lapsed balances; Section 540 rescinds $300 million in unobligated balances from the Disaster Relief Fund. Modified and new policy-related general provisions are outlined in Table 9 and Table 10 , respectively. <3.2.5.1. Spending Provisions> Some general provisions have a direct impact on the amount of funding in the bill. In FY2019, funding was included in Title V for the Financial Systems Modernization initiative and a grant program for Presidential Residence Protection costs. In this report, Financial Systems Modernization is listed with headquarters components, and it is managed by the DHS Office of the Chief Information Officer. Presidential Residence Protection Cost grants are listed with FEMA, as they manage the distribution of those funds. While H.R. 3931 included funding for Presidential Residence Protection Cost Grants, it did not include separate funding for Financial Systems Modernization. S. 2582 included no additional appropriations for any DHS activities in Title V. P.L. 116-93 , Div. D, included $41 million for Presidential Residence Protection Cost Grants in Title V. In addition to provisions appropriating additional resources, rescissions of prior-year appropriations cancellations of budget authority that reduce the net funding level in the bill are found in this title. For FY2019, Division A of P.L. 116-6 included $303 million in rescissions and a provision directing that $300 million of DRF unobligated balances be used to offset new DRF appropriations. For FY2020, the Administration proposed rescinding $250 million in prior-year funding from the portion of the DRF not dedicated to the costs of major disasters. Section 536 of H.R. 3931 included $657 million in rescissions from other appropriations. The largest of these comes from CBP's PC&I appropriation for FY2019, reducing it by $601 million the amount transferred to it from the Treasury's Asset Forfeiture Fund by the Trump Administration for construction of border security infrastructure. S. 2582 included $62 million of provisions that reduced the score of the bill, the largest being a $33 million reduction in administrative costs to be made by DHS from certain operations and support appropriations. P.L. 116-93 , Div. D, included $754 million in rescissions, including $300 million in rescissions from unobligated balances in the DRF, and $233 million in emergency-designated rescissions from CBP appropriations as part of redirecting funds provided in P.L. 116-26 for humanitarian care, critical life and safety improvements to CBP facilities, and electronic health records. <4. For Further Information> For additional perspectives on FY2020 DHS appropriations, see the following: CRS Report R45972, Comparing DHS Component Funding, FY2020: In Brief ; CRS Report R44604, Trends in the Timing and Size of DHS Appropriations: In Brief ; and CRS Report R44052, DHS Budget v. DHS Appropriations: Fact Sheet . Congressional clients also may wish to consult CRS's experts directly. Table 11 lists CRS analysts and specialists who have expertise in policy areas linked to DHS appropriations. <4.1. Appendix. Appropriations Terms and Concepts> Budget Authority, Obligations, and Outlays Federal government spending involves a multistep process that begins with the enactment of budget authority by Congress. Federal agencies then obligate funds from enacted budget authority to pay for their activities. Finally, payments are made to liquidate those obligations; the actual payment amounts are reflected in the budget as outlays. Budget authority is established through appropriations acts or direct spending legislation and determines the amounts that are available for federal agencies to spend. The Antideficiency Act prohibits federal agencies from obligating more funds than the budget authority enacted by Congress. Budget authority also may be indefinite in amount, as when Congress enacts appropriations providing "such sums as may be necessary" to complete a project or purpose. Budget authority may be available on a one-year, multiyear, or no-year basis. One-year budget authority is available for obligation only during a specific fiscal year; any unobligated funds at the end of that year are no longer available for spending. Multiyear budget authority specifies a range of time during which funds may be obligated for spending, and no-year budget authority is available for obligation for an indefinite period of time. Obligations are incurred when federal agencies employ personnel, enter into contracts, receive services, and engage in similar transactions in a given fiscal year which create a legal requirement for the government to pay. Outlays are the funds that are actually spent during the fiscal year. Because multiyear and no-year budget authorities may be obligated over a number of years, outlays do not always match the budget authority enacted in a given year. Additionally, budget authority may be obligated in one fiscal year but spent in a future fiscal year, especially with certain contracts. In sum, budget authority allows federal agencies to incur obligations and authorizes payments, or outlays, to be made from the Treasury. Discretionary funded agencies and programs, and appropriated entitlement programs, are funded each year in appropriations acts. Discretionary and Mandatory Spending Gross budget authority , or the total funds available for spending by a federal agency, may be composed of discretionary and mandatory spending. Discretionary spending is not mandated by existing law and is thus appropriated yearly by Congress through appropriations acts. The Budget Enforcement Act of 1990 defines discretionary appropriations as budget authority provided in annual appropriations acts and the outlays derived from that authority, but it excludes appropriations for entitlements. Mandatory spending , also known as direct spending , consists of budget authority and resulting outlays provided in laws other than appropriations acts and is typically not appropriated each year. Some mandatory entitlement programs, however, must be appropriated each year and are included in appropriations acts. Within DHS, Coast Guard retirement pay is an example of appropriated mandatory spending. Offsetting Collections Offsetting funds are collected by the federal government, either from government accounts or the public, as part of a business-type transaction such as collection of a fee. These funds are not considered federal revenue. Instead, they are counted as negative outlays. DHS net discretionary budget authority , or the total funds appropriated by Congress each year, is composed of discretionary spending minus any fee or fund collections that offset discretionary spending. Some collections offset a portion of an agency's discretionary budget authority. Other collections offset an agency's mandatory spending. These mandatory spending elements are typically entitlement programs under which individuals, businesses, or units of government that meet the requirements or qualifications established by law are entitled to receive certain payments if they establish eligibility. The DHS budget features two mandatory entitlement programs: the Secret Service and the Coast Guard retired pay accounts (pensions). Some entitlements are funded by permanent appropriations, and others are funded by annual appropriations. Secret Service retirement pay is a permanent appropriation and, as such, is not annually appropriated. In contrast, Coast Guard retirement pay is annually appropriated. In addition to these entitlements, the DHS budget contains offsetting Trust and Public Enterprise Funds. These funds are not appropriated by Congress. They are available for obligation and included in the President's budget to calculate the gross budget authority. 302(a) and 302(b) Allocations In general practice, the maximum budget authority for annual appropriations (including DHS) is determined through a two-stage congressional budget process. In the first stage, Congress sets overall spending totals in the annual concurrent resolution on the budget. Subsequently, these totals are allocated among the congressional committees, usually through the statement of managers for the conference report on the budget resolution. These amounts are known as the 302(a) allocations . They include discretionary totals available to the Committees on Appropriations for enactment in annual appropriations bills through the subcommittees responsible for the development of the bills. In the second stage of the process, the appropriations committees allocate the 302(a) discretionary funds among their subcommittees for each of the appropriations bills. These amounts are known as the 302(b) allocations . These allocations must add up to no more than the 302(a) discretionary allocation and form the basis for enforcing budget discipline, since any bill reported with a total above the ceiling is subject to a point of order. The 302(b) allocations may be adjusted during the year by the respective appropriations committee issuing a report delineating the revised suballocations as the various appropriations bills progress toward final enactment. Table A-1 shows comparable figures for the 302(b) allocation for FY2020, based on the adjusted net discretionary budget authority included in Division A of P.L. 116-6 , the President's request for FY2020, and the House and Senate subcommittee allocations for the Homeland Security appropriations bill for FY2020. A series of amendments were offered and adopted in the House full committee markup of the FY2020 DHS appropriations bill that, according to CBO, put the bill $3.066 billion over its 302(b) discretionary allocation. This scoring was later revised to $1.9 billion. These provisions were not included in the final FY2020 DHS annual appropriations act. The Budget Control Act, Discretionary Spending Caps, and Adjustments The Budget Control Act established enforceable discretionary limits, or caps, for defense and nondefense spending for each fiscal year from FY2012 through FY2021. Subsequent legislation, including the Bipartisan Budget Acts of 2013, 2015, 2018, and 2019, amended those caps. Most of the budget for DHS is considered nondefense spending. In addition, the Budget Control Act allows for adjustments that would raise the statutory caps to cover funding for overseas contingency operations/Global War on Terror, emergency spending, and, to a limited extent, disaster relief and appropriations for continuing disability reviews and control of health care fraud and abuse. Three of the four justifications outlined in the Budget Control Act for adjusting the caps on discretionary budget authority have played a role in DHS's appropriations process. Two of these emergency spending and overseas contingency operations/Global War on Terror are not limited. The third justification disaster relief is limited. Under the Budget Control Act, the allowable adjustment for disaster relief was determined by the Office of Management and Budget (OMB), using the following formula until FY2019: Limit on disaster relief cap adjustment for the fiscal year = Rolling average of the disaster relief spending over the last ten fiscal years (throwing out the high and low years) + the unused amount of the potential adjustment for disaster relief from the previous fiscal year. The Bipartisan Budget Act of 2018 amended the above formula, increasing the allowable size of the adjustment by adding 5% of the amount of emergency-designated funding for major disasters under the Stafford Act, calculated by OMB as $6.296 billion. The act also extended the availability of unused adjustment capacity indefinitely, rather than having it only carry over for one year. In August 2019, OMB released a sequestration preview report for FY2020 that provided a preview estimate of the allowable adjustment for FY2020 of $17.5 billion the second-largest allowable adjustment for disaster relief in the history of the mechanism. That estimate is the sum of: the 10-year average, dropping the high and low years ($7.9 billion); 5% of the emergency-designated Stafford Act spending since 2012 ($6.6 billion); and carryover from the previous year ($3.0 billion). The final allowable adjustment for FY2020 may still differ from this estimate.

This report provides an overview and analysis of FY2020 appropriations for the Department of Homeland Security (DHS). The primary focus of this report is on the funding provided to DHS through the appropriations process. It includes an Appendix with definitions of key budget terms used throughout the suite of Congressional Research Service reports on DHS appropriations. It also directs the reader to other reports providing context for specific component appropriations. As part of an overall DHS budget that the Office of Management and Budget (OMB) estimated to be $92.08 billion, the Trump Administration requested $51.68 billion in adjusted net discretionary budget authority through the appropriations process for DHS for FY2020. The request amounted to a $2.27 billion (4.6%) increase from the $49.41 billion in annual appropriations enacted for FY2019 through the Department of Homeland Security Appropriations Act, 2019 ( P.L. 116-6 , Division A). The Administration also requested discretionary funding that does not count against discretionary spending limits and is not reflected in the adjusted net discretionary budget authority total. The Administration requested an additional $14.08 billion for the Federal Emergency Management Agency (FEMA) in disaster relief funding, as defined by the Budget Control Act ( P.L. 112-25 ; BCA), and in the budget request for the Department of Defense (DOD), $190 million in Overseas Contingency Operations designated funding (OCO) for the Coast Guard to be transferred from the Operations and Maintenance budget of the U.S. Navy. On June 11, 2019, the House Appropriations Committee marked up H.R. 3931 , its version of the Department of Homeland Security Appropriations Act, 2020. H.Rept. 116-180 was filed July 24, 2019. Committee-reported H.R. 3931 included $52.80 billion in adjusted net discretionary budget authority, according to the Congressional Budget Office's initial score of the bill. This was $1.12 billion (2.2%) above the level requested by the Administration, and $3.39 billion (6.9%) above the enacted annual level for FY2019. Much of this increase was due to the addition of several immigration-related policy provisions in the full committee markup, which added more than $3.0 billion to the score of the bill, putting the bill over its subcommittee allocation (CBO later revised the scoring of those provisions to $1.9 billion in a separate letter on September 10, 2019). On September 26, 2019, the Senate Appropriations Committee marked up S. 2582 , its version of the Department of Homeland Security Appropriations Act, 2020. S.Rept. 116-125 was filed the same day. Committee-reported S. 2582 included $53.18 billion in adjusted net discretionary budget authority. This was $1.50 billion (2.9%) above the level requested by the Administration, and $3.77 billion (7.6%) above the enacted annual level for FY2019. Much of this latter increase was due to the inclusion of $5 billion in funding for border barrier construction as opposed to $1.38 billion in the FY2019 act. Both the House and Senate appropriations committees recommended more discretionary funding for the Coast Guard, Transportation Security Administration, and FEMA than had been requested by the Administration. No annual appropriations for FY2020 had been enacted as FY2019 was drawing to a close, so a continuing resolution was enacted ( P.L. 116-59 ) on September 27, 2019. It temporarily extended funding at the FY2019 rate for operations through November 21 for most DHS programs (see limited exceptions in the Department of Homeland Security section of CRS Report R45982, Overview of Continuing Appropriations for FY2020 (P.L. 116-59) ). This CR was subsequently extended through December 20. Annual appropriations for DHS were enacted on December 20, 2019, in P.L. 116-93 , Division D. The act included $50.47 billion in adjusted net discretionary budget authority. This was $1.22 billion (2.4%) below the level requested by the Administration, and $1.06 billion (2.1%) above the enacted annual level for FY2019. The FY2020 DHS Appropriations Act included $17.35 billion for the Federal Emergency Management Agency (FEMA) in disaster relief funding, as defined by the BCA, and $190 million in OCO funding for the Coast Guard rather than as a transfer from the Navy. This report will be updated as events warrant.

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<1. Overview> On June 5, 2019, the commissioners of the Securities and Exchange Commission (SEC) voted to adopt Regulation Best Interest (Reg BI). Reg BI is arguably the centerpiece and most controversial part of a set of regulatory reforms related to financial professionals adopted by the SEC on that day. A new rule under the Securities and Exchange Act of 1934 (P.L. 73-291), Reg BI changes broker-dealers' obligations in their relationships with retail customers. According to the SEC, the regulation is meant to "enhance the broker-dealer standard of conduct beyond existing ... obligations [by] requiring broker-dealers ... to: (1) act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest of the broker-dealer ahead of the interests of the retail customer; and (2) address [various broker-dealer] conflicts of interest [with those clients]." H.R. 3351 , the FY2020 Financial Services and General Government appropriations bill as passed by the House included an amendment sponsored by House Financial Services Committee Chair Maxine Waters that would have forbidden the SEC from using any of its congressional spending authority to implement, administer, enforce, or publicize the final rules and interpretations with respect to Reg BI. This language, however, was not included in H.R. 1865 / P.L. 116-94 , the Further Consolidated Appropriations Act, 2020, as enacted. This report examines Reg BI in that it (1) provides background on the roles and the regulation of two types of financial professionals, broker-dealers and investment advisers; (2) provides background on the Obama Administration Department of Labor's 2016 fiduciary rule for broker-dealers under the Employee Retirement Income Security Act of 1974 (ERISA, P.L. 93-406 ); (3) describes the component obligations required to fulfill Reg BI's best interest broker-dealer standard; (4) examines state-based broker-dealer fiduciary regulatory and statutory developments; (5) examines congressional concerns and actions regarding Reg BI; (6) presents some key supportive and critical perspectives on Reg BI; and (7) examines research with potential relevance to the debate over the potential costs and benefits of Reg BI. <2. Background on Broker-Dealers and Investment Advisers> Broker-dealer firms or their affiliated persons act as brokers when they execute securities trades for their clients and as dealers when they trade their own securities for their own benefit. They are often discussed as a joint entity because most broker-dealers must register with the SEC, and must generally be members of and comply with the rules and guidance of a self-regulatory organization (SRO), the Financial Industry Regulatory Authority (FINRA, an SEC-regulated nonprofit). In addition, broker-dealer sales personnel (called registered representatives) register with their state securities regulator. SEC-registered broker-dealers are largely regulated under the Securities Exchange Act of 1934 (P.L. 73-291) and comprise a small set of large and medium-sized broker-dealers and thousands of smaller broker-dealers who compete in small niche or regional markets. Broker-dealers, or simply brokers, have significant range in the kinds of services they provide and generally divide into two groups, full-service and discount brokerage firms. Broker-dealers typically provide discrete, transaction-specific investment recommendations and are compensated via the commissions they receive for each individual transaction. A broker-dealer's investment recommendations suite may include buying securities from or selling securities to retail customers on a principal basis or recommending the purchase of proprietary products. In their investment recommendations, they are generally subject to what is known as the suitability standard , which requires them to "reasonably believe that a client recommendation is suitable given the client's investor profile." Investment a dvisers are firms or persons who provide investment advice directly to their clients. Clients include individuals and institutional investors, such as mutual funds and hedge funds. Pursuant to the Investment Advisers Act of 1940 (IAA, which regulates key aspects of investment advisers; P.L. 76-768), advisers with more than $110 million in assets under management (AUM) must register with the SEC. States generally register and regulate investment adviser firms with between $25 million and $110 million in AUM. Investment advisers typically provide ongoing investment advice and services with respect to client portfolio management. Their compensation is generally determined by the client's account AUM size, a fixed fee, or other arrangements, such as a fee-based compensation model. Although not expressly written in the IAA, court rulings and decisions from SEC enforcement cases have helped establish the fiduciary standard , the prevailing standard of retail customer care for investment advisers. Under this standard, advisers are generally expected to serve the best interests of their clients and are required to subordinate their own interests to those of their clients. Ideally, advisers are also expected to either eliminate material conflicts of interest or be fully transparent to the client about the existence of such conflicts. By contrast, broker-dealers are generally subject to a less demanding standard of client care that is found in FINRA's Rule 2111, the suitability standard . Triggered when a broker-dealer makes an investment recommendation, the "standard requires that a firm or associated person have a reasonable basis to believe a recommended transaction or investment strategy involving a security or securities is suitable for the customer.... [It] is based on the information obtained through reasonable diligence of the firm or associated person to ascertain the customer's investment profile." Also, unlike investment advisers, brokers do not have an ongoing duty to monitor their clients' financial positions. Broker-dealers are, however, subject to a fiduciary standard (1) when they have control of a client's discretionary account (meaning that they have a client's authority to buy and sell securities on the client's behalf) generally, according to case law; or (2) in a few states California, Missouri, South Dakota, and South Carolina where state courts have reportedly "imposed an unambiguous fiduciary standard" on them. The overall number of SEC-registered broker-dealers fell from more than 6,000 in 2005 to fewer than 4,000 in 2018, in contrast to an increase of SEC-registered investment advisers from about 9,000 in 2005 to more than 13,000 in 2018. <3. Blurred Lines Between Broker-Dealers and Investment Advisers, the Dodd-Frank Act, and a Uniform Fiduciary Standard> During the late 1980s and early 1990s, the landscape for the delivery of investment advice began to shift as broker-dealers increasingly offered financial advisory services somewhat akin to investment advisers, including investment and retirement planning. The expansion was reportedly helped along by the brokers' reliance on the IAA's "solely incidental" exemption from compliance with the act, and the growth of dually registered firms (i.e., firms registered with FINRA and the SEC as both broker-dealers and investment advisers). Compounding the potential retail customer perplexity over who is an investment adviser and who is a broker-dealer is the existence of "dozens of titles [in the broker world], including generic titles, such as financial advisor and financial consultant, as well as advertisements that reportedly claim that 'we do it all.'" As a consequence of these developments, various surveys report that retail customers are often confused over the distinctions between broker-dealers and advisers and the unique set of customer obligations attached to each of them. This was encapsulated in an observation made in a Rand Corporation study: "[T]he industry is becoming increasingly complex, firms are becoming more heterogeneous and intertwined, and investors do not have a clear understanding of the different functions and fiduciary responsibilities of financial professionals." In 2009, the U.S. Department of the Treasury issued a white paper on potential financial reforms in the wake of the financial crisis, Financial Regulatory Reform A New Foundation: Rebuilding Financial Supervision and Regulation . A section of the report observed that for many investors there was little if any difference in the way they perceived brokers and advisers. It then argued that "retail customers repose the same degree of trust in their brokers as they do in investment advisers, but the legal responsibilities of the intermediaries may not be the same." The white paper then recommended the enactment of new legislation "requiring that broker-dealers who provide investment advice about securities to investors have the same fiduciary obligations as registered investment advisers." On the heels of the Treasury report and driven in part by similar concerns regarding investor confusion over the roles of investment advisors and broker-dealers, Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act, P.L. 111-203 ) did a number of things in this area. Among them was granting the SEC authority to impose fiduciary rules on broker-dealers subject to certain conditions and requiring the SEC to study various aspects of financial professionals' standards of retail customer care. Among other questions, the study was asked to evaluate "whether there are legal or regulatory gaps, shortcomings, or overlaps in legal or regulatory standards in the protection of retail customers relating to the standards of care for providing personalized investment advice about securities to retail customers that should be addressed by rule or statute." Released in 2011, the staff study recommended that the SEC bolster investor protection and reduce investor confusion regarding the differences between brokers and investment advisers. The staff study then recommended "establishing a uniform fiduciary standard for investment advisers and broker-dealers when providing investment advice about securities to retail customers that is consistent with the standard that currently applies to investment advisers." After the study, then-SEC Chair Mary Schapiro noted that the SEC staff had been tasked with considering the various ramifications of the recommended rulemaking. No such rulemaking was proposed or adopted by the SEC under Chair Schapiro or her successor, Chair Mary Jo White, who in 2015 reportedly said that the agency should "implement a uniform fiduciary duty for broker-dealers and investment advisers where the standard is to act in the best interest of the investor." <4. The 2016 DOL Fiduciary Rules> In April 2016, the Obama Administration's Department of Labor (DOL) adopted new rules under the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406 ). Previously, under ERISA, securities brokers-dealers who provided services to retirement plans and who were not fiduciaries were generally subject to a suitability standard. The 2016 DOL rules represented a significant change from this. Under them, broker-dealers were generally deemed to be fiduciaries while providing recommendations to retirement plan participants. Major parts of the rules were not to be implemented until 2018. In making the case for the reform, the Obama Administration argued that the definition of investment advice needed to be revised given the changed nature of how Americans were readying themselves for retirement after ERISA's enactment in 1975. More specifically, the number of participants in traditional defined benefit (DB) plans had significantly declined, whereas the number of participants in defined contribution (DC) plans, such as 401(k) plans, had surged. The Administration argued that DC plan participants tend to confront more decision options, such as contribution amounts, investment allocations, rollovers, and withdrawals, than do DB plan participants. As such, it was argued that those in DB plans may have greater need for investment assistance and advice subject to the more strenuous fiduciary standard. Supporters of DOL's fiduciary rules, including investor advocates, argued that financial advisers (including broker-dealers) would no longer be able to direct clients to products that awarded them larger commissions at the client's expense. Detractors, including broker-dealers, financial planners, and various Members of Congress, stressed that the rules would increase the cost of retirement accounts and would curtail various investors' access to investment advice. In February 2017, President Trump released a presidential memorandum ordering the Labor Department to reexamine the rule. Later, between April and November 2017, DOL ordered a series of delays for key parts of the rule that stretched until July 2019. On March 15, 2018, the Fifth Circuit Court of Appeals vacated the DOL rules. It ruled that DOL had exceeded its statutory authority under ERISA in writing the rules. The decision formally halted implementation of the rules. The adjudication was the result of a lawsuit brought by various business groups, including the U.S. Chamber of Commerce (a major business trade group), the Financial Services Roundtable (a group that represents the nation's largest firms in banking, insurance, and investment services), and the Securities Industry and Financial Markets Association (SIFMA, a major trade group for broker-dealers, investment banks and asset managers). The Trump Administration's DOL has not challenged the Fifth Circuit's decision. However, in fall 2018, DOL officially announced that it was "considering regulatory options in light of the Fifth Circuit opinion" and projected a September 2019 date for the potential new final rules. In June 2019, various DOL officials, including then-DOL Secretary Alexander Acosta, reportedly said that the agency "was working with the SEC to promulgate new rules." The same month, Jeanne Klinefelter Wilson, deputy assistant secretary of the Employee Benefits Security Administration, the DOL unit that oversees ERISA, observed that although DOL and the SEC operate under different regulations, "the goal is to proceed under a raw common framework and propose Department of Labor rules [that] track as closely as possible with [the] SEC's best-interest regulations." In July 2019, President Trump nominated Eugene Scalia to succeed Alexander Acosta as Secretary of Labor. Scalia was later confirmed for that post by the Senate on September 26, 2019. While a partner with the law firm Gibson, Dunn, & Crutcher, Scalia presented oral arguments on behalf of the plaintiffs in the aforementioned case in which the court vacated DOL's fiduciary rule. Scalia has reportedly described the rule as "an immensely controversial and burdensome rule that really pushed the envelope of the agency's regulatory authority." The possibility has been raised that Secretary Scalia may have to recuse himself from involvement in the development of a fiduciary rule because of government ethics rules that guard against conflicts of interest by prohibiting officials from participating in issues they were involved with in the private sector. <5. The Reg BI Final Rule> On June 5, 2019, the SEC commissioners separately approved parts of a package of final rules related to the duty of care financial professionals owe to retail investors. The package contained Reg BI; the Form Customer Relationship Summary, a short-form disclosure that would identify key distinctions in the types of services offered by broker-dealers and investment advisers to their clients; applicable legal standards, and potential conflicts of interest; a clarification of the fiduciary duty owed by investment advisers to their clients under the Investment Advisers Act; and an interpretation of the "solely incidental" broker-dealer exclusion under the IAA aimed at clarifying when a broker-dealer's exercise of investment advisory activities redefines it as an investment adviser according to the IAA. As observed earlier, in addition to its stated goal of requiring a broker-dealer to act in the best interest of a retail customer making recommendations, Reg BI also seeks to address some remaining conflict-of-interest concerns. Reg BI will do so by requiring broker-dealers to "address conflicts of interest by establishing, maintaining, and enforcing policies and procedures reasonably designed to identify and fully and fairly disclose material facts about conflicts of interest, and in instances where [the SEC] ... determined that disclosure is insufficient to reasonably address the conflict, to mitigate or, in certain instances, eliminate the conflict." According to SEC officials, under Reg BI, which the SEC deliberately constructed to be a principles-based set of obligations rather than an expressly defined one, when retail investor clients receive and use a broker-dealer recommendation, the broker-dealer will be required to act in the retail customer's best interest without placing the broker-dealer's financial or other interests ahead of the retail customer's. The SEC interprets Regulation BI to apply to recommendations of (1) "any securities transaction" (purchase, sale, and exchange); and (2) any "investment strategy" involving securities (including account recommendations). In addition to investors receiving broker-dealer recommendations for non-retirement-based investment accounts, Reg BI also defines an applicable retail investor to include a "person receiving recommendations for his or her own retirement account, including but not limited to IRAs and individual accounts in workplace retirement plans, such as 401(k) plans and other tax-favored retirement plans." It also interprets applicable broker-dealer "account recommendations to include recommendations to roll over or transfer assets from one type of account to another (e.g., converting a workplace retirement plan account to an IRA)." Broker-dealers will have until June 30, 2020, to comply with Reg BI. Officials at FINRA have reportedly characterized Reg BI as "sort of federalizing [broker-dealer] sales practice issues." Noting that "most of the [broker-dealer] sales practice requirements historically have come from the FINRA rulebook," they indicated that FINRA will likely have to adjust its rules to align with Reg BI. <5.1. The "Best Interest" Rule's Component Obligations> Under Reg BI, the dictate that a broker-dealer cannot place its financial or other interests ahead of its retail customers' interests is known as the general obligation . To satisfy the general obligation, a broker-dealer must comply with three underlying component obligations: (1) a duty of disclosure; (2) a duty of compliance; and (3) a duty of customer care. These obligations are described below. In addition, a fourth component obligation a duty to address certain conflicts of interests is one of two broad mandates under Reg BI. Given its significance, a separate section (see " The Conflict of Interest Obligation Under Reg BI ") then discusses that obligation. <5.1.1. The Disclosure, Compliance, and Duty of Customer Care Obligations> The disclosure obligation. Under this obligation, a broker must, prior to or at the time of the recommendation, provide to the retail customer, in writing, full and fair disclosure of all material facts related to the scope and terms of the relationship, including all material facts relating to conflicts of interest associated with the recommendation. The compliance obligation. Reg BI requires broker-dealers to establish written policies and procedures reasonably designed to achieve compliance with Reg BI as a whole. This requirement reflected the SEC's decision to adopt certain commenters' suggestions that the proposed requirement to develop policies and procedures align with the conflict-of-interest obligation described below. The compliance obligation provides flexibility to allow broker-dealers to establish compliance policies and procedures that accommodate a broad range of business models. It does not enumerate specific requirements that broker-dealers must include in their policies and procedures. Instead, each broker-dealer should consider the scope, size, and risks associated with the firm's operations and the types of business in which the firm engages when adopting its policies and procedures. According to the Reg BI release, a reasonably designed compliance program generally would also include controls, remediation of noncompliance, training, and periodic review and testing. The duty of care obligation . Under the duty of care obligation, a broker-dealer must exercise reasonable diligence, care, and skill when making a recommendation to a retail customer. As part of this, the broker-dealer must understand the potential risks, rewards, and costs associated with the recommendation. The broker-dealer must consider such factors in light of the retail customer's investment profile, while ensuring that an ensuing recommendation is in that customer's best interest. <5.1.2. The Conflict of Interest Obligation Under Reg BI> The broad conflict of interest mandate under Reg BI says that broker-dealers must "address conflicts of interest by establishing, maintaining, and enforcing policies and procedures reasonably designed to identify and fully and fairly disclose material facts about conflicts of interest, and in instances where [the SEC] ... determined that disclosure is insufficient to reasonably address the conflict ... mitigate or, in certain instances, eliminate the conflict." Conflicts of interest occur when the interests of an entity working on behalf of a customer and the interests of that customer are misaligned. This dynamic informs the relationship between broker-dealers and customers because of various factors that potentially encourage broker-dealers to boost their compensation or to benefit in other ways to the possible detriment of their customers, such as the transaction-based commission compensation model. Federal securities laws and FINRA's rules address broker-dealer conflicts through three distinct approaches: (1) the express prohibition of certain actions; (2) mitigation through the client suitability requirement when giving investment advice; and (3) the required disclosure of material conflicts of interest when making client recommendations. Expanding on these, the conflict of interest component obligation under Reg BI requires broker-dealers to have written policies and procedures reasonably designed to identify and, at a minimum, disclose or eliminate conflicts of interest, including the following: Mitigating conflicts that may encourage them to place their interests, or their firm's interests, ahead of the customer's. Mitigation alters a broker-dealer's policies and procedures to "reduce the incentive for the associated person to make a recommendation that places the associated person's or firm's interests ahead of the retail customer's interest." Examples include (1) avoiding broker-dealer compensation targets that disproportionately expand compensation via certain sale increases; and (2) establishing a differential compensation based on neutral factors to minimize broker-dealer employee compensation incentives that incentivize the promotion of certain types of investment accounts over others. (This is similar to a provision in the 2016 DOL fiduciary rules. ) Establishing, maintaining, and enforcing written policies and procedures designed to "identify and eliminate any sales contests, sales quotas, bonuses, and non-cash compensation that are based on the sales of specific securities or specific types of securities within a limited period of time." (This is similar to a provision in the earlier DOL fiduciary rule. ) Preventing customer offerings that have material limitations, including product menus that are very limited in scope or that solely offer proprietary products that can cause a broker-dealer to place his or her interests or the firm's interests ahead of the customer's. (This is said to be a broader and more rigorous requirement than current FINRA rules on noncash compensation. ) <6. The States' Requirements and Reg BI> Broker-dealers are subject to state securities laws, known as "Blue Sky Laws," state common laws, and judicial rulings from a state's highest court. As discussed earlier, reports indicate that the common law derived from judicial rulings in four states California, Missouri, South Dakota, and South Carolina imposes an "unambiguous fiduciary standard" for broker-dealers who do business in the states. State common laws, however, lack the authority of state regulations and statutes. Under state Blue Sky laws, it is generally unlawful for any person to transact business in a state as a broker-dealer or agent unless they are registered with the state's securities regulatory authority. During the past few years, several states have been attempting to impose either state statutory or regulatory requirements stipulating that state-registered broker-dealers have a fiduciary duty to their retail customers. And as of September 2019, New Jersey, Nevada, Massachusetts, and New York reportedly had ongoing initiatives that would impose fiduciary requirements on broker-dealers in various stages of development. Of these state initiatives, only Massachusetts' (proposed in June 2019) began after the Reg BI proposal and final rule. Explaining the rationale for the Massachusetts initiative, Secretary of the Commonwealth William Galvin blamed the inadequacies of Reg BI: "We are proposing this standard, because the SEC has failed to provide investors with the protections they need against conflicts of interest in the financial industry, with its recent 'Regulation Best Interest' rule." Barbara Roper, director of investor protection at the Consumer Federation of America, a consumer advocacy group, has raised concerns that the state-based fiduciary laws could create loopholes to the detriment of broker-dealer customers. She noted that the Nevada initiative would not recognize insurance agents as financial planners, excluding them from the fiduciary regulation, which she argued could significantly disadvantage consumers within the state. Meanwhile, the brokerage industry and its trade groups have reportedly been lobbying states, such as New Jersey, to halt state-based fiduciary actions. Their arguments are two-pronged: (1) states should reconsider their fiduciary efforts in light of Reg BI; and (2) if adopted, multiple state-based fiduciary broker-dealer standards will result in a messy patchwork of "laws that would be duplicative of, different than, and possibly in conflict with federal standards." Jay Clayton, the SEC chair, has raised related concerns; he identified "the potential patchwork of inconsistent state-level standards [as a development that he] and many others believe ... will increase costs, limit choice for retail investors and make oversight and enforcement more difficult." By contrast, SEC Commissioner Robert Jackson, who provided the sole dissenting vote on Reg BI, has characterized the state fiduciary effort as a potentially encouraging fix to the perceived inadequacies of Reg BI. The National Securities Markets Improvement Act (NSMIA; P.L. 104-290 ) is often cited as being in potential conflict with the state fiduciary proposals. Aimed at increasing financial services industry efficiency, the act expanded federal regulators' authority by taking some authority away from state securities regulators. Among other things, it also prohibited states from imposing additional or different books and records requirements on broker-dealers outside of federal requirements. The provision is often cited as a potential source for a legal challenge in the event that any of the state broker-dealer fiduciary regimes are adopted. Before the SEC's adoption of Reg BI, SIFMA, a critic of the state fiduciary proposals, asked the agency to consider inserting language into Reg BI noting that NSMIA provides for federal preemption of such actions. The final rule does not contain any such language, a position advocated by an association of state and provincial securities regulators, the North American Securities Administrators Association. Instead, the commentary accompanying the rule notes that "the preemptive effect of Regulation Best Interest on any state law governing the relationship between regulated entities and their customers would be determined in future judicial proceedings based on the specific language and effect of that state law." <6.1. Action by Eight Attorneys General> On September 9, 2019, Attorneys General (AGs) from California, Connecticut, Delaware, Maine, New Mexico, New York, Oregon, and the District of Columbia filed a suit in the United States District Court, Southern District of New York, asking the court to vacate Reg BI. In arguing that it should be vacated, the AGs alleged that the regulation injures retail investors in two significant ways: (1) it fails to restrict the provision of conflicted advice as directed by Section 913(g) of the Dodd-Frank Act, which permits the SEC to promulgate rules to provide for a uniform fiduciary standard; and (2) it increases the potential that retail investors will receive conflicted information because it compounds previously existing investor confusion with respect to the duties that broker-dealers owe such investors in the provision of investment advice. The AGs also argued that the standard of customer care provided by Reg BI fails to meaningfully go beyond FINRA's existing "suitability obligation." <7. Congressional Concerns and Actions> In September 2018, 35 House and Senate Democratic Members including House Committee on Financial Services then-ranking member Maxine Waters, who now chairs the committee, and Senate Committee on Banking, Housing, and Urban Affairs ranking member Sherrod Brown sent a letter to SEC Chair Jay Clayton criticizing the then-proposed Reg BI. The letter stated the following: Regulation BI falls woefully short We urge the SEC to revise its proposal consistent with [the Dodd-Frank law] and require brokers to abide by the same high standard that currently applies to investment advisers so that their advice to retail investors is provided without regard to their financial and other interests. Regulation BI for brokers and the SEC's interpretation of the "fiduciary" obligation owed by investment advisers fail to clearly do this, enabling investors to 'consent' to harmful conduct in complex and legalistic disclosures that most will never read and would not understand if they did. In March 2019, in advance of the SEC's adoption of Reg BI, Chair Waters reportedly said the following: [W]e have to be concerned about best interests of our consumers and our seniors in particular. When you have investment advisors who are not acting in [consumer's] best interest, but are acting in their own best interest, it does not bode well for our senior investors in particular. So we are going to continue to pay attention to that. I don't know what the SEC has decided about what their role should be in this [fiduciary realm], but it's of interest to us. On June 26, 2019, the House passed H.R. 3351 , the Financial Services and General Government Appropriations Act for FY2020. The bill included an amendment sponsored by Chair Waters that would have forbidden the SEC from using any of its congressional spending authority "to implement, administer, enforce or publicize the final rules and interpretations" with respect to Reg BI. On December 20, 2019, President Trump signed H.R. 1865 , the Further Consolidated Appropriations Act, 2020, which became P.L. 116-94 and will fund the federal government through FY2020. It does not contain the aforementioned SEC restrictions contained in H.R. 3351 . Responses to the congressional action generally reflect where observers stand on the merits of Reg BI itself. <8. Various Perspectives on Reg BI> Like the wide-ranging comments that followed the release of the proposed Reg BI in 2018, the adoption of the final 2019 rule also elicited an expansive range of responses. This section first identifies the three broad reactions to the reform. It then provides quoted excerpts from various observers and stakeholders that either (1) provide support for or (2) are critical of several concerns regarding Reg BI, including its failure to provide for a broker-dealer fiduciary standard. <8.1. The Division of Views on Reg BI> The three broad divisions with respect to overall views on Reg BI are as follows: those who have given it qualified support, such as Rick Fleming, the SEC's investor advocate, who characterized it as "not as strong as it could be" but "a step in the right direction"; those who broadly support it, including the U.S. Chamber of Commerce, a major business trade group, and SIFMA; and those who are broadly critical, including the Consumer Federation of America and the Public Investors Arbitration Bar Association (PIABA, a bar association whose members represent investors in disputes with the securities industry). <8.2. Significant Supportive and Critical Perspectives on Debated Assertions About Reg BI> This section provides excerpts of quotes from various stakeholders and observers, which provide contrasting supportive and critical views on policy concerns integral to the debate surrounding Reg BI. Framed as debatable assertions, they are as follows: (1) Reg BI represents meaningful progress over the suitability requirement; (2) Reg BI's failure to define best interest is a problem; (3) the absence of a uniform fiduciary standard is not a problem; (4) the absence of a Reg BI fiduciary standard is not a problem; and (5) Reg BI meaningfully addresses outstanding conflict of interest issues. <8.2.1. Reg BI Represents Meaningful Progress over the Suitability Requirement> <8.2.1.1. Supportive Comments> In a letter to Members of the House, SIFMA said the following in support of Reg BI: Reg BI is the most comprehensive enhancement of the standard of conduct rules governing broker-dealers since the enactment of the Securities Exchange Act of 1934. The new SEC rules dramatically and undeniably exceed the previous suitability standard by requiring a duty of loyalty, meaning that a broker's recommendations must be in the customer's best interest and that the broker cannot place its own interests ahead of its customer. The regulations impose a duty of diligence, care and skill in making the recommendations, thereby holding the broker accountable for failures of knowledge or skill. SEC Chairman Jay Clayton said the following in a July 2019 speech: Regulation Best Interest or "Reg. BI" imposes a new standard of conduct specifically for broker-dealers that substantially enhances their obligations beyond the current "suitability" requirements . Reg. BI is satisfied only if the broker-dealer complies with four specified component obligations: Disclosure, Care, Conflict of Interest, and Compliance. Each of these obligations includes a number of prescriptive requirements, all of which must be satisfied to comply with the rule. The U.S. Chamber of Commerce said the following in a press release supporting Reg BI: The new best interest standards create strong new protections for investors against bad actors, provide clearer information that will help Americans invest and save for their futures, allow investors to choose the right type of advice to fit their needs, and help small businesses provide retirement benefits for their employees. We hope that the Department of Labor moves forward on similar protections for ERISA plans that dovetail with the SEC's approach. <8.2.1.2. Critical Comments> SEC Commissioner Robert Jackson, who provided the sole dissenting vote on Reg BI, said the following in a statement after the rule's adoption: As to brokers, today's rule, like the proposal, fails to require that investor interests come first. Congress expressly authorized us to take that step in Dodd-Frank authority we should have used today. Instead, the core standard of conduct set forth in Regulation Best Interest remains far too ambiguous about a question on which there should be no confusion. As a result, conflicts will continue to taint the advice American investors receive from brokers. Micah Hauptman, financial services counsel at the Consumer Federation of America, reportedly said the following: [Reg BI is] a bait and switch on investors. The SEC claims to be imposing a new best interest standard on brokers, but it won't change any practices in the brokerage industry. Instead, Reg BI simply codifies the existin g standard under FINRA rules, just like the brokerage industry asked them to. [The investing public is] getting hoodwinked. Barbara Roper, director of investor protection for the Consumer Federation of America, reportedly said the following: [The SEC is saying] we'll let you have the conflict and then just mitigate it. Two different advisors both can call what they do financial planning or retirement planning, and one could have a duty to you for the whole relationship, but for the other a broker it's transaction by transaction. <8.2.2. Reg BI's Failure to Define Best Interest is a Problem> <8.2.2.1. Supportive Comments> Barbara Roper, of the Consumer Federation of America, said the following in testimony before the House Committee on Financial Services Committee, Subcommittee on Investor Protection, Entrepreneurship and Capital Markets: If the goal behind Reg BI truly is to enhance protections for investors, and not simply to preserve the status quo, the Commission must start by clarifying what it means by "best interest," and it must do so in a way that offers protections beyond those already afforded under FINRA rules.... The Commission must adopt a principles-based definition of best interest clarifying that a broker acts in a customer's best interest when she recommends, from among the reasonably available suitable options, those investments, investment strategies, services, or accounts that she reasonably believes are the best available match for that investor, taking into account both the investor's needs and the investments' material characteristics. While there will often not be a single "best" option, satisfying a best interest standard should require the broker to narrow down the acceptable options beyond the dozens or even hundreds of investments that would satisfy the existing suitability standard in a given situation." Massachusetts Secretary of the Commonwealth William Galvin reportedly said the following: Crucially, the term "best interest" is not defined in the rulemaking package. This ambiguity will lay the groundwork for the same debates and litigation that exist today under the "suitability" standard that applies to broker/dealers. <8.2.2.2. Critical Comments> SEC Chairman Jay Clayton said the following in a July 2019 speech: [Some commenters to the Reg BI proposal asked whether the SEC should] provide a detailed, specific, situation-by-situation definition of "best interest" in the rule text.... Our view was that the best approach would be to apply the specific component obligations of Reg. BI, including the "best interest" requirement in the Care Obligation, in a principles-based manner. Under Reg. BI, whether a broker-dealer has acted in the retail customer's best interest will turn on an objective assessment of the facts and circumstances of how the specific components of the rule are satisfied. This principles-based approach is a common and effective approach to addressing issues of duty under law, particularly where the facts and circumstances of individual relationships can vary widely and change over time, including as a result of innovation. [The] approach is similar to an investment adviser's fiduciary duty, which has worked well for advisers' retail clients and our markets. Indeed, there is no definition of "best interest" under the Advisers Act. Thomas Wade, director of financial services policy at the American Action Forum, said the following: [With respect to Reg BI's lack of a clear definition] the SEC provides for a spectrum of advisor-investor obligation, allowing investors to choose their desired level of protection based on their risk appetite and finances. The criticism of allowing this fluidity that investors may not understand the duty of care provided by their advisor has been mitigated by the SEC requirement that brokers at stand-alone broker-dealerships not be able to use the word "advisor" in their title. Financial news summary service FINSUM said the following regarding Reg BI's lack of a "best interest" definition: Having a highly defined rule leaves it more vulnerable to loopholes. With the current contextual structure, one has to worry whether their behavior could be considered "best interest" depending on an amorphous standard. It seems like a better way to keep bad actors in line. <8.2.3. The Absence of a Uniform Fiduciary Standard in Reg BI is not a Problem> <8.2.3.1. Supportive Comments> In the text of Reg BI, the SEC said the following regarding a uniform fiduciary standard: We have also declined to craft a new uniform standard that would apply equally and without differentiation to both broker-dealers and investment advisers. Adopting a "one size fits all" approach would risk reducing investor choice and access to existing products, services, service providers, and payment options, and would increase costs for firms and for retail investors in both broker-dealer and investment adviser relationships. In a July 2019 speech, SEC Chairman Jay Clayton said the following regarding the decision to not adopt a uniform fiduciary standard: A number of commenters expressly or impliedly advocated for regulation that would collapse the distinction, with a substantial majority of those commentators favoring the generally applicable investment adviser model where clients pay an asset-based fee or a flat fee for generally broad-based financial advice from a fiduciary . [T]his is a good model, and for many investors, this type of investment adviser relationship may better match their needs than the typical broker-dealer relationship. However, for many other investors, the broker-dealer model, particularly after the implementation of Reg. BI either alone or in combination with an investment adviser relationship provides the better match. For example, a retail customer that intends to buy and hold a long-term investment may find that paying a one-time commission to a broker-dealer is more cost effective than paying an ongoing advisory fee to an investment adviser to hold the same investment. That same investor might want to use a brokerage account to hold those long-term investments, and an advisory account for other investments. SIFMA described the following findings from a study in support of the idea that a uniform fiduciary standard could negatively impact customer choice: SIFMA has released a study conducted by Oliver Wyman for the Securities and Exchange Commission that examines the impact of unifying the fiduciary standard of care that retail investors receive from financial advisers and broker-dealers.... Oliver Wyman collected data from a broad selection of retail brokerage firms that serve 33% of households and represent 27% of all retail financial assets. The key insight from the survey is that broker-dealers play a critical role in the financial services industry that cannot be easily replicated with alternative services models. Therefore, if the proposed standardization is adopted, retail investors (particularly small investors) could see a negative impact on the choice of advisory model, product access, and affordability of advisory services. <8.2.3.2. Critical Comments> The Financial Planning Coalition, an industry group, said the following: Adoption of a uniform fiduciary standard of care will not affect the availability of investment advice or the range of products for moderate- or low-income consumers.... Research shows that the costs to broker-dealers to implement a fiduciary standard would be minimal. Duane Thompson, senior policy analyst at Fi360, reportedly said the following: Instead of having a uniform fiduciary standard for identical advisory services, there will continue to be two somewhat different market conduct standards to what can be identical advisory services. It's another tangible sign that the broker-dealer business model has changed dramatically in recent years, where advice is a dominant feature of what they provide. According to a media report, the AARP's Reg BI comment letter to the SEC said the following: [AARP is asking the SEC to] adopt a uniform fiduciary standard for financial professionals that applies to all types of retail accounts. There is no question that there is confusion among retail investors in the marketplace as a result of standards that are not uniform and do not address the perpetually evolving universe of investment products and industry practices. <8.2.4. The Absence of a Reg BI Fiduciary Standard is not a Problem> <8.2.4.1. Supportive Comments> In a 2015 speech, SEC Commissioner Daniel M. Gallagher said the following regarding the fiduciary duty: Much of the debate on these issues seems to assume that the "fiduciary duty" is some sort of talismanic protection that can overcome any competing regulatory concerns. All too often, this is the approach taken by those who simply do not know how the fiduciary duty works in practice. They do not understand or choose to ignore the limitations of the fiduciary duty. In a 2018 speech, SEC Commissioner Hester Peirce said the following: The word "fiduciary" hangs heavily over any discussion about standards for financial professionals. The word carries a lot of different meanings, and legal context matters . Never mind that it took many pages of regulation and lots of interpretation to explain what "fiduciary" meant in the new DOL iteration. Never mind that even lawyers and financial professionals do not have a universal understanding of what the term means. The SEC addressed the fiduciary standard in the text of Reg BI as follows: We have declined to subject broker-dealers to a wholesale and complete application of the existing fiduciary standard under the Advisers Act because it is not appropriately tailored to the structure and characteristics of the broker-dealer business model (i.e., transaction-specific recommendations and compensation), and would not properly take into account, and build upon, existing obligations that apply to broker-dealers, including under FINRA rules. Moreover, we believe (and our experience indicates), that this approach would significantly reduce retail investor access to differing types of investment services and products, reduce retail investor choice in how to pay for those products and services, and increase costs for retail investors of obtaining investment recommendations. In a July 2019 speech, SEC Chairman Clayton said the following: Reg. BI imposes a new standard of conduct specifically for broker-dealers that substantially enhances their obligations beyond the current "suitability" requirements.... [I]t establishes a general obligation that draws from key fiduciary principles, requiring broker-dealers to act in the best interest of their retail customers and not place their own interest ahead of the retail customer's interest. In the same speech, Chairman Clayton also said the following: This [principles-based] approach is similar to an investment adviser's fiduciary duty, which has worked well for advisers' retail clients and our markets.... [And the determination of whether a broker-dealer is acting in a retail customer's best interests, will be based on] an objective assessment of the facts and circumstances of how the specific components of Regulation Best Interest are satisfied at the time that the recommendation is made (and not in hindsight). In a June 2019 statement, SEC Commissioner Elad L. Roisman said the following: Regulation Best Interest also will impose heightened disclosure requirements about brokers, their investment offerings, and associated conflicts of interest in order to better inform retail customers about their service provider and investing options. Not even the so-called fiduciary standard under the Investment Advisers Act includes the obligation to eliminate or mitigate conflicts. In the same statement, Commissioner Roisman also said the following: In 2016, for example, the DOL acted unilaterally to adopt its so-called "Fiduciary Rule" that would have applied to providers of retirement investment accounts a significant proportion of the registrants under the SEC's jurisdiction. DOL's rule quickly proved unworkable for many, if not all, providers of pay-as-you-go financial services, raising compliance costs, exposing firms to new litigation risks, and in some cases forcing them to choose whether to continue serving some of their smallest customers. According to some, the rule resulted in huge swaths of U.S. investors losing access to affordable financial advice and others paying much higher fees on their retirement accounts, without receiving any increases in service or other discernable benefits. I am glad that this rule is not in effect. Representative Trey Hollingsworth reportedly said the following: I am very upset that we continue to talk about polls that ask: Do you believe that this fiduciary rule is a good idea? People say yes. What's not disclosed in that is that you, lower and middle income America, won't get the benefit of that because you don't have an account size that's enough to ensure that those people will continue to give you advice. <8.2.4.2. Critical Comments> The Financial Planning Coalition said the following: Adoption of a fiduciary standard of care will not negatively affect the availability of investment advice or the range of products for moderate- and low-income consumers.... Research shows that the costs to broker-dealers to implement a fiduciary standard would be minimal, and that broker-dealers and investment advisers who provide financial services under a fiduciary standard experience stronger asset and revenue growth than those under a suitability standard. In comments to the SEC, the CFA Institute, an investment profession industry group, said the following: [B]rokers who are providing non-incidental advice must, by virtue of the Advisers Act, adhere to a fiduciary standard of care and therefore refrain from putting their own interests ahead of their clients' interests. Imposing a fiduciary standard on broker-dealer recommendations, therefore, would still be in keeping with these investor expectations. Representative Carolyn Maloney reportedly said the following during a House subcommittee hearing on Reg BI: [Under Reg BI] brokers have to act in the "best interest of customers," which sounds good, but the rule does not even define what this means. In fact, the rule allows brokers to continue to take their own financial interest into account when making client regulations. They can remain conflicted as long as they offer some basic amount of disclosure. This is dangerous for investors. An industry observer wrote the following regarding the absence of a fiduciary standard: [This rulemaking] presented a perfect opportunity to firm up what "best interest" means, but the SEC declined to do so. I have mixed feelings about this, because best interest can vary from client to client, and this allows flexibility when needed. However, the grey area has proven to be problematic, because, as you can imagine, it's hard to hold someone accountable to a flexible and unclear standard of care. John Britt, a retired SEC enforcement attorney, reportedly said the following: If a securities professional recommends that his client purchase a particular stock, he is giving investment advice. And if he's giving investment advice, he should have a fiduciary duty to his client nothing less.... [This is] fake regulation. <8.2.5. Reg BI Meaningfully Addresses Outstanding Broker-Dealer Conflict of Interest Issues> <8.2.5.1. Supportive Comments> The SEC addressed conflicts of interest in the text of Reg BI as follows: The conflicts of interest associated with incentives at the associated person level and limitations on the securities or products that may be recommended to retail customers have raised particular concerns in the context of the broker-dealer, transaction-based relationship. Accordingly, the Commission believes specific disclosure and additional mitigation requirements are appropriate to address those conflicts. Sales contests, sales quotas, bonuses and non-cash compensation that are based on the sales of specific securities within a limited period of time create high-pressure situations for associated persons to increase the sales of specific securities or specific types of securities within a limited period of time and thus compromise the best interests of their retail customers. The Commission does not believe such conflicts of interest can be reasonably mitigated and, accordingly, they must be eliminated. In a written statement to Congress, former SEC Chairman Harvey L. Pitt said the following: [N]othing ... requires broker-dealers to recommend the least expensive or least remunerative securities or investment strategies, as long as the firm and its associated individuals comply with the disclosure, care and conflict of interest obligations that would be created by the Regulation. This is significant, because the mere fact that a brokerage firm, or an account executive, receive additional remuneration for pursuing certain strategies or securities does not, ipso facto, make the recommendation improper, unsuitable, or contrary to the best interests of the retail customer. In a July 2019 speech, SEC Chairman Jay Clayton said the following: Some critics have gone so far as to fault Reg. BI for failing to require elimination of all conflicts of interest. This criticism is misguided there are conflicts of interest inherent in all principal-agent relationships, and the broker-customer relationship and the investment adviser-client relationship are no exception. Reg. BI recognizes that these conflicts exist, and requires that firms address those conflicts and provide recommendations that are in the best interest of their retail customers. Thomas Wade, of the American Action Forum, said the following: [It has been argued] that the best interest standard is a greater protection than fiduciary, as brokers must mitigate and eliminate conflicts of interests, where under the fiduciary duty all that was required was disclosure. <8.2.5.2. Critical Comments> The Consumer Federation of America said the following in a fact sheet criticizing Reg BI: The rule's conflict obligations don't prohibit firms from creating incentives that encourage and reward advice that is not in customers' best interests. Nor does the rule require firms to manage any conflicts to the benefit of the customer. For example, policies and procedures to "mitigate" financial conflicts don't have to be reasonably designed to prevent the broker from placing its interests ahead of the customer's interests. A media report detailed SEC Commissioner Jackson's criticism of Reg BI's approach to conflicts of interest as follows: The rule would be much improved with the addition of provisions that "limit or ban compensation practices that lead brokers to engage in conflicted activities," he says. "[Y]ou can expect people in the marketplace to do that which they're paid to do," he says. "If you pay them extra to put people in in-house products that are bad for the people, you can expect that there will be conflicts that will be difficult to mitigate, so I've urged for changes there as well." Commissioner Jackson also said the following in his statement on Reg BI: Troubling broker compensation practices that put investors at risk are addressed [in a very limited fashion] when they are "based on the sales of specific securities within a limited period of time," or "create high-pressure situations." These restrictions merely mimic those in longstanding FINRA proposals, and I cannot see why our rules should permit pay practices that create any pressure for brokers to harm investors." An industry observer wrote the following regarding Reg BI and conflicts of interest: The SEC fact sheet [as part of the press release accompanying Reg BI] ... did take positive steps from the proposed rule, but still left significant worries. For instance, sales competitions with award trips, bonuses and other rewards tend to prioritize growth over customer care (think Wells Fargo) were to some degree shot down in the rule, but not entirely. While specific product sales leading to bonuses appear to be shot down, an overall competition or bonus system for selling a suite of products is not clearly prohibited. This could really just cause companies to redo their bonus and competition models and allow them to continue. The Consumer Federation of America said the following in a press release: Even where conflicts would have to be "mitigated," the Commission doesn't make clear that mitigation has to be designed to support compliance with the best interest standard. <9. An Analysis of Reg BI Reform> In its 700-page Reg BI release, the SEC spoke of its inability to employ data-based research to gain insight into the reform's probable impact: Because the Commission does not have, has not received, and, in certain cases, does not believe it can reasonably obtain data that may inform on certain economic effects, the Commission is unable to quantify certain economic effects.... [E]ven in cases where it has some data or it has received some data regarding certain economic effects, the quantification of these effects is particularly challenging due to the number of assumptions that it would need to make to forecast how broker-dealers will respond to Regulation Best Interest, and how those responses will, in turn, affect the broader market for investment advice and the retail customers' participation in financial markets. The release, however, included a discussion of theoretical costs and benefits from an alternative to Reg BI that would have imposed fiduciary standards on broker-dealers akin to those that generally apply to investment advisers. The release asserted that a major theoretical benefit to such a uniform fiduciary standard would be reduced customer confusion surrounding what obligations both brokers and investment advisers have toward them. Moreover, the release argued that such a change could also reduce potential customer costs associated with choosing a financial professional who is not a good fit since both brokers and investment advisers would be subject to the same standard of customer care. The release noted, however, that a uniform fiduciary standard could result in a standard of care for brokers "that is not appropriately tailored to the structure and characteristics of the broker-dealer model (i.e., transaction specific recommendations and compensation)." Because of this possibility, it argued that the range of options in the financial advice market would shrink. It contended that at least in the short run, brokers would face greater compliance costs, possibly encouraging them to transition into offering advice in an investment adviser capacity and discouraging them from continuing to offer advice in a broker capacity. In turn, the release observed that brokers formally exiting their roles as broker-dealers could limit retail customers' access to particular securities or investment strategies as well as how they would pay for such advice. As a result, customers' costs for such advice could increase. The release then examined the potential fallout from a hypothetical scenario in which brokers operate under a new fiduciary standard but uniformly remain broker-dealers. According to the release, this could result in increased compliance costs for brokers that could be fully or partially passed on to their clients. That possibility, it argued, could lead to some customers problematically engaging less expensive investment advice providers outside of the regulated world of investment advisers and broker-dealers. Some data-based research has also examined the implications of a hypothetical final rulemaking that imposed a fiduciary standard on brokers. Several examples of this research are examined below, illustrating that research has resulted in disparate views on the nature of such impact. The Deloitte -SIFMA Study . In 2017, the business consultant Deloitte and SIFMA, the broker-dealer trade group, released the results of a collaborative survey conducted by Deloitte on SIFMA members. The study yielded results from the responses of 21 large national corporate SIFMA members on their reactions to the partially implemented DOL fiduciary rule, which the members had responded to by making plans to modify their retail customer-based services and products. Of the 21 respondents, 53% reported that they had either eliminated or limited access to brokerage advice services and 67% had migrated away from open choice to fee-based or limited brokerage services. The study also found that a "trend towards fee-based accounts was likely accelerated by the rule." It noted that "[t]ypically, fee-based accounts offer a higher level of service than brokerage accounts and often include automatic rebalancing of accounts, comprehensive annual reviews, enhanced reporting to account holders, and access to third party money managers. The fees are generally an 'all-in' asset-based fee that is generally higher than the fees paid in an advised brokerage account." Finke and Langdon . As indicated earlier, some states have common laws that impose a fiduciary standard of care on brokers, but many do not. By surveying broker-dealer registered representatives subject to differing state common law-based fiduciary requirements, Finke and Langdon, two academics, exploited those differences to ascertain whether a relatively stricter fiduciary standard of care affected brokers' willingness to provide advisory services to retail consumers. Among other things, the 2012 research found that the number of registered representatives conducting business within a state as a percentage of total households did not significantly change whether or not a state had a stricter fiduciary standard. It also found no significant differences among such financial professionals in states with a strict fiduciary standard compared with states that did not have a fiduciary standard with respect to (1) whether they were limited in their ability to recommend certain products or to serve clients with limited wealth; (2) the percentage of clients with lower incomes and higher levels of wealth; (3) their ability to provide a broad range of investment products including those that involve commission-based compensation; and (4) the ability to provide tailored customer advice. Bhattacharya , Padi , and Illanes . The researchers analyzed patterns of sales behavior for annuities issued by a large national financial company sold between 2013 and 2015 by broker-dealers based in adjacent counties separated by state lines. Released in 2019, the analysis hinged on the fact that some of the counties were in states with common law-based broker fiduciary standards, but adjacent counties were in states without such standards. Among other things, they found that subjecting brokers to a fiduciary duty shifted the suite of investment products that they sell to retail investors. Relative to counties without broker fiduciary obligations, brokers in counties with fiduciary standards saw increased costs of doing business, but the jurisdictions also witnessed direct improvements in the quality of the financial advice.

On June 5, 2019, the Securities and Exchange Commission (SEC) voted to adopt Regulation Best Interest (Reg BI) under the Securities and Exchange Act of 1934 (P.L. 73-291). Reg BI reforms requirements for broker-dealers when they make investment recommendations to retail customers. According to the SEC, Reg BI is meant to "enhance the broker-dealer standard of conduct beyond existing ... obligations [by] requiring broker-dealers ... to: (1) act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest of the broker-dealer ahead of the interests of the retail customer; and (2) address [various broker-dealer] conflicts of interest [with those clients]." Broker-dealers have until June 2020 to comply. Broker-dealers execute securities trades and provide investment recommendations. They are licensed and regulated by state securities regulators, the SEC, and the Financial Industry Regulatory Authority (FINRA), a SEC-regulated entity that they must also join. Traditionally, broker-dealers provided transaction-specific discrete investment recommendations and were compensated via commissions for individual transactions. Broker-dealers have generally made investment recommendations under the suitability standard , a FINRA rule requiring that recommendations are merely consistent with customers' interests. By contrast, investment advisers—another type of financial professional that typically offers more ongoing investment counsel (such as retirement planning) and is compensated by fixed fees or a percentage of total assets managed—have generally followed the fiduciary standard , a nonstatutory obligation derived from court rulings and decisions from SEC enforcement cases. It requires a more demanding level of financial professional client care than does broker-dealers' suitability standard: advisers are expected to serve their clients' best interests above their own. Partly motivated by reporting on widespread investor confusion over the differences between broker-dealers and investment advisers and their respective client obligations, Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank, P.L. 111-203 ) directed the SEC to evaluate gaps in existing regulations for advisers and broker-dealers. It gave the SEC authority to impose a fiduciary standard of care on broker-dealers akin to that already applied to advisers. Dodd-Frank also required the SEC to study this issue. The resulting 2011 staff study recommended that the SEC adopt a uniform fiduciary standard. In 2016, the Obama Administration's Department of Labor (DOL) issued controversial regulations that subjected financial professionals who work with private-sector retirement plans governed by the Employee Retirement Income Security Act of 1974 ( P.L. 93-406 ) to an elevated fiduciary level of customer duty. The largely unimplemented reform, which earned praise from investor advocates, was vacated in a 2018 court case brought by various business interests who successfully argued that it was statutory overreach. Currently, Trump Administration DOL officials are reportedly working on a new standard projected to align with Reg BI. SEC officials and various business groups argue that Reg BI properly balances the need for an enhanced broker-dealer standard of care with the need to preserve the broker-dealer business model, a model deemed to have special appeal to less-affluent investors. Critics, including investor advocates, argue that it effectively preserves the inadequate suitability standard, exposing investors to harm from unaddressed broker-dealer conflicts of interest. In June 2019, the House passed H.R. 3351 , the FY2020 Financial Services and General Government appropriations bill. It included an amendment sponsored by House Financial Services Committee Chair Maxine Waters that would have forbidden the SEC from using any of its congressional spending authority to implement, administer, enforce, or publicize the final rules and interpretations with respect to Reg BI. On December 20, 2019, President Trump signed H.R. 1865 , the Further Consolidated Appropriations Act, 2020, which became P.L. 116-94 and will fund the federal government through FY2020. It does not contain the aforementioned SEC restrictions contained in H.R. 3351 .

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This report describes actions taken to provide FY2021 appropriations for Commerce, Justice, Science, and Related Agencies (CJS) accounts. The dollar amounts in this report reflect only new appropriations made available at the start of the fiscal year. Therefore, the amounts do not include any rescissions of unobligated or deobligated balances that may be counted as offsets to newly enacted appropriations, nor do they include any scorekeeping adjustments (e.g., the budgetary effects of provisions limiting the availability of the balance in the Crime Victims Fund). In the text of the report, appropriations are rounded to the nearest million. However, percentage changes are calculated using whole, not rounded, numbers, meaning that in some instances there may be small differences between the actual percentage change and the percentage change that would be calculated by using the rounded amounts discussed in the report. <1. Overview of CJS> The annual CJS appropriations act provides funding for the Departments of Commerce and Justice, select science agencies, and several related agencies. Appropriations for the Department of Commerce include funding for bureaus and offices 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 (DOJ) 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 public safety-related 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. <1.1. Department of Commerce> The mission of the Department of Commerce is to "create the conditions for economic growth and opportunity." The department promotes "job creation and economic growth by ensuring fair and reciprocal trade, providing the data necessary to support commerce and constitutional democracy, and fostering innovation by setting standards and conducting foundational research and development." It 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 pursues and implements policies that affect trade and economic development by working to open new markets for U.S. goods and services and promoting pro-growth business policies. It also invests in research and development to foster innovation. The agencies within the Department of Commerce, and their responsibilities, include the following: International Trade Administration (ITA) seeks to strengthen the international competitiveness of U.S. industry, promote trade and investment, and ensure fair trade and compliance with trade laws and agreements; Bureau of Industry and Security (BIS) works to ensure an effective export control and treaty compliance system and promote continued U.S. leadership in strategic technologies by maintaining and strengthening adaptable, efficient, and effective export controls and treaty compliance systems, along with active leadership and involvement in international export control regimes; Economic Development Administration (EDA) promotes innovation and competitiveness, preparing American regions for growth and success in the worldwide economy; Minority Business Development Agency (MBDA) promotes the growth of minority owned businesses through the mobilization and advancement of public and private sector programs, policy, and research; Bureau of Economic Analysis (BEA) is a federal statistical agency that promotes a better understanding of the U.S. economy by providing timely, relevant, and accurate economic accounts data in an objective and cost-effective manner; Census Bureau is a federal statistical agency that measures and disseminates information about the U.S. economy, society, and institutions, which fosters economic growth, advances scientific understanding, and facilitates informed decisions; National Telecommunications and Information Administration (NTIA) advises the President on communications and information policy; United States Patent and Trademark Office (USPTO) fosters innovation, competitiveness, and economic growth domestically and abroad by providing high-quality and timely examination of patent and trademark applications, guiding domestic and international intellectual property (IP) policy, and delivering IP information and education worldwide; National Institute of Standards and Technology (NIST) promotes U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve quality of life ; and National Oceanic and Atmospheric Administration (NOAA) provides daily weather forecasts, severe storm warnings, climate monitoring, fisheries management, coastal restoration, and support of marine commerce. <1.2. Department of Justice> DOJ's mission 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 also provides legal advice and opinions, upon request, to the President and executive branch department heads. The major DOJ offices and agencies, and their functions, are described below: Office of the United States Attorneys prosecutes violations of federal criminal laws, represents the federal government in civil actions, and initiates 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 alleged and convicted offenders, 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 for the investigation of federal drug violations; Drug Enforcement Administration (DEA) investigates federal drug law violations; coordinates its efforts with other federal, state, and local law enforcement agencies; develops and maintains drug intelligence systems; regulates the manufacture, distribution, and dispensing of legitimate controlled substances; 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; Federal Prison System ( Bureau of Prisons; BOP ) houses offenders sentenced to a term of incarceration for a federal crime and provides for the operation and maintenance of the federal prison system; Office on Violence Against Women (OVW) provides federal leadership in developing the nation's capacity to reduce violence against women and administer justice for and strengthen services to victims of domestic violence, dating 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; Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking; and Office of Victims of Crime; and Community Oriented Policing Services (COPS) advances the practice of community policing by the nation's state, local, territorial, and tribal law enforcement agencies through information and grant resources. <1.3. Science Offices and Agencies> The science offices and agencies support research and development and related activities across a wide variety of federal missions, including national competitiveness, space exploration, and fundamental discovery. <1.3.1. Office of Science and Technology Policy> The primary function of the Office of Science and Technology Policy (OSTP) is to provide the President and others within the Executive Office of the President with advice on the scientific, engineering, and technological aspects of issues that require the attention of the federal government. The OSTP director also manages the National Science and Technology Council, which coordinates science and technology policy across the executive branch of the federal government, and cochairs the President's Council of Advisors on Science and Technology, a council of external advisors that provides advice to the President on matters related to science and technology policy. <1.3.2. The National Space Council> The National Space Council, in the Executive Office of the President, is a coordinating body for U.S. space policy. Chaired by the Vice President, it consists of the Secretaries of State, Defense, Commerce, Transportation, and Homeland Security; the Administrator of NASA; and other senior officials. The council was first established in 1988 through P.L. 100-685 . The council ceased operations in 1993, and was reestablished by the Trump Administration in June 2017. <1.3.3. National Science Foundation> The National Science Foundation (NSF) supports basic research and education in the nonmedical sciences and engineering. The foundation was established as an independent federal agency "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 in the nonmedical sciences and engineering. 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. <1.3.4. National Aeronautics and Space Administration> The National Aeronautics and Space Administration (NASA) was created 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 STEM Engagement (formerly the Office of Education) manages education programs for schoolchildren, college and university students, and the general public. <1.4. Related Agencies> The annual CJS appropriations act includes funding for several related agencies: U.S. Commission on Civil Rights informs the development of national civil rights policy and enhances enforcement of federal civil rights laws; Equal Employment Opportunity Commission is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person's race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability, or genetic information; International Trade Commission investigates the effects of dumped and subsidized imports on domestic industries and conducts global safeguard investigations, adjudicates cases involving imports that allegedly infringe intellectual property rights, and serves as a resource for trade data and other trade policy-related information; Legal Services Corporation (LSC) is a federally funded nonprofit corporation that provides financial support for civil legal aid to low-income Americans; Marine Mammal Commission works for the conservation of marine mammals by providing science-based oversight of domestic and international policies and actions of federal agencies with a mandate to address human effects on marine mammals and their ecosystems; Office of the U.S. Trade Representative is responsible for developing and coordinating U.S. international trade, commodity, and direct investment policy, and overseeing negotiations with other countries; and State Justice Institute is a federally funded nonprofit corporation that awards grants to improve the quality of justice in state courts and foster innovative, efficient solutions to common issues faced by all courts. <2. The Administration's FY2021 Budget Request> The Administration's FY2021 budget request for CJS is $74.849 billion, which is $4.910 billion (-6.2%) less than the $79.759 billion appropriated for CJS for FY2020 (see Table 1 ). The Administration's FY2021 request includes the following: $8.318 billion for the Department of Commerce, which is $6.903 billion (-45.4%) less than the $15.221 billion provided for FY2020; $32.964 billion for the Department of Justice, which is $358 million (1.1%) more than the $32.605 billion provided for FY2020; $32.994 billion for the science agencies, which is $2.080 billion (6.7%) more than the $30.915 billion provided for FY2020; and $574 million for the related agencies, which is $445 million (-43.7%) less than the $1.019 billion provided for FY2020. The decrease in funding for the Department of Commerce is largely the result of a proposed $5.886 billion (-77.9%) decrease in funding for the Census Bureau. For the past several fiscal years, Congress has increased funding for the Census Bureau to help build capacity for conducting the decennial 2020 Census. In keeping with past precedent, funding for the Census Bureau peaks in the year in which the decennial census is conducted and it decreases sharply in the following year (see the discussion on historical funding for CJS, below). However, the proposed reduction in funding for the Department of Commerce is not only the result of reduced funding for the Census Bureau. The Administration also proposes shuttering the EDA (though the Administration requests some funding to help provide for an orderly closeout of the EDA's operations) and eliminating NIST's Manufacturing Extension Partnership and NOAA's Pacific Coastal Salmon Recovery Fund. In addition, the Administration proposes reducing funding for several other Department of Commerce accounts, including the following: the International Trade Administration (-$36 million, -7.0%); NIST's Scientific and Technical Research and Services account (-$102 million, -13.5%); NIST's Industrial Technology Services account (-$137 million, -84.4%); NOAA's Operations, Research, and Facilities account (-$599 million, -15.9%); and NOAA's Procurement, Acquisition, and Facilities account (-$64 million, -4.2%). The Administration also proposes a $32 million (-75.5%) reduction for the Minority Business Development Administration. It proposes changing the agency's focus to being a policy office that concentrates on advocating for the minority business community as a whole rather than supporting individual minority business enterprises. The Administration's FY2021 budget includes a proposal to establish a Federal Capital Revolving Fund, which would be administered by the General Services Administration (GSA). The Administration proposes to transfer $294 million from the proposed fund to NIST's Construction of Research Facilities account for renovating NIST's Building 1 in Boulder, CO, which would be repaid by NIST from future appropriations at $20 million per year for 15 years. While the Administration proposes increased funding for most DOJ offices and agencies, the budget request would reduce funding for the FBI (-$152 million, -1.5%) and BOP (-$67 million, -0.9%), though these reductions are the result of proposals for reduced funding for construction-related accounts. The Administration proposes reducing funding for two grant-related DOJ accounts, State and Local Law Enforcement Assistance (-$381 million, -20.1%) and Juvenile Justice Programs (-$93 million, -28.9%). The Administration also proposes to eliminate the COPS program as a separate account in DOJ and requests funding for COPS-related programs under the State and Local Law Enforcement Assistance account. The Administration proposes eliminating the Community Relations Service and moving its functions to DOJ's Civil Rights Division. The Administration's FY2021 budget request would add two new accounts to DOJ. First, the Administration proposes moving funding for the High Intensity Drug Trafficking Areas (HIDTA) program to the DEA. Currently, HIDTA funding is administered by the Office of National Drug Control Policy. In addition, the Administration proposes adding a Construction account for ATF. The Administration requested this funding so the ATF can consolidate its laboratory facilities in Walnut Creek, CA and Atlanta, GA. The annual CJS appropriations act traditionally includes an obligation cap of funds expended from the Crime Victims Fund (CVF). The Administration's FY2021 budget does not include a proposed obligation cap for the CVF. Rather, the Administration proposes a new $2.300 billion annual mandatory appropriation for crime victims programs. Within this amount, $499 million would be for the OVW, $10 million would be for oversight of Office for Victims of Crime (OVC) programs by the Office of the Inspector General, $12 million would be for developing innovative crime victims services initiatives, and a set-aside of up to $115 million would be for tribal victims assistance grants. From the remaining amount, OVC would provide formula and nonformula grants to the states to support crime victim compensation and victims services programs. Under the Administration's proposal, the amount of the mandatory appropriation would decrease if the balance on the CVF falls below $5.000 billion in future fiscal years. Also, the Administration's budget includes a proposal to transfer primary jurisdiction over federal tobacco and alcohol anti-smuggling laws from the ATF to the Department of the Treasury's Tax and Trade Bureau. The Administration's budget request includes increased funding for NASA, but the Administration does propose reduced funding for the Science account (-$832 million, -11.7%) and eliminating the Office of STEM Engagement (formerly the Office of Education). The Administration also proposes renaming three of NASA's accounts: the Space Technology account would be changed to the Exploration Technology account, the Exploration account would be changed to the Deep Space Exploration Systems account, and the Space Operations account would be changed to the Low Earth Orbit and Spaceflight Operations account. Like the Administration's FY2020 budget, the FY2021 budget proposal does not appear to include a realignment of items that would be funded from these accounts, which is what the Administration proposed in its FY2019 budget request. The FY2021 budget request includes reduced funding for NSF (-$537 million, -6.5%), which includes proposed reductions for the Research and Related Activities (-$524 million, -7.8%), Major Research Equipment and Facilities Construction (-$13 million, -5.5%), and Education and Human Resources (-$9 million, -1.0%) accounts. The proposed reductions are partially offset by proposed increases for the Agency Operations and Award Management (+$9 million, +2.6%) and Office of the Inspector General (+$1 million, +8.2%) accounts. The Administration requests reduced funding for most of the related agencies, which includes a proposal to close the LSC, though it requests some funding to help provide for an orderly closeout of the LSC's operations. Table 1 outlines the FY2020 funding and the Administration's FY2021 request for the Department of Commerce, the Department of Justice, the science agencies, and the related agencies. <3. Historical Funding for CJS> Figure 1 shows the total CJS funding for FY2010-FY2020, in both nominal and inflation-adjusted dollars (more-detailed historical appropriations data can be found in Table 2 ). The data show that in FY2020 nominal funding for CJS reached its highest level since FY2010, though in inflation-adjusted terms, funding for FY2020 was lower than it was in FY2010. There is a cyclical nature to total nominal funding for CJS because of appropriations for the Census Bureau to administer decennial censuses. Overall funding for CJS traditionally starts to increase a few years before the decennial census, peaks in the fiscal year in which the census is conducted, and then declines immediately thereafter. Figure 1 shows how total funding for CJS decreased after the 2010 Census and started to ramp up again as the Census Bureau prepared to conduct the 2020 Census. Increased funding for CJS also coincides with increases to the discretionary budget caps under the Budget Control Act of 2011 (BCA, P.L. 112-25 ). The BCA put into effect statutory limits on discretionary spending for FY2012-FY2021. Under the act, discretionary spending limits were scheduled to be adjusted downward each fiscal year until FY2021. However, legislation was enacted that increased discretionary spending caps for FY2014 to FY2021. A sequestration of discretionary funding, ordered pursuant to the BCA, cut $2.973 billion out of the total amount Congress and the President provided for CJS for FY2013. Since then, funding for CJS has increased as more discretionary funding has been allowed under the BCA. Figure 2 shows total CJS funding for FY2010-FY2020 by major component (i.e., the Department of Commerce, DOJ, NASA, and the NSF). Although decreased appropriations for the Department of Commerce (-47.4%) from FY2010 to FY2013, during years immediately following the 2010 Census, mostly explain the overall decrease in CJS appropriations during this time, cuts in funding for DOJ (-8.7%) and NASA (-9.8%) also contributed. Funding for NSF held relatively steady from FY2010 to FY2013. Overall CJS funding has increased since FY2014, and this is partially explained by more funding for the Department of Commerce to help the Census Bureau prepare for the 2020 Census. While funding for the Department of Commerce decreased from FY2018 to FY2019, it was partly a function of the department receiving $1.000 billion in emergency supplemental funding for FY2018. If supplemental funding is excluded, appropriations for the Department of Commerce increased 2.5% from FY2018 to FY2019. While increased funding for the Department of Commerce partially explains the overall increase in funding for CJS since FY2014, there have also been steady increases in funding for DOJ (+17.6%), NASA (+28.2%), and NSF (+12.6%), as higher discretionary spending caps have been used to provide additional funding to these agencies.

This report describes actions taken to provide FY2021 appropriations for Commerce, Justice, Science, and Related Agencies (CJS) accounts. The annual CJS appropriations act provides funding for the Department of Commerce, which includes bureaus and offices 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; the Department of Justice (DOJ), which includes agencies such as the Federal Bureau of Investigation, the Bureau of Prisons, the U.S. Marshals, the Drug Enforcement Administration, and the U.S. Attorneys; the National Aeronautics and Space Administration (NASA); the National Science Foundation (NSF); and several related agencies such as the Legal Services Corporation (LSC) and the Equal Employment Opportunity Commission. The Administration requests $74.849 billion for CJS for FY2021, which is $4.910 billion (-6.2%) less than the $79.759 billion appropriated for CJS for FY2020. The Administration's request includes $8.318 billion for the Department of Commerce, $32.964 billion for the Department of Justice, $32.994 billion for specified science agencies, and $574 million for the related agencies. The Administration's FY2021 budget proposes reduced funding for the Department of Commerce, NSF, and most of the related agencies, and increased funding for DOJ and NASA. The proposed reduction in overall funding for CJS is partially the result of a proposed $5.886 billion (-77.9%) decrease in funding for the Census Bureau, which, in keeping with past precedent, receives less funding in the fiscal year after conducting the decennial census. The FY2021 budget request for CJS also includes reductions to several other CJS accounts along with proposals to eliminate several CJS agencies and programs, including the Economic Development Administration, the Community Oriented Policing Services Office, NASA's STEM Engagement Office (formerly the Office of Education), and the LSC.

crs_R42567

crs_R42567_0

<1. Introduction> This report provides background information and potential oversight issues for Congress on the Coast Guard's programs for procuring 8 National Security Cutters (NSCs), 25 Offshore Patrol Cutters (OPCs), and 58 Fast Response Cutters (FRCs). The Coast Guard's proposed FY2020 budget requests a total of $657 million in procurement funding for the NSC, OPC, and FRC programs. The issue for Congress is whether to approve, reject, or modify the Coast Guard's funding requests and acquisition strategies for the NSC, OPC, and FRC programs. Congress's decisions on these three programs could substantially affect Coast Guard capabilities and funding requirements, and the U.S. shipbuilding industrial base. The NSC, OPC, and FRC programs have been subjects of congressional oversight for several years, and were previously covered in other CRS reports that are now archived. CRS testified on the Coast Guard's cutter acquisition programs most recently on November 29. The Coast Guard's plans for modernizing its fleet of polar icebreakers are covered in a separate CRS report. <2. Background> <2.1. Older Ships to Be Replaced by NSCs, OPCs, and FRCs> The 91 planned NSCs, OPCs, and FRCs are intended to replace 90 older Coast Guard ships 12 high-endurance cutters (WHECs), 29 medium-endurance cutters (WMECs), and 49 110-foot patrol craft (WPBs). The Coast Guard's 12 Hamilton (WHEC-715) class high-endurance cutters entered service between 1967 and 1972. The Coast Guard's 29 medium-endurance cutters include 13 Famous (WMEC-901) class ships that entered service between 1983 and 1991, 14 Reliance (WMEC-615) class ships that entered service between 1964 and 1969, and 2 one-of-a-kind cutters that originally entered service with the Navy in 1944 and 1971 and were later transferred to the Coast Guard. The Coast Guard's 49 110-foot Island (WPB-1301) class patrol boats entered service between 1986 and 1992. Many of these 90 ships are manpower-intensive and increasingly expensive to maintain, and have features that in some cases are not optimal for performing their assigned missions. Some of them have already been removed from Coast Guard service: eight of the Island-class patrol boats were removed from service in 2007 following an unsuccessful effort to modernize and lengthen them to 123 feet; additional Island-class patrol boats are being decommissioned as new FRCs enter service; the one-of-a-kind medium-endurance cutter that originally entered service with the Navy in 1944 was decommissioned in 2011; and Hamilton-class cutters are being decommissioned as new NSCs enter service. A July 2012 Government Accountability Office (GAO) report discusses the generally poor physical condition and declining operational capacity of the Coast Guard's older high-endurance cutters, medium-endurance cutters, and 110-foot patrol craft. <2.2. Missions of NSCs, OPCs, and FRCs> NSCs, OPCs, and FRCs, like the ships they are intended to replace, are to be multimission ships for routinely performing 7 of the Coast Guard's 11 statutory missions, including search and rescue (SAR); drug interdiction; migrant interdiction; ports, waterways, and coastal security (PWCS); protection of living marine resources; other/general law enforcement; and defense readiness operations. Smaller Coast Guard patrol craft and boats contribute to the performance of some of these seven missions close to shore. NSCs, OPCs, and FRCs perform them both close to shore and in the deepwater environment, which generally refers to waters more than 50 miles from shore. <2.3. NSC Program> National Security Cutters ( Figure 1 ) also known as Legend (WMSL-750) class cutters because they are being named for legendary Coast Guard personnel are the Coast Guard's largest and most capable general-purpose cutters. They are larger and technologically more advanced than Hamilton-class cutters, and are built by Huntington Ingalls Industries' Ingalls Shipbuilding of Pascagoula, MS (HII/Ingalls). The Coast Guard's acquisition program of record (POR) the service's list, established in 2004, of planned procurement quantities for various new types of ships and aircraft calls for procuring 8 NSCs as replacements for the service's 12 Hamilton-class high-endurance cutters. The Coast Guard's FY2019 budget submission estimated the total acquisition cost of a nine-ship NSC program at $6.030 billion, or an average of about $670 million per ship. Although the Coast Guard's POR calls for procuring a total of 8 NSCs to replace the 12 Hamilton-class cutters, Congress through FY2018 has funded 11 NSCs, including the 10 th and 11 th in FY2018. The seventh was delivered to the Coast Guard on September 19, 2018, and the eighth was delivered on April 30, 2019. The ninth through 11th are under construction; the ninth is scheduled for delivery in 2021. The Coast Guard's proposed FY2020 budget requests $60 million in procurement funding for the NSC program; this request does not include funding for a 12 th NSC. For additional information on the status and execution of the NSC program from a May 2018 GAO report, see Appendix C . <2.4. OPC Program> Offshore Patrol Cutters ( Figure 2 , Figure 3 , and Figure 4 ) also known as Heritage (WMSM-915) class cutters because they are being named for past cutters that played a significant role in the history of the Coast Guard and the Coast Guard's predecessor organizations are to be somewhat smaller and less expensive than NSCs, and in some respects less capable than NSCs. In terms of full load displacement, OPCs are to be about 80% as large as NSCs. Coast Guard officials describe the OPC program as the service's top acquisition priority. OPCs are being built by Eastern Shipbuilding Group of Panama City, FL. The Coast Guard's POR calls for procuring 25 OPCs as replacements for the service's 29 medium-endurance cutters. The Coast Guard's FY2019 budget submission estimated the total acquisition cost of the 25 ships at $10.523 billion, or an average of about $421 million per ship. The first OPC was funded in FY2018 and is to be delivered in 2021. The second OPC and long leadtime materials (LLTM) for the third were funded in FY2019. The Coast Guard's proposed FY2020 budget requests $457 million in procurement funding for the third OPC, LLTM for the fourth and fifth, and other program costs. The Coast Guard's Request for Proposal (RFP) for the OPC program, released on September 25, 2012, established an affordability requirement for the program of an average unit price of $310 million per ship, or less, in then-year dollars (i.e., dollars that are not adjusted for inflation) for ships 4 through 9 in the program. This figure represents the shipbuilder's portion of the total cost of the ship; it does not include the cost of government-furnished equipment (GFE) on the ship, or other program costs such as those for program management, system integration, and logistics that contribute to the above-cited figure of $421 million per ship. At least eight shipyards expressed interest in the OPC program. On February 11, 2014, the Coast Guard announced that it had awarded Preliminary and Contract Design (P&CD) contracts to three of those eight firms Bollinger Shipyards of Lockport, LA; Eastern Shipbuilding Group of Panama City, FL; and General Dynamics' Bath Iron Works (GD/BIW) of Bath, ME. On September 15, 2016, the Coast Guard announced that it had awarded the detail design and construction (DD&C) contract to Eastern Shipbuilding. The contract covers detail design and production of up to 9 OPCs and has a potential value of $2.38 billion if all options are exercised. For additional information on the status and execution of the OPC program from a May 2018 GAO report, see Appendix C . <2.5. FRC Program> Fast Response Cutters ( Figure 5 ) also called Sentinel (WPC-1101) class patrol boats because they are being named for enlisted leaders, trailblazers, and heroes of the Coast Guard and its predecessor services of the U.S. Revenue Cutter Service, U.S. Lifesaving Service, and U.S. Lighthouse Service are considerably smaller and less expensive than OPCs, but are larger than the Coast Guard's older patrol boats. FRCs are built by Bollinger Shipyards of Lockport, LA. The Coast Guard's POR calls for procuring 58 FRCs as replacements for the service's 49 Island-class patrol boats. The POR figure of 58 FRCs is for domestic operations. The Coast Guard, however, operates six Island-class patrol boats in the Persian Gulf area as elements of a Bahrain-based Coast Guard unit, called Patrol Forces Southwest Asia (PATFORSWA), which is the Coast Guard's largest unit outside the United States. Providing FRCs as one-for-one replacements for all six of the Island-class patrol boats in PATFORSWA would result in a combined POR+PATFORSWA figure of 64 FRCs. The Coast Guard's FY2019 budget submission estimated the total acquisition cost of the 58 cutters at $3.748.1 billion, or an average of about $65 million per cutter. A total of 56 FRCs have been funded through FY2019, including six in FY2019. Four of the 56 (two of the FRCs funded in FY2018 and two of the FRC funded in FY2019) are to be used for replacing PATFORSWA cutters and consequently are not counted against the Coast Guard's 58-ship POR for the program. Excluding these four OPCs, a total of 52 FRCs for domestic operations have been funded through FY2019. The 32nd FRC was commissioned into service on May 1, 2019. The Coast Guard's proposed FY2020 budget requests $140 million in acquisition funding for the procurement of two more FRCs for domestic operations. For additional information on the status and execution of the FRC program from a May 2018 GAO report, see Appendix C . <2.6. Funding in FY2013-FY2020 Budget Submissions> Table 1 shows annual requested and programmed acquisition funding for the NSC, OPC, and FRC programs in the Coast Guard's FY2013-FY2020 budget submissions. Actual appropriated figures differ from these requested and projected amounts. <3. Issues for Congress> <3.1. FY2020 Funding for a 12th NSC> One issue for Congress is whether to whether to provide funding in FY2020 for the procurement of a 12 th NSC. Funding long leadtime materials (LLTM) for a 12 th NSC in FY2020 could require tens of millions of dollars; fully funding the procurement of a 12 th NSC in FY2020 could require upwards of $700 million. Supporters of providing funding for a 12 th NSC in FY2020 could argue that a total of 12 NSCs would provide one-for-one replacements for the 12 retiring Hamilton-class cutters; that Coast Guard analyses showing a need for no more than 9 NSCs assumed dual crewing of NSCs something that has not worked as well as expected; and that the Coast Guard's POR record includes only about 61% as many new cutters as the Coast Guard has calculated would be required to fully perform the Coast Guard's anticipated missions in coming years (see " Planned NSC, OPC, and FRC Procurement Quantities " below, as well as Appendix A ). Skeptics or opponents of providing funding for a 12 th NSC in FY2019 could argue that the Coast Guard's POR includes only 8 NSCs, that the Coast Guard's fleet mix analyses (see " Planned NSC, OPC, and FRC Procurement Quantities " below, as well as Appendix A ) have not shown a potential need for more than 9 NSCs, and that in a situation of finite Coast Guard budgets, providing funding for a 12 th NSC might require reducing funding for other FY2020 Coast Guard programs. <3.2. Whether to Procure Two FRCs or a Higher Number in FY2020> Another issue for Congress is whether to fund the procurement in FY2020 of two FRCs, as requested by the Coast Guard, or some higher number, such as four or six. Supporters of funding the procurement of a higher number could argue that FRCs in past years have been procured at annual rates of up to six per year; that procuring them at higher annual rates reduces their unit procurement costs due to improved production economies of scale; and that procuring four or six FRCs in FY2020 would accelerate the replacement of aging and less-capable Island-class patrol boats with new and more capable FRCs. Opponents of procuring more than two FRCs in FY2020, while acknowledging these points, could argue that in a situation of finite Coast Guard funding, procuring more than two could require offsetting reductions in funding for other FY2020 Coast Guard programs, producing an uncertain net result on overall Coast Guard capabilities, and that replacing Island-class patrol boats, while desirable, is not so urgent a requirement that the procurement of FRCs needs to be accelerated beyond what the Coast Guard plans under its FY2020 budget submission. <3.3. Annual or Multiyear (Block Buy) Contracting for OPCs> Another issue for Congress is whether to acquire OPCs using annual contracting or multiyear contracting. The Coast Guard currently plans to use a contract with options for procuring the first nine OPCs. Although a contract with options may look like a form of multiyear contracting, it operates more like a series of annual contracts. Contracts with options do not achieve the reductions in acquisition costs that are possible with multiyear contracting. Using multiyear contracting involves accepting certain trade-offs. One form of multiyear contracting, called block buy contracting, can be used at the start of a shipbuilding program, beginning with the first ship. (Indeed, this was a principal reason why block buy contracting was in effect invented in FY1998, as the contracting method for procuring the Navy's first four Virginia-class attack submarines.) Section 311 of the Frank LoBiondo Coast Guard Authorization Act of 2018 ( S. 140 / P.L. 115-282 of December 4, 2018) provides permanent authority for the Coast Guard to use block buy contracting with economic order quantity (EOQ) purchases (i.e., up-front batch purchases) of components in its major acquisition programs. The authority is now codified at 14 U.S.C. 1137. CRS estimates that if the Coast Guard were to use block buy contracting with EOQ purchases of components for acquiring the first several OPCs, and either block buy contracting with EOQ purchases or another form of multiyear contracting known as multiyear procurement (MYP) with EOQ purchases for acquiring the remaining ships in the program, the savings on the total acquisition cost of the 25 OPCs (compared to costs under contracts with options) could amount to roughly $1 billion. CRS also estimates that acquiring the first nine ships in the OPC program under the current contract with options could forego roughly $350 million of the $1 billion in potential savings. One potential option for the subcommittee would be to look into the possibility of having the Coast Guard either convert the current OPC contract at an early juncture into a block buy contract with EOQ authority, or, if conversion is not possible, replace the current contract at an early juncture with a block buy contract with EOQ authority. Replacing the current contract with a block buy contract might require recompeting the program, which would require effort on the Coast Guard's part and could create business risk for Eastern Shipbuilding Group, the shipbuilder that holds the current contract. On the other hand, the cost to the Coast Guard of recompeting the program would arguably be small relative to a potential additional savings of perhaps $300 million, and Eastern arguably would have a learning curve advantage in any new competition by virtue of its experience in building the first OPC. <3.4. Annual OPC Procurement Rate> The current procurement profile for the OPC, which reaches a maximum projected annual rate of two ships per year, would deliver OPCs many years after the end of the originally planned service lives of the medium-endurance cutters that they are to replace. Coast Guard officials have testified that the service plans to extend the service lives of the medium-endurance cutters until they are replaced by OPCs. There will be maintenance and repair expenses associated with extending the service lives of medium-endurance cutters, and if the Coast Guard does not also make investments to increase the capabilities of these ships, the ships may have less capability in certain regards than OPCs. One possible option for addressing this situation would be to increase the maximum annual OPC procurement rate from the currently planned two ships per year to three or four ships per year. Doing this could result in the 25 th OPC being delivered about four years or six years sooner, respectively, than under the currently planned maximum rate. Increasing the OPC procurement rate to three or four ships per year would require a substantial increase to the Coast Guard's Procurement, Construction, and Improvements (PC&I) account, an issue discussed in Appendix B . Increasing the maximum procurement rate for the OPC program could, depending on the exact approach taken, reduce OPC unit acquisition costs due to improved production economies of scale. Doubling the rate for producing a given OPC design to four ships per year, for example, could reduce unit procurement costs for that design by as much as 10%, which could result in hundreds of millions of dollars in additional savings in acquisition costs for the program. Increasing the maximum annual procurement rate could also create new opportunities for using competition in the OPC program. Notional alternative approaches for increasing the OPC procurement rate to three or four ships per year include but are not necessarily limited to the following: increasing the production rate to three or four ships per year at Eastern Shipbuilding an option that would depend on Eastern Shipbuilding's production capacity; introducing a second shipyard to build Eastern's design for the OPC; introducing a second shipyard (such as one of the other two OPC program finalists) to build its own design for the OPC an option that would result in two OPC classes; or building additional NSCs in the place of some of the OPCs an option that might include descoping equipment on those NSCs where possible to reduce their acquisition cost and make their capabilities more like that of the OPC. Such an approach would be broadly similar to how the Navy is using a descoped version of the San Antonio (LPD-17) class amphibious ship as the basis for its LPD-17 Flight II (LPD-30) class amphibious ships. <3.5. Impact of Hurricane Michael on OPC Program at Eastern Shipbuilding> Another potential issue for Congress concerns the impact of Hurricane Michael on Eastern Shipbuilding of Panama City, FL, the shipyard that is to build the first nine OPCs. A May 22, 2019, press report states: A Category 5 hurricane that battered Florida's panhandle region last fall, including shipbuilder Eastern Shipbuilding Group, will impact the new medium-endurance cutter ship the company is building for the Coast Guard but at the moment it's unclear what the effects will be on cost and schedule, Coast Guard Commandant Adm. Karl Schultz said on Tuesday [May 21]. Eastern Shipbuilding's analysis of Hurricane Michael's impact on the Offshore Patrol Cutter (OPC) is due to the Coast Guard by May 31, and from there the service expects to have an understanding on the way forward with the program before the end of June, Schultz said in response to questions from Rep. Garret Graves (R-La.), during a hearing hosted by the House Transportation and Infrastructure Coast Guard and Maritime Transportation Subcommittee. He said Eastern Shipbuilding will provide "perspectives" on the cost and schedule and any other impacts. "It's safe to say that we understand the impacts of a Category 5 hurricane on Eastern Shipbuilding Group will have an impact on the OPC program," Shultz said. He expects there to be some "puts and takes" after Eastern Shipbuilding submits its analysis. Rep. Peter DeFazio (D-Ore.), citing a press report earlier in the hearing, said that Sen. Marco Rubio (R-Fla.) has inserted language in a draft disaster assistance bill allowing the Coast Guard and Eastern Shipbuilding to renegotiate the firm fixed-price contract the shipbuilder is working under for the OPC to account for damage to shore side facilities from Hurricane Michael and increased labor costs. DeFazio said he is skeptical of the company's claim, noting, "I'm pretty sure they had insurance," and adding that "I question whether or not this has something to do with their original bid, which some thought was low." He also said he has concerns that a former Coast Guard Commandant that works for Eastern Shipbuilding has said he'll have authority to negotiate with his former service. Retired Adm. Robert Papp, the 24th commandant of the Coast Guard, runs Eastern Shipbuilding's Washington, D.C., operations. Eastern Shipbuilding did not respond to a query from Defense Daily about impacts to the OPC program from Hurricane Michael and any relief it may need from the current contract. Schultz said that the OPC contract can't be renegotiated without legislative authorities from Congress. He said the Coast Guard, in response to an "ask" from Congress, provided language to help with drafting the proposed legislation related to the OPC in the disaster bill. Schultz also said that the Coast Guard is not involved in Eastern Shipbuilding's lobbying efforts with Congress. A May 17, 2019, press report stated: As the Senate continues to negotiate the particulars of the supplemental disaster relief bill that seems poised to go to a vote next week, a new provision to save something many likely didn't know was at risk has been added. A new line in the draft bill will let Eastern Shipbuilding Group renegotiate its contract with the U.S. Coast Guard to build up to 25 new off-shore patrol cutters. "Under the old contract we were prohibited from negotiating for additional money for increased costs," said Admiral Bob Papp, President of Washington Operations for Eastern. That meant that after Hurricane Michael, they would be unable to negotiate with the Coast Guard to help cover a slew of new costs associated with both the project and the hurricane, such as the damage from the Category 5 storm that needed repairs, the prolonged schedule and the "skyrocketing" costs of labor, Papp said. The contract the largest in the Coast Guard's history at more than $10 billion didn't account for a natural disaster. It was going to be hard, Papp said, for Eastern to complete the project and to "stay healthy" without some negotiations. At stake in the community are 900 planned jobs and up to 5,000 indirect jobs officials believe will help jump-start the region's manufacturing economy. But an official in Sen. Marco Rubio's office said the latest version of the supplemental disaster relief bill now includes a provision that will allow negotiations. Rubio, according to the official, spoke with the President Donald Trump on Air Force One following the president's rally in Panama City Beach last week, helping to secure the language that made it into the bill. "We've waited far too long (for disaster relief), and we're also involved in some Florida-specific issues," Rubio said in a recent video. "For example, the Hurricane had an impact on a very important Coast Guard project that's in Northwest Florida and we want to make sure that project stays on target and continues to feed jobs because Northwest Florida desperately needs those jobs to recover. We're very hopeful. Cautiously optimistic, that next week can be a very good week." Papp thanked the area's congressional delegation for stepping up to advocate for this project, saying the company is "honored and delighted" to receive help. A January 28, 2019, press release from Eastern Shipbuilding stated: Panama City, FL, Eastern Shipbuilding Group [ESG] reports that steel cutting for the first offshore patrol cutter (OPC), Coast Guard Cutter ARGUS (WMSM-915), commenced on January 7, 2019 at Eastern's facilities. ESG successfully achieved this milestone even with sustaining damage and work interruption due to Hurricane Michael. The cutting of steel will start the fabrication and assembly of the cutter's hull, and ESG is to complete keel laying of ARGUS later this year. Additionally, ESG completed the placement of orders for all long lead time materials for OPC #2, Coast Guard Cutter CHASE (WMSM-916). Eastern's President Mr. Joey D'Isernia noted the following: "Today represents a monumental day and reflects the dedication of our workforce - the ability to overcome and perform even under the most strenuous circumstances and impacts of Hurricane Michael. ESG families have been dramatically impacted by the storm, and we continue to recover and help rebuild our shipyard and community. I cannot overstate enough how appreciative we are of all of our subcontractors and vendors contributions to our families during the recovery as well as the support we have received from our community partners. Hurricane Michael may have left its marks but it only strengthened our resolve to build the most sophisticated, highly capable national assets for the Coast Guard. Today's success is just the beginning of the construction of the OPCs at ESG by our dedicated team of shipbuilders and subcontractors for our customer and partner, the United States Coast Guard. We are excited for what will be a great 2019 for Eastern Shipbuilding Group and Bay County, Florida." A November 1, 2018, statement from Eastern Shipbuilding states that the firm resumed operations at both of its two main shipbuilding facilities just two weeks after Hurricane Michael devastated Panama City Florida and the surrounding communities . the majority of ESG's [Eastern Shipbuilding Group's] workforce has returned to work very quickly despite the damage caused by the storm. "Our employees are a resourceful and resilient group of individuals with the drive to succeed in the face of adversity. This has certainly been proven by their ability to bounce back over the two weeks following the storm. Our employees have returned to work much faster than anticipated and brought with them an unbreakable spirit, that I believe sets this shipyard and our community apart" said [Eastern Shipbuilding] President Joey D'Isernia. "Today, our staffing levels exceed 80% of our pre-Hurricane Michael levels and is rising daily." Immediately following the storm, ESG set out on an aggressive initiative to locate all of its employees and help get them back on the job as soon as practical after they took necessary time to secure the safety and security of their family and home. Together with its network of friends, partners, and customers in the maritime community, ESG organized daily distribution of meals and goods to employees in need. Additionally, ESG created an interest free deferred payback loan program for those employees in need and has organized Go Fund Me account to help those employees hardest hit by the storm. ESG also knew temporary housing was going to be a necessity in the short term and immediately built a small community located on greenfield space near its facilities for those employees with temporary housing needs. ESG has worked closely with its federal, state and commercial partners over the past two weeks to provide updates on the shipyard as well as on projects currently under construction. Power was restored to ESG's Nelson Facility on 10-21-18 and at ESG's Allanton Facility on 10-24-18 and production of vessels under contract is ramping back up. Additionally, all of the ESG personnel currently working on the US Coast Guard's Offshore Patrol Cutter contract have returned to work . "We are grateful to our partners and the maritime business community as a whole for their support and confidence during the aftermath of this historic storm. Seeing our incredible employees get back to building ships last week was an inspiration," said D'Isernia. "While there is no doubt that the effects of Hurricane Michael will linger with our community for years to come, I can say without reservation that we are open for business and excited about delivering quality vessels to our loyal customers." An October 22, 2018, press report states the following: U.S. Coast Guard officials and Eastern Shipbuilding Group are still assessing the damage caused by deadly category 4 Hurricane Michael to the Panama City, Fla.-based yard contracted to build the new class of Offshore Patrol Cutters. On September 28, the Coast Guard awarded Eastern Shipbuilding a contract to build the future USCGC Argus (WMSM-915), the first offshore patrol cutter (OPC). The yard was also set to build a second OPC, the future USCGC Chase (WMSM-916). Eastern Shipbuilding's contract is for nine OPCs, with options for two additional cutters. Ultimately, the Coast Guard plans to buy 25 OPCs. However, just as the yard was preparing to build Argus , Hurricane Michael struck the Florida Panhandle near Panama City on October 10. Workers from the shipyard and Coast Guard project managers evacuated and are just now returning to assess damage to the yard facilities, Brian Olexy, communications manager for the Coast Guard's Acquisitions Directorate, told USNI News. "Right now we haven't made any decisions yet on shifts in schedule," Olexy said . Since the yard was just the beginning stages of building Argus , Olexy said the hull wasn't damaged. "No steel had been cut," he said. Eastern Shipbuilding is still in the process of assessing damage to the yard and trying to reach its workforce. Many employees evacuated the area and have not returned, or are in the area but lost their homes, Eastern Shipbuilding spokesman Justin Smith told USNI News. At first, about 200 workers returned to work, but by week's end about 500 were at the yard, Smith said. The company is providing meals, water, and ice for its workforce. "Although we were significantly impacted by this catastrophic weather event, we are making great strides each day thanks to the strength and resiliency of our employees," Joey D'Isernia, president of Eastern Shipbuilding, said in a statement. <3.6. Planned NSC, OPC, and FRC Procurement Quantities> Another issue for Congress concerns the Coast Guard's planned NSC, OPC, and FRC procurement quantities. The POR's planned force of 91 NSCs, OPCs, and FRCs is about equal in number to the Coast Guard's legacy force of 90 high-endurance cutters, medium-endurance cutters, and 110-foot patrol craft. NSCs, OPCs, and FRCs, moreover, are to be individually more capable than the older ships they are to replace. Even so, Coast Guard studies have concluded that the planned total of 91 NSCs, OPCs, and FRCs would provide 61% of the cutters that would be needed to fully perform the service's statutory missions in coming years, in part because Coast Guard mission demands are expected to be greater in coming years than they were in the past. For further discussion of this issue, about which CRS has testified and reported on since 2005, see Appendix A . <4. Legislative Activity in 2019> <4.1. Summary of Appropriations Action on FY2020 Acquisition Funding Request> Table 2 summarizes appropriations action on the Coast Guard's request for FY2020 acquisition funding for the NSC, OPC, and FRC programs. Appendix A. Planned NSC, OPC, and FRC Procurement Quantities This appendix provides further discussion on the issue of the Coast Guard's planned NSC, OPC, and FRC procurement quantities. Overview The Coast Guard's program of record for NSCs, OPCs, and FRCs includes only about 61% as many cutters as the Coast Guard calculated in 2011 would be needed to fully perform its projected future missions. The Coast Guard's planned force levels for NSCs, OPCs, and FRCs have remained unchanged since 2004. In contrast, the Navy since 2004 has adjusted its ship force-level goals eight times in response to changing strategic and budgetary circumstances. Although the Coast Guard's strategic situation and resulting mission demands may not have changed as much as the Navy's have since 2004, the Coast Guard's budgetary circumstances may have changed since 2004. The 2004 program of record was heavily conditioned by Coast Guard expectations in 2004 about future funding levels in the PC&I account. Those expectations may now be different, as suggested by the willingness of Coast Guard officials in 2017 to begin regularly mentioning the need for an PC&I funding level of $2 billion per year (see Appendix B ). It can also be noted that continuing to, in effect, use the Coast Guard's 2004 expectations of future funding levels for the PC&I account as an implicit constraint on planned force levels for NSCs, OPCs, and FRCs can encourage an artificially narrow view of Congress's options regarding future Coast Guard force levels and associated funding levels, depriving Congress of agency in the exercise of its constitutional power to provide for the common defense and general welfare of the United States, and to set funding levels and determine the composition of federal spending. 2009 Coast Guard Fleet Mix Analysis The Coast Guard estimated in 2009 that with the POR's planned force of 91 NSCs, OPCs, and FRCs, the service would have capability or capacity gaps in 6 of its 11 statutory missions search and rescue (SAR); defense readiness; counterdrug operations; ports, waterways, and coastal security (PWCS); protection of living marine resources (LMR); and alien migrant interdiction operations (AMIO). The Coast Guard judges that some of these gaps would be "high risk" or "very high risk." Public discussions of the POR frequently mention the substantial improvement that the POR force would represent over the legacy force. Only rarely, however, have these discussions explicitly acknowledged the extent to which the POR force would nevertheless be smaller in number than the force that would be required, by Coast Guard estimate, to fully perform the Coast Guard's statutory missions in coming years. Discussions that focus on the POR's improvement over the legacy force while omitting mention of the considerably larger number of cutters that would be required, by Coast Guard estimate, to fully perform the Coast Guard's statutory missions in coming years could encourage audiences to conclude, contrary to Coast Guard estimates, that the POR's planned force of 91 cutters would be capable of fully performing the Coast Guard's statutory missions in coming years. In a study completed in December 2009 called the Fleet Mix Analysis (FMA) Phase 1, the Coast Guard calculated the size of the force that in its view would be needed to fully perform the service's statutory missions in coming years. The study refers to this larger force as the objective fleet mix. Table A-1 compares planned numbers of NSCs, OPCs, and FRCs in the POR to those in the objective fleet mix. As can be seen in Table A-1 , the objective fleet mix includes 66 additional cutters, or about 73% more cutters than in the POR. Stated the other way around, the POR includes about 58% as many cutters as the 2009 FMA Phase I objective fleet mix. As intermediate steps between the POR force and the objective fleet mix, FMA Phase 1 calculated three additional forces, called FMA-1, FMA-2, and FMA-3. (The objective fleet mix was then relabeled FMA-4.) Table A-2 compares the POR to FMAs 1 through 4. FMA-1 was calculated to address the mission gaps that the Coast Guard judged to be "very high risk." FMA-2 was calculated to address both those gaps and additional gaps that the Coast Guard judged to be "high risk." FMA-3 was calculated to address all those gaps, plus gaps that the Coast Guard judged to be "medium risk." FMA-4 the objective fleet mix was calculated to address all the foregoing gaps, plus the remaining gaps, which the Coast Guard judge to be "low risk" or "very low risk." Table A-3 shows the POR and FMAs 1 through 4 in terms of their mission performance gaps. Figure A-1 , taken from FMA Phase 1, depicts the overall mission capability/performance gap situation in graphic form. It appears to be conceptual rather than drawn to precise scale. The black line descending toward 0 by the year 2027 shows the declining capability and performance of the Coast Guard's legacy assets as they gradually age out of the force. The purple line branching up from the black line shows the added capability from ships and aircraft to be procured under the POR, including the 91 planned NSCs, OPCs, and FRCs. The level of capability to be provided when the POR force is fully in place is the green line, labeled "2005 Mission Needs Statement." As can be seen in the graph, this level of capability is substantially below a projection of Coast Guard mission demands made after the terrorist attacks of September 11, 2001 (the red line, labeled "Post-9/11 CG Mission Demands"), and even further below a Coast Guard projection of future mission demands (the top dashed line, labeled "Future Mission Demands"). The dashed blue lines show future capability levels that would result from reducing planned procurement quantities in the POR or executing the POR over a longer time period than originally planned. FMA Phase 1 was a fiscally unconstrained study, meaning that the larger force mixes shown in Table A-2 were calculated primarily on the basis of their capability for performing missions, rather than their potential acquisition or life-cycle operation and support (O&S) costs. Although the FMA Phase 1 was completed in December 2009, the figures shown in Table A-2 were generally not included in public discussions of the Coast Guard's future force structure needs until April 2011, when GAO presented them in testimony. GAO again presented them in a July 2011 report. The Coast Guard completed a follow-on study, called Fleet Mix Analysis (FMA) Phase 2, in May 2011. Among other things, FMA Phase 2 includes a revised and updated objective fleet mix called the refined objective mix. Table A-4 compares the POR to the objective fleet mix from FMA Phase 1 and the refined objective mix from FMA Phase 2. As can be seen in Table A-4 , compared to the objective fleet mix from FMA Phase 1, the refined objective mix from FMA Phase 2 includes 49 OPCs rather than 57. The refined objective mix includes 58 additional cutters, or about 64% more cutters than in the POR. Stated the other way around, the POR includes about 61% as many cutters as the refined objective mix. Compared to the POR, the larger force mixes shown in Table A-2 and Table A-4 would be more expensive to procure, operate, and support than the POR force. Using the average NSC, OPC, and FRC procurement cost figures presented earlier (see " Background "), procuring the 58 additional cutters in the Refined Objective Mix from FMA Phase 2 might cost an additional $10.7 billion, of which most (about $7.8 billion) would be for the 24 additional FRCs. (The actual cost would depend on numerous factors, such as annual procurement rates.) O&S costs for these 58 additional cutters over their life cycles (including crew costs and periodic ship maintenance costs) would require billions of additional dollars. The larger force mixes in the FMA Phase 1 and 2 studies, moreover, include not only increased numbers of cutters, but also increased numbers of Coast Guard aircraft. In the FMA Phase 1 study, for example, the objective fleet mix included 479 aircraft 93% more than the 248 aircraft in the POR mix. Stated the other way around, the POR includes about 52% as many aircraft as the objective fleet mix. A decision to procure larger numbers of cutters like those shown in Table A-2 and Table A-4 might thus also imply a decision to procure, operate, and support larger numbers of Coast Guard aircraft, which would require billions of additional dollars. The FMA Phase 1 study estimated the procurement cost of the objective fleet mix of 157 cutters and 479 aircraft at $61 billion to $67 billion in constant FY2009 dollars, or about 66% more than the procurement cost of $37 billion to $40 billion in constant FY2009 dollars estimated for the POR mix of 91 cutters and 248 aircraft. The study estimated the total ownership cost (i.e., procurement plus life-cycle O&S cost) of the objective fleet mix of cutters and aircraft at $201 billion to $208 billion in constant FY2009 dollars, or about 53% more than the total ownership cost of $132 billion to $136 billion in constant FY2009 dollars estimated for POR mix of cutters and aircraft. A December 7, 2015, press report states the following: The Coast Guard's No. 2 officer said the small size and advanced age of its fleet is limiting the service's ability to carry out crucial missions in the Arctic and drug transit zones or to meet rising calls for presence in the volatile South China Sea. "The lack of surface vessels every day just breaks my heart," VADM Charles Michel, the Coast Guard's vice commandant, said Dec. 7. Addressing a forum on American Sea Power sponsored by the U.S. Naval Institute at the Newseum, Michel detailed the problems the Coast Guard faces in trying to carry out its missions of national security, law enforcement and maritime safety because of a lack of resources. "That's why you hear me clamoring for recapitalization," he said. Michel noted that China's coast guard has a lot more ships than the U.S. Coast Guard has, including many that are larger than the biggest U.S. cutter, the 1,800-ton [sic:4,800-ton] National Security Cutter. China is using those white-painted vessels rather than "gray-hull navy" ships to enforce its claims to vast areas of the South China Sea, including reefs and shoals claimed by other nations, he said. That is a statement that the disputed areas are "so much our territory, we don't need the navy. That's an absolutely masterful use of the coast guard," he said. The superior numbers of Chinese coast guard vessels and its plans to build more is something, "we have to consider when looking at what we can do in the South China Sea," Michel said. Although they have received requests from the U.S. commanders in the region for U.S. Coast Guard cutters in the South China Sea, "the commandant had to say 'no'. There's not enough to go around," he said. Potential oversight questions for Congress include the following: Under the POR force mix, how large a performance gap, precisely, would there be in each of the missions shown in Table A-3 ? What impact would these performance gaps have on public safety, national security, and protection of living marine resources? How sensitive are these performance gaps to the way in which the Coast Guard translates its statutory missions into more precise statements of required mission performance? Given the performance gaps shown in Table A-3 , should planned numbers of Coast Guard cutters and aircraft be increased, or should the Coast Guard's statutory missions be reduced, or both? How much larger would the performance gaps in Table A-3 be if planned numbers of Coast Guard cutters and aircraft are reduced below the POR figures? Has the executive branch made sufficiently clear to Congress the difference between the number of ships and aircraft in the POR force and the number that would be needed to fully perform the Coast Guard's statutory missions in coming years? Why has public discussion of the POR focused mostly on the capability improvement it would produce over the legacy force and rarely on the performance gaps it would have in the missions shown in Table A-3 ? Appendix B. Funding Levels in PC&I Account This appendix provides background information on funding levels in the Coast Guard's Procurement, Construction, and Improvements (PC&I) account. Overview As shown in Table B-1 , the FY2013 budget submission programmed an average of about $1.5 billion per year in the PC&I account. As also shown in the table, the FY2014-FY2016 budget submissions reduced that figure to between $1 billion and $1.2 billion per year. The Coast Guard has testified that funding the PC&I account at a level of about $1 billion to $1.2 billion per year would make it difficult to fund various Coast Guard acquisition projects, including a new polar icebreaker and improvements to Coast Guard shore installations. Coast Guard plans call for procuring OPCs at an eventual rate of two per year. If each OPC costs roughly $400 million, procuring two OPCs per year in an PC&I account of about $1 billion to $1.2 billion per year, as programmed under the FY2014-FY2016 budget submissions, would leave about $200 million to $400 million per year for all other PC&I-funded programs. Since 2017, Coast Guard officials have been stating more regularly what they stated only infrequently in earlier years: that executing the Coast Guard's various acquisition programs fully and on a timely basis would require the PC&I account to be funded in coming years at a level of about $2 billion per year. Statements from Coast Guard officials on this issue in past years have sometimes put this figure as high as about $2.5 billion per year. Using Past PC&I Funding Levels as a Guide for Future PC&I Funding Levels In assessing future funding levels for executive branch agencies, a common practice is to assume or predict that the figure in coming years will likely be close to where it has been in previous years. While this method can be of analytical and planning value, for an agency like the Coast Guard, which goes through periods with less acquisition of major platforms and periods with more acquisition of major platforms, this approach might not always be the best approach, at least for the PC&I account. More important, in relation to maintaining Congress's status as a co-equal branch of government, including the preservation and use of congressional powers and prerogatives, an analysis that assumes or predicts that future funding levels will resemble past funding levels can encourage an artificially narrow view of congressional options regarding future funding levels, depriving Congress of agency in the exercise of its constitutional power to set funding levels and determine the composition of federal spending. Past Coast Guard Statements About Required PC&I Funding Level At an October 4, 2011, hearing on the Coast Guard's major acquisition programs before the Coast Guard and Maritime Transportation subcommittee of the House Transportation and Infrastructure Committee, the following exchange occurred: REPRESENATIVE FRANK LOBIONDO: Can you give us your take on what percentage of value must be invested each year to maintain current levels of effort and to allow the Coast Guard to fully carry out its missions? ADMIRAL ROBERT J. PAPP, COMMANDANT OF THE COAST GUARD: I think I can, Mr. Chairman. Actually, in discussions and looking at our budget and I'll give you rough numbers here, what we do now is we have to live within the constraints that we've been averaging about $1.4 billion in acquisition money each year. If you look at our complete portfolio, the things that we'd like to do, when you look at the shore infrastructure that needs to be taken care of, when you look at renovating our smaller icebreakers and other ships and aircraft that we have, we've done some rough estimates that it would really take close to about $2.5 billion a year, if we were to do all the things that we would like to do to sustain our capital plant. So I'm just like any other head of any other agency here, as that the end of the day, we're given a top line and we have to make choices and tradeoffs and basically, my tradeoffs boil down to sustaining frontline operations balancing that, we're trying to recapitalize the Coast Guard and there's where the break is and where we have to define our spending. An April 18, 2012, blog entry stated the following: If the Coast Guard capital expenditure budget remains unchanged at less than $1.5 billion annually in the coming years, it will result in a service in possession of only 70 percent of the assets it possesses today, said Coast Guard Rear Adm. Mark Butt. Butt, who spoke April 17 [2012] at [a] panel [discussion] during the Navy League Sea Air Space conference in National Harbor, Md., echoed Coast Guard Commandant Robert Papp in stating that the service really needs around $2.5 billion annually for procurement. At a May 9, 2012, hearing on the Coast Guard's proposed FY2013 budget before the Homeland Security subcommittee of the Senate Appropriations Committee, Admiral Papp testified, "I've gone on record saying that I think the Coast Guard needs closer to $2 billion dollars a year [in acquisition funding] to recapitalize [to] do proper recapitalization." At a May 14, 2013, hearing on the Coast Guard's proposed FY2014 budget before the Homeland Security Subcommittee of the Senate Appropriations Committee, Admiral Papp stated the following regarding the difference between having about $1.0 billion per year rather than about $1.5 billion per year in the PC&I account: Well, Madam Chairman, $500 million a half a billion dollars is real money for the Coast Guard. So, clearly, we had $1.5 billion in the [FY]13 budget. It doesn't get everything I would like, but it it gave us a good start, and it sustained a number of projects that are very important to us. When we go down to the $1 billion level this year, it gets my highest priorities in there, but we have to either terminate or reduce to minimum order quantities for all the other projects that we have going. If we're going to stay with our program of record, things that have been documented that we need for our service, we're going to have to just stretch everything out to the right. And when we do that, you cannot order in economic order quantities. It defers the purchase. Ship builders, aircraft companies they have to figure in their costs, and it inevitably raises the cost when you're ordering them in smaller quantities and pushing it off to the right. Plus, it almost creates a death spiral for the Coast Guard because we are forced to sustain older assets older ships and older aircraft which ultimately cost us more money, so it eats into our operating funds, as well, as we try to sustain these older things. So, we'll do the best we can within the budget. And the president and the secretary have addressed my highest priorities, and we'll just continue to go on the on an annual basis seeing what we can wedge into the budget to keep the other projects going. At a March 12, 2014, hearing on the Coast Guard's proposed FY2015 budget before the Homeland Security subcommittee of the House Appropriations Committee, Admiral Papp stated the following: Well, that's what we've been struggling with, as we deal with the five-year plan, the capital investment plan, is showing how we are able to do that. And it will be a challenge, particularly if it sticks at around $1 billion [per year]. As I've said publicly, and actually, I said we could probably I've stated publicly before that we could probably construct comfortably at about 1.5 billion [dollars] a year. But if we were to take care of all the Coast Guard's projects that are out there, including shore infrastructure that that fleet that takes care of the Yemen [sic: inland] waters is approaching 50 years of age, as well, but I have no replacement plan in sight for them because we simply can't afford it. Plus, we need at some point to build a polar icebreaker. Darn tough to do all that stuff when you're pushing down closer to 1 billion [dollars per year], instead of 2 billion [dollars per year]. As I said, we could fit most of that in at about the 1.5 billion [dollars per year] level, but the projections don't call for that. So we are scrubbing the numbers as best we can. At a March 24, 2015, hearing on the Coast Guard's proposed FY2016 budget before the Homeland Security subcommittee of the House Appropriations Committee, Admiral Paul Zukunft, Admiral Papp's successor as Commandant of the Coast Guard, stated the following: I look back to better years in our acquisition budget when we had a an acquisition budget of of $1.5 billion. That allows me to move these programs along at a much more rapid pace and, the quicker I can build these at full-rate production, the less cost it is in the long run as well. But there's an urgent need for me to be able to deliver these platforms in a timely and also in an affordable manner. But to at least have a reliable and a predictable acquisition budget would make our work in the Coast Guard much easier. But when we see variances of of 30, 40% over a period of three or four years, and not knowing what the Budget Control Act may have in store for us going on, yes, we are treading water now but any further reductions, and now I am I am beyond asking for help. We are taking on water. An April 13, 2017, press report states the following (emphasis added): Coast Guard Commandant Adm. Paul Zukunft on Wednesday [April 12] said that for the Coast Guard to sustain its recapitalization plans and operations the service needs a $2 billion annual acquisition budget that grows modestly overtime to keep pace with inflation. The Coast Guard needs a "predictable, reliable" acquisition budget "and within that we need 5 percent annual growth to our operations and maintenance (O&M) accounts," Zukunft told reporters at a Defense Writers Group breakfast. Inflation will clip 2 to 3 percent from that, but "at 5 percent or so it puts you on a moderate but positive glide slope so you can execute, so you can build the force," he said. In an interview published on June 1, 2017, Zukunft said the following (emphasis added): We cannot be more relevant than we are now. But what we need is predictable funding. We have been in over 16 continuing resolutions since 2010. I need stable and repeatable funding. An acquisition budget with a floor of $2 billion. Our operating expenses as I said, they've been funded below the Budget Control Act floor for the past five years. I need 5 percent annualized growth over the next five years and beyond to start growing some of this capability back. But more importantly, we [need] more predictable, more reliable funding so we can execute what we need to do to carry out the business of the world's best Coast Guard. Appendix C. Additional Information on Status and Execution of NSC, OPC, and FRC Programs from May 2018 GAO Report This appendix presents additional information on the status and execution of the NSC, OPC, and FRC programs from a May 2018 GAO report reviewing DHS acquisition programs. NSC Program Regarding the NSC program, the May 2018 GAO report states the following: DHS's Under Secretary for Management (USM) directed the USCG to complete follow-on operational test and evaluation (OT&E) by March 2019. According to USCG officials, the program's OTA began follow-on OT&E in October 2017, which will test unmet key performance parameters (KPP) and address deficiencies found during prior testing. The NSC completed initial operational testing in 2014, but did not fully demonstrate 7 of its 19 KPPs, including those related to unmanned aircraft and cutter-boat deployment in rough seas. According to USCG officials, operators have since demonstrated these KPPs during USCG operations. For example, USCG officials stated that they successfully demonstrated operations of a prototype unmanned aircraft on an NSC. However, the USCG will not evaluate the NSC's unmanned aircraft KPP until the unmanned aircraft undergoes initial OT&E, currently planned for June 2019. In addition, the NSC will be the first USCG asset to undergo cybersecurity testing. However, this test has been delayed over a year with the final cyber test event scheduled for August 2018 because of a change in NSC operational schedules, among other things. The DHS USM also directed the USCG to complete a study to determine the root cause of the NSC's propulsion system issues by December 2017; however, as of January 2018, the study was not yet complete. GAO previously reported on these issues including high engine temperatures, cracked cylinder heads, and overheating generator bearings that were impacting missions in January 2016.... The USCG initially planned to implement a crew rotational concept in which crews would rotate while NSCs were underway to achieve a goal of 230 days away from the cutter's homeport. In February 2018, USCG officials told GAO they abandoned the crew rotational concept because the concept did not provide the USCG with the expected return on investment. Instead, USCG officials said a new plan has been implemented that does not rotate crew and is anticipated to increase the days away from home port from the current capability of 185 days to 200 days. OPC Program Regarding the OPC program, the May 2018 GAO report states the following: DHS approved six key performance parameters (KPP) for the OPC related to the ship's operating range and duration, crew size, interoperability and maneuverability, and ability to support operations in moderate to rough seas. The first OPC has not yet been constructed, so the USCG has not yet demonstrated whether it can meet these KPPs. The USCG plans to use engineering reviews, and developmental and operational tests throughout the acquisition to measure the OPC's performance. USCG officials told GAO that the program completed an early operational assessment on the basic ship design in August 2017, which entailed a review of the current design plans. The program plans to refine the ship's design as needed based on preliminary test results. However, as of December 2017, USCG officials had not received the results of this assessment. The USCG plans to conduct initial operational test and evaluation (OT&E) on the first OPC in fiscal year 2023. However, the test results from initial OT&E will not be available to inform key decisions. For example, the results will not be available to inform the decision to build 2 OPCs per year which USCG officials said is scheduled to begin in fiscal year 2021. Without test results to inform these key decisions, the USCG must make substantial commitments prior to knowing how well the ship will meet its requirements.... The USCG is in the process of completing the design of the OPC before starting construction, which is in-line with GAO shipbuilding best practices. In addition, USCG officials stated that the program is using state-of-the-market technology that has been proven on other ships as opposed to state-of-the-art technology, which lowers the risk of the program. FRC Program Regarding the FRC program, the May 2018 GAO report states the following: In February 2017, DHS's Director, Office of Test and Evaluation (DOT&E) assessed the results from the program's July 2016 follow-on operational test and evaluation (OT&E) and determined that the program met its six key performance parameters, and the FRC was operationally effective and suitable. During follow-on OT&E, the OTA found that several deficiencies from the program's initial OT&E had been corrected. For example, the OTA closed a severe deficiency related to the engines based on modifications to the FRC's main diesel engines. However, five major deficiencies remain. According to USCG officials, the remaining deficiencies are related to ergonomics (e.g., improving the working environment for operators) and issues with stowage space. USCG officials stated that they plan to resolve the remaining deficiencies by fiscal year 2020. DOT&E noted that these deficiencies do not prevent mission completion or present a danger to personnel, but recommended that they be resolved as soon as possible. USCG officials indicated that they plan to resolve the remaining deficiencies through engineering or other changes.... The USCG continues to work with the contractor Bollinger Shipyards, LLC to address issues covered by the warranty and acceptance clauses for each ship. For example, 18 engines 9 operational engines and 9 spare engines have been replaced under the program's warranty. According to USCG documentation, 65 percent of the current issues with the engines have been resolved through retrofits; however, additional problems with the engines have been identified since our April 2017 review. For example, issues with water pump shafts are currently being examined through a root cause analysis and will be redesigned and are scheduled to undergo retrofits starting in December 2018. We previously found that the FRC's warranty resulted in improved cost and quality by requiring the shipbuilder to pay for the repair of defects. As of September 2017, USCG officials said the replacements and retrofits completed under the program's warranty allowed the USCG to avoid an estimated $104 million in potential unplanned costs of which $63 million is related to the engines. For a discussion of some considerations relating to warranties in shipbuilding and other acquisition programs, see Appendix D . Appendix D. Some Considerations Relating to Warranties in Shipbuilding and Other Acquisition Programs This appendix presents some considerations relating to warranties in shipbuilding and other defense acquisition. In discussions of Navy and Coast Guard shipbuilding, one question that sometimes arises is whether including a warranty in a shipbuilding contract is preferable to not including one. Including a warranty in a shipbuilding contract (or a contract for building some other kind of military end item), while potentially valuable, might not always be preferable to not including one it depends on the circumstances of the acquisition, and it is not necessarily a valid criticism of an acquisition program to state that it is using a contract that does not include a warranty (or a weaker form of a warranty rather than a stronger one). Including a warranty generally shifts to the contractor the risk of having to pay for fixing problems with earlier work. Although that in itself could be deemed desirable from the government's standpoint, a contractor negotiating a contract that will have a warranty will incorporate that risk into its price, and depending on how much the contractor might charge for doing that, it is possible that the government could wind up paying more in total for acquiring the item (including fixing problems with earlier work on that item) than it would have under a contract without a warranty. When a warranty is not included in the contract and the government pays later on to fix problems with earlier work, those payments can be very visible, which can invite critical comments from observers. But that does not mean that including a warranty in the contract somehow frees the government from paying to fix problems with earlier work. In a contract that includes a warranty, the government will indeed pay something to fix problems with earlier work but it will make the payment in the less-visible (but still very real) form of the up-front charge for including the warranty, and that charge might be more than what it would have cost the government, under a contract without a warranty, to pay later on for fixing those problems. From a cost standpoint, including a warranty in the contract might or might not be preferable, depending on the risk that there will be problems with earlier work that need fixing, the potential cost of fixing such problems, and the cost of including the warranty in the contract. The point is that the goal of avoiding highly visible payments for fixing problems with earlier work and the goal of minimizing the cost to the government of fixing problems with earlier work are separate and different goals, and that pursuing the first goal can sometimes work against achieving the second goal. The Department of Defense's guide on the use of warranties states the following: Federal Acquisition Regulation (FAR) 46.7 states that "the use of warranties is not mandatory." However, if the benefits to be derived from the warranty are commensurate with the cost of the warranty, the CO [contracting officer] should consider placing it in the contract. In determining whether a warranty is appropriate for a specific acquisition, FAR Subpart 46.703 requires the CO to consider the nature and use of the supplies and services, the cost, the administration and enforcement, trade practices, and reduced requirements. The rationale for using a warranty should be documented in the contract file.... In determining the value of a warranty, a CBA [cost-benefit analysis] is used to measure the life cycle costs of the system with and without the warranty. A CBA is required to determine if the warranty will be cost beneficial. CBA is an economic analysis, which basically compares the Life Cycle Costs (LCC) of the system with and without the warranty to determine if warranty coverage will improve the LCCs. In general, five key factors will drive the results of the CBA: cost of the warranty + cost of warranty administration + compatibility with total program efforts + cost of overlap with Contractor support + intangible savings. Effective warranties integrate reliability, maintainability, supportability, availability, and life-cycle costs. Decision factors that must be evaluated include the state of the weapon system technology, the size of the warranted population, the likelihood that field performance requirements can be achieved, and the warranty period of performance.

The Coast Guard's program of record (POR) calls for procuring 8 National Security Cutters (NSCs), 25 Offshore Patrol Cutters (OPCs), and 58 Fast Response Cutters (FRCs) as replacements for 90 aging Coast Guard high-endurance cutters, medium-endurance cutters, and patrol craft. The Coast Guard's proposed FY2020 budget requests a total of $657 million in procurement funding for the NSC, OPC, and FRC programs. NSCs are the Coast Guard's largest and most capable general-purpose cutters; they are intended to replace the Coast Guard's 12 aged Hamilton-class high-endurance cutters. NSCs have an estimated average procurement cost of about $670 million per ship. Although the Coast Guard's POR calls for procuring a total of 8 NSCs to replace the 12 Hamilton-class cutters, Congress through FY2019 has funded 11 NSCs, including the 10th and 11th in FY2018. Six NSCs have been commissioned into service. The seventh was delivered to the Coast Guard on September 19, 2018, and the eighth was delivered on April 30, 2019. The ninth through 11th are under construction; the ninth is scheduled for delivery in 2021. The Coast Guard's proposed FY2020 budget requests $60 million in procurement funding for the NSC program; this request does not include funding for a 12th NSC. OPCs are to be smaller, less expensive, and in some respects less capable than NSCs; they are intended to replace the Coast Guard's 29 aged medium-endurance cutters. Coast Guard officials describe the OPC program as the service's top acquisition priority. OPCs have an estimated average procurement cost of about $421 million per ship. On September 15, 2016, the Coast Guard awarded a contract with options for building up to nine OPCs to Eastern Shipbuilding Group of Panama City, FL. The first OPC was funded in FY2018 and is to be delivered in 2021. The second OPC and long leadtime materials (LLTM) for the third were funded in FY2019. The Coast Guard's proposed FY2020 budget requests $457 million in procurement funding for the third OPC, LLTM for the fourth and fifth, and other program costs. FRCs are considerably smaller and less expensive than OPCs; they are intended to replace the Coast Guard's 49 aging Island-class patrol boats. FRCs have an estimated average procurement cost of about $58 million per boat. A total of 56 have been funded through FY2019, including six in FY2019. Four of the 56 are to be used by the Coast Guard in the Persian Gulf and are not counted against the Coast Guard's 58-ship POR for the program, which relates to domestic operations. Excluding these four OPCs, a total of 52 FRCs for domestic operations have been funded through FY2019. The 32nd FRC was commissioned into service on May 1, 2019. The Coast Guard's proposed FY2020 budget requests $140 million in acquisition funding for the procurement of two more FRCs for domestic operations. The NSC, OPC, and FRC programs pose several issues for Congress, including the following: whether to provide funding in FY2020 for the procurement of a 12th NSC; whether to fund the procurement in FY2020 of two FRCs, as requested by the Coast Guard, or some higher number, such as four or six; whether to use annual or multiyear contracting for procuring OPCs; the annual procurement rate for the OPC program; the impact of Hurricane Michael on Eastern Shipbuilding of Panama City, FL, the shipyard that is to build the first nine OPCs; and the planned procurement quantities for NSCs, OPCs, and FRCs.

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<1. Introduction> The asset management industry operates in a complex system with many components. Asset management companies have two major product categories public funds and private funds. Additionally, a number of intermediaries, such as investment advisers and custodians, provide distribution channels, safeguards, and other essential services to investors and issuers. Nearly half, or 44.8%, of all U.S. households own some form of public funds. When operating as expected, the industry functions to pool assets, share risks, allocate resources, produce information, and protect investors. Asset management companies also referred to as investment management companies, money managers, funds, or investment funds are collective investment vehicles that pool money from various individual or institutional investor clients and invest on their behalf for financial returns. The Securities and Exchange Commission (SEC) is the primary regulator of the asset management industry. The main statutes that govern the asset management industry at the federal level include the Investment Company Act of 1940 (P.L. 76-768), the Investment Advisers Act of 1940 (P.L. 76-768), the Securities Act of 1933 (P.L. 73-22), and the Securities Exchange Act of 1934 (P.L. 73-291). Public and private funds are distinguished by the types of investors who can access them and by the regulation applied to them. Public funds, such as mutual funds, exchange-traded funds (ETFs), closed-end funds, and unit investment trusts (UITs), are broadly accessible to investors of all types. Private funds are limited to more sophisticated institutional and retail (individual) investors, thus the name private fund . The main types of private funds are hedge funds, venture capital funds, and private equity. The first part of this report provides an overview of the asset management industry and its regulation. Although there is no single definition for the industry, the report generally covers public and private investment funds and the industry components that serve those funds. The report also illustrates some of the industry's key risk exposures and the regulations designed to disclose, monitor, and mitigate them. The second part of this report considers current trends and policy issues, including (1) whether the asset management industry affects the financial stability of the United States; (2) whether regulation of the asset management industry provides sufficient protection for the retail investors who invest money in the industry; and (3) the impact of financial technology, or "fintech," on the industry, and whether the current regulatory framework is adequate to address these new technologies. <1.1. Industry Assets> The asset management industry is large and highly concentrated. Exact statistics differ somewhat depending on the source, but one industry report on the world's 500 largest asset managers indicates that the largest U.S. asset managers (i.e., those within the global top 500 ranking) managed around $50 trillion in assets in 2017. The top 10 U.S. asset managers alone held $26.2 trillion in assets under management as of year-end 2017 ( Table 1 ). The industry's assets are measured by assets under management (AUM) and net assets. AUM or gross assets refer to the sum of assets overseen by the asset manager. Net assets refer to the value of assets minus liabilities. U.S.-registered investment companies or "public funds" held $21.4 trillion in total net assets as of 2018. Private funds, which are not accessible by typical households, held $8.7 trillion in total net assets and $13.5 trillion in AUM as of December 2018. In addition, other market intermediaries, such as broker-dealers, held around $3.1 trillion AUM as of second quarter 2018. <2. Types of Asset Management Companies> Many types of asset management companies exist. Further, the different types of asset management companies are subject to different regulatory requirements. This section highlights major types of asset management companies, including public funds, private funds, and other forms of asset management. <2.1. Public Funds> Public funds are pooled investment vehicles that gather money from a wide variety of investors and invest the money in stocks, bonds, and other securities. They are SEC-registered investment companies that are open to all institutional and retail investors in the public, thus the name public funds. Asset holdings of public funds experienced significant growth in the past two decades ( Figure 1 ). At year-end 2018, public funds managed more than $21.4 trillion in assets, largely on behalf of more than 100 million U.S. retail investors. The four basic types of public funds are mutual funds, closed-end funds, exchange-traded funds, and unit investment trusts. <2.1.1. Mutual Funds> Mutual funds are the most widely used pooled investment vehicle. They are also called open-ended funds, referring to their continuous offering of shares. Mutual funds do not have a limit on the number of shares they can issue. The shares are not traded on exchanges. When investors need to exit their investment positions, they "redeem" shares at net asset value (NAV). Redemption means selling shares back to the mutual fund. These technical features, including NAV and redemption, are revisited in the context of compliance and risk controls in " Regulatory and Risk Mitigation Frameworks " section of this report. <2.1.2. Closed-End Funds> A closed-end fund is a publicly traded investment company that sells a limited number of shares rather than continuously offering them. Closed-end fund shares are not redeemable, meaning they cannot be returned to the fund for NAV, but they are traded in the secondary market. Investors can exit closed-end funds by buying or selling shares on securities exchanges. <2.1.3. Exchange-Traded Funds (ETF)> ETFs are pooled investment vehicles that combine features of both mutual funds and closed-end funds. ETFs offer investors a way to pool their money into a fund with continuous share offerings that can also trade on exchanges like a stock. <2.1.4. Unit Investment Trusts (UIT)> UITs invest money raised from many investors in a one-time public offering in a generally fixed portfolio of stocks, bonds, or other investments. It is an investment company organized under a trust or similar structure that issues redeemable securities, each of which represents an interest in a unit of specified securities. <2.2. Private Funds> Private funds, in contrast, are investment companies that operate through exemptions from certain SEC regulation. Private funds are also called alternative investments. Relative to public funds, private funds tend to take on higher risk, and they are subject to more investor access restrictions. Private funds are available to only a limited number of qualified investors, thus the name private funds. As of December 2018, private funds held $8.7 trillion in total net assets and $13.5 trillion in gross assets under management ( Figure 2 ). From the SEC's first available private funds statistics in the first quarter of 2013 to the fourth quarter of 2018, the private fund industry grew more than 60%, primarily led by increases in private equity and hedge funds. The rules governing the funds were established as part of the Investment Company Act in the 1940s, but some argue the drafters never foresaw the rise of private funds at such a scale. The current private fund landscape thus raises questions regarding if or how the regulations ought to be updated. The main types of private funds include hedge funds, venture capital funds, private equity funds, and family offices, but these fund types are not mutually exclusive. Some use the term private equity interchangeably as a catch-all phrase to describe all types of private funds. This report uses the terminology set forth by the SEC in its private funds Form PF reporting system. Among all major types of private funds, only venture capital funds and family offices have legal definitions. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203; Dodd-Frank Act) removed the historical exemption from SEC registration for investment advisers with fewer than 15 clients to "fill a key gap in the regulatory landscape." The act also established legal definitions of venture capital funds and family offices, so that these selected private funds could be exempted from the new regulation requirement. In addition, private funds with less than $150 million in assets under management continue to be exempted. <2.2.1. Private Equity Funds> A private equity fund is a pooled investment vehicle that typically concentrates on investments not offered to the public, such as ownership stakes in privately held companies. Private equity fund investors include high-net-worth individuals and families, pension funds, endowments, banks and insurance companies. According to a 2017 survey, around 88% of institutional investors invested in private equity funds; nearly a third allocated more than 10% of their assets in private equity. <2.2.2. Venture Capital Funds> Venture capital funds are sources of startup financing for early stage, high-potential firms, such as high-tech startups. Pursuant to the Dodd-Frank Act, the SEC established a definition for venture capital funds in 2011. To be considered for the venture capital exemption from certain investment company regulatory requirements, the fund should generally pursue a venture strategy, cannot borrow funding to incur leverage, and should hold no more than 20% of its capital in nonqualifying investments, among other conditions. The legal definition of "venture capital fund" needs to be met in order to qualify for regulatory exemptions. <2.2.3. Hedge Funds> Hedge funds are pooled investment vehicles that often deploy more "speculative" investment practices than mutual funds, such as leverage and short-selling. Among investors, hedge funds are more controversial than other funds because of their high fee structure coupled with reported persistent underperformance. Hedge fund fee structures often include an annual asset management fee of 1% to 2% of assets under management as well as an additional 20% performance fee on any profits. This fee structure could motivate a hedge fund manager to take greater risks in the hope of generating a larger performance fee, yet only the investors, not the hedge funds, bear the downside risk. Prior to the Dodd-Frank Act, hedge funds were virtually unregulated, and regulators were largely unaware of the hedge fund market's size, investment strategies, and number of players. The Dodd-Frank Act mandated more detailed reporting of hedge funds and other private funds. Confidential filings from hedge funds are now reported to the SEC. Despite continuous discussions of whether hedge funds' fees are excessive and their closings, the hedge fund industry remains at peak net assets levels of around $4 trillion ( Figure 2 ). <2.2.4. Family Offices> Family offices are investment firms that solely manage the wealth of family clients. They do not offer their services to the public and are generally exempt from SEC registration requirements. According to a 2018 report, around two-thirds of family offices were established after 2000. Owing to their exclusivity, family offices receive minimal regulation and oversight. They have grown rapidly in recent years and are reportedly increasingly becoming an option for some hedge fund managers, who solely manage their own money. <2.3. Public Versus Private Funds> Table 2 compares public and private funds' characteristics. The main differences between public and private funds include the following examples: Risk private funds normally invest in higher-risk assets and deploy more volatile investment strategies. For example, certain private funds focus on funding for startups, which are inherently riskier with higher possibilities for business failure. Certain private funds also have a greater ability to borrow money to invest (leverage), which could multiply the funds' risks and returns. Regulation private funds face less regulation relative to public funds. For example, whereas public funds generally have to calculate daily valuation and maintain periodic public reporting, private funds are not subject to such mandates. Investor access private funds are limited as to the type and the number of investors they can reach, while public funds are available to all investors. These restrictions are meant to protect certain retail investors who are perceived as less sophisticated, given the generally higher risk and lower levels of regulation. Portfolio company involvement a private equity or venture capital fund typically uses client funds to obtain a controlling interest in a nonpublicly traded company (called a portfolio company). This controlling interest normally allows the private fund to have a say in the portfolio company's operations. Public funds, in contrast, typically do not directly affect portfolio company management and operations, except through shareholder voting processes. Liquidity liquidity refers to how easy it is to buy and sell securities without affecting the price. Public funds are considered liquid for investors because of their redemption or exchange trading features, whereas private funds are considered illiquid. H olding period Private funds often invest in private securities that are not publicly traded. This causes private funds to normally have to wait for three to seven years before a "liquidity event" can occur. The liquidity events are typically company buyouts or initial public offerings (IPOs). Private funds typically realize the gains or losses of their investments only when portfolio companies are sold or go public. Public funds mostly invest in publicly traded companies that are considered to offer immediate liquidity. Public funds are not restricted from investing in private securities, but certain public fund regulatory requirements, such as daily valuation, make private investment operations less practical for public funds. As such, public funds largely focus on publicly traded securities and have not significantly undertaken private securities investments. Publicly traded private funds Some of the world's largest private fund managers are publicly traded, and thus able to offer company stock level liquidity. This means that public investors can directly purchase these fund companies' stocks and gain exposure to the companies' private fund investment portfolios as a whole. Publicly listed asset management firms include Amundi Group, Man Group, Och-Ziff Capital Management Group, Blackstone Group, and KKR. In 2017, they managed $2.4 trillion combined. Publicly traded private funds must concurrently adhere to private fund compliance requirements and restrictions, as well as public security offering standards. These private funds separately answer to both their direct fund investors and public shareholders. <2.4. Other Forms of Asset Management> Other forms of asset management do not fit tightly into the public or private fund categorization. <2.4.1. Business Development Companies> Business development companies (BDCs) are closed-end funds that primarily invest in small and developing businesses, and that generally provide operational assistance to such businesses in addition to funding. Congress created BDCs in 1980 in amendments to the Investment Company Act of 1940 to "make capital more readily available to small, developing, and financially troubled companies that are not able to access public markets or other forms of conventional financing." BDCs are not required to register with the SEC as investment companies, and thus face much less regulation than mutual funds. But they do offer their securities to the public, and their public offerings are subject to full SEC reporting requirements. <2.4.2. Fund of Funds> A fund of funds is an investment fund that invests in other funds. The fund of funds design aims to achieve asset allocation, diversification, hedging, or other investment objectives. The SEC estimates that almost half of all registered funds invest in other funds. <3. Operational Components> The asset management industry operates in a complex system with many components, including different types of funds and various intermediaries. This section explains the operation of a typical public fund as well as other prominent actors supporting the fund and the efficient operations of the industry. <3.1. Operation of a Fund> Funds typically operate through asset management companies (AMCs). The largest AMCs, as measured by assets under management, are shown in Table 1 . The AMCs can manage multiple funds of different types. Each fund has an Investment Management Agreement that designates the AMC to manage the fund's portfolio composition and trading. As Figure 3 illustrates, the end investors own the fund and contribute cash for its shares, custodians safeguard the fund assets, and the fund can also interact with certain counterparties for other transactions. <3.2. Key Intermediaries> The main players supporting the asset management industry include those who are more directly related to the flow of capital, such as financial advisers and others who serve back-office or administrative functions, such as data and research, asset safekeeping, and shareholder voting. Because funds are also financial products that are sold to investors, investment advisers and broker-dealers are the most commonly used retail sales and distribution channels. This section discusses several selected groups of players that frequently appear in asset management policy discussions. <3.2.1. Investment Advisers> An investment adviser is "any person or firm that for compensation is engaged in the business of providing advice to others or issuing reports or analysis regarding securities." Investment advisers generally include money managers, investment consultants, financial planners, and others who provide advice about securities. Investment advisers meeting the SEC legal definition must register with the SEC. As of 2018, the SEC oversaw around 13,200 registered investment advisers. <3.2.2. Broker-Dealers> Brokers and dealers are often discussed together, but they are two different types of entities. Brokers conduct securities transactions for others. They are generally paid a commission on securities sales. Dealers conduct securities transactions for their own accounts. Most brokers and dealers must register with the SEC and also comply with the guidance of self-regulatory organizations (SROs). The Financial Industry Regulatory Authority (FINRA) is the main SRO for the broker-dealer industry. FINRA writes and enforces broker-dealer rules, conducts examinations, and provides investor education. As of 2018, FINRA supervises around 3,596 member firms and 626,127 individual registered reps. <3.2.3. Custodians> Custodians provide safekeeping of financial assets. They are financial institutions that do not have legal ownership of assets but are tasked with holding and securing the assets, among other administrative functions. As mentioned in more detail in the " Asset Management Risks and Regulation " section of this report, client assets are not owned by an adviser or fund. As part of the regulatory requirements to protect investors, client assets are generally required to be safeguarded by a qualified custodian who maintains possession and control of the assets. In the past 90 years, financial custody has evolved from a system of self-custody to custodians playing key component of asset management operations. Today, four banks (BNY Mellon, J.P. Morgan, State Street, and Citigroup) service around $114 trillion of global assets under custody. <3.2.4. Information Services> The asset management industry in its essence is also an investment research industry that aggregates data and analysis for investment decision-making. Owing to the sophistication of the industry's technology and analysis, there are many data vendors and research providers, including national exchanges, data and technology aggregators, and sell-side researchers involved. <3.2.5. The Proxy System> A proxy vote is a vote cast by others on behalf of a shareholder who may not physically attend a shareholder meeting. This is how the vast majority of shareholder votes are cast. The SEC requires investment managers to vote as proxies in the best interest of their clients and disclose their voting policies and records to clients. During the 2018 shareholder meeting season, there were more than 4,000 shareholder meetings involving over 259 million proxy votes. Under the current system, shareholders cast their votes through a variety of intermediaries that assume the functions of forwarding proxy materials, collecting voting instructions, voting shares, soliciting proxies, tabulating proxies, and analyzing proxy issues. Different aspects of this complex system have attracted years-long policy debates regarding proxy reform. <4. Regulatory and Risk Mitigation Frameworks> The asset management industry's legislative history is relatively long and complex. The current regulatory regime governing the asset management industry was not a comprehensive design from inception, but rather developed through many iterations of adjustments and expansions. Therefore, the asset management industry is overseen by a somewhat fragmented regulatory regime with areas of disconnect between business practices and the legal definitions describing them. Congress created the SEC during the Great Depression to restore public confidence in the U.S. capital markets. Early policymaking in the 1930s focused on full disclosure, with the specific intention that publicly traded companies tell the whole truth about any material issues pertaining to their securities and the risks associated with investing in them. However, Congress realized that the disclosure-based approach alone was not enough to deter fraudulent and abusive activities in the asset management industry, which flourished in the 1920s and 1930s. Congress thus directed the SEC to conduct a 1 -year study of the issue in the Public Utility Holding Company Act of 1935. The SEC took four years, resulting in a four-part study with six additional supplemental reports. Based on the SEC research and subsequent hearings, in 1940, Congress introduced two new laws to govern the asset management industry the Investment Company Act of 1940 and the Investment Advisers Act of 1940. These statutes and regulations required those who manage and distribute funds to treat investors fairly and honestly. The textbox below describes the individual laws, which generally apply to the asset management industry as follows: Asset management companies must comply with the Investment Company Act of 1940 or gain exemption from its requirements. Funds' portfolio managers or investment advisers generally must register with the SEC under the Investment Advisers Act of 1940. The funds themselves are securities, and thus subject to federal securities regulation in relation to securities offering and trading, including the Securities Act of 1933 and the Securities Exchange Act of 1934. <4.1. Asset Management Risks and Regulation Compared With Banking> After the 2007-2009 financial crisis, Congress directed more attention toward financial services sector risks and policy solutions. In some congressional discussions, risks in the banking and asset management industries were jointly debated. Although similarities exist between the two industries' financial risks, there are fundamental differences. These differences are derived from the industries' different business models, risk controls, and risk mitigation backstops. <4.1.1. Agent-Based Versus Principal-Based Models> The asset management framework is an agent-based model that separates investment management functions from investment ownership. This is different from the principal-based model for banking, in which banks own and retain the assets and risks. In many ways, asset managers are viewed as agents that perform investment management services. They are compensated through service or performance fees, but otherwise they are insulated from the investment returns or their clients' account losses. Because their clients' assets are not owned by the funds, asset managers routinely exit the market without significant market impact. Even when under market stress, the risks associated with asset managers winding down differ greatly from those associated with bank liquidations. Whereas bank failures may lead to government financial intervention for either recovery or resolution, asset managers do not own or guarantee client assets. Their clients bear investment performance risks and can directly transfer assets out of failing asset management firms. With that said, macro-prudential tools for detecting and mitigating systemic risks in the banking sector have been considered for asset management firms. For example, the Dodd-Frank Act mandated the SEC implement annual stress testing for certain asset managers. <4.2. Disclosure Requirements> Disclosure requirements are the cornerstone of securities regulation. The purposes of and requirements for disclosure differ for public and private funds. Public funds normally provide public disclosures to inform investors. Private funds normally provide SEC-only disclosures that allow the agency to monitor risks and inform policy, while maintaining confidentiality. <4.2.1. Public Disclosure> Public disclosures allow the public to make informed judgments about whether to invest in specific funds by ensuring that investors receive significant information on the funds. The disclosure-based regulatory philosophy is consistent with Supreme Court Justice Louis Brandeis's famous dictum that "sunlight is said to be the best of disinfectants; electric light the most efficient policeman." Public disclosures, including mutual fund and ETF prospectuses, are available for free from the SEC public disclosure portal. SEC-registered investment advisers, for example, are also required to publicly report their business operations and certain disciplinary events. <4.2.2. Nonpublic SEC-only Disclosure> A number of SEC-only reporting requirements apply to public and private funds and their advisers. The private disclosures are often for purposes of regulatory review, risk monitoring, and policymaking. The SEC normally does not make information that identifies any particular registrant publicly available, although it can release certain information in aggregate and use the information in enforcement actions. Examples of private disclosure include public fund liquidity position reporting and periodic reporting of private funds by SEC-registered investment advisers pursuant to Dodd-Frank Act requirements. <4.3. Investor Access Restrictions> Public funds are open to all investors, but private funds' investor access is restricted by several intersecting federal laws that govern different regulatory requirements for securities offerings, investment management companies, and investment advisers. Only those investors who meet certain definitions can invest in private funds without triggering related regulatory requirements. Funds can avoid additional regulatory requirements by adhering to restrictions on the types of investors permitted to invest in the fund; some examples follows: Accredited investor if a fund's investors meet the definition, such a fund could qualify for private securities exemption. Qualified client if a fund's investors meet the definition, the fund manager could receive performance-based compensation. Qualified purchaser if a fund's investors meet the definition, the fund could be exempted from registering as an investment company. Most private funds choose to comply with investor definitions to preserve their scaled-down regulatory requirements relative to public funds. The specifics of the investor access definitions, especially the accredited investor definition, have been a source of policy debate. <4.4. Examinations> The SEC's Office of Compliance Inspections and Examinations (OCIE) is responsible for conducting examinations and certain other risk oversight of the asset management industry. In addition, self-regulatory agencies, such as FINRA, also conduct examinations of their members under SEC oversight. OCIE examinations focus on compliance, fraud, risk monitoring, and informing policymaking. OCIE has 1,000 employees in 11 regional offices and headquarters. Approximately 10,000 mutual funds and ETFs, 13,200 investment advisers, and 3,800 broker-dealers, among other regulated entities are subject to potential examinations. The OCIE completed more than 3,000 examinations in fiscal year 2018. <4.5. Securities Investor Protection Corporation> The federal government does not guarantee or insure the value and performance of investment management accounts. As the common investment disclaimer "past performance is no guarantee of future results" suggests, due to unpredictable market fluctuations, capital markets investors could experience underperformance or lose their principal. Investors should be prepared to absorb their own losses. When a capital markets firm fails, certain losses could possibly receive limited payouts for investors from the Securities Investor Protection Corporation (SIPC). However, the nature and the level of payouts are different than those associated with the banking insurer Federal Deposit Insurance Corporation (FDIC). SIPC is a nongovernment nonprofit corporation created by the Securities Investor Protection Act. It insures up to $500,000 of cash and securities (with a $250,000 limit for cash) in brokerage accounts to protect customers against cash and securities losses if their brokerage firm fails. SIPC only protects the custody function of the broker-dealers, which means it works to restore any assets missing from customers' accounts but it does not protect the principal against the decline in market value of investments. The FDIC, in contrast, is a government organization that insures up to $250,000 of deposits, including principal, in banks and thrift institutions when these institutions fail. <4.6. Risk Mitigation Controls> The asset management industry faces a number of risks. Some of them are inherent in the industry's agent-based business model whereas others are more common to financial services institutions. This section lays out examples of the risk factors and attendant mitigation controls to help policymakers better comprehend the rationale behind the regulatory requirements. This section also contains a summary table ( Table 3 ) providing context on how certain existing regulations fit into risk mitigation policy goals. <4.6.1. Conflict of Interest> Context : Conflicts of interest may occur in any principal-agent paradigm within which one entity (agent) makes decisions on behalf of another entity (principal). In the context of asset management industry client relationships, the central concern is that asset managers (agents) may not act in the best interest of investors (principals). An example of a conflict of interest would be an investment adviser directing clients' investments toward products that generate higher sales commissions, rather than products that best fit the clients' financial needs. Example s of mitigation controls : SEC-registered investment advisers are fiduciaries, meaning they have a legal obligation to act in the best interest of their clients. FINRA also casts a similar, yet less rigorous suitability requirement for broker-dealers. The standard requires broker-dealers to make investment recommendations to suit client financial needs. In addition, the SEC adopted Regulation Best Interest in June 2019 to address certain conflict of interest concerns in financial advisory services. The proposal aims to further prevent financial advisers from placing their own financial or other interests ahead of the best interest of their clients. <4.6.2. Liquidity> Context : Liquidity, as mentioned previously, is commonly defined as the ease of buying or selling assets without affecting their prices. The easier the assets are to sell, the higher their liquidity. The liquidity issue could be especially important during market distress, when factors like cash needs and exceptional volatility in asset valuations could drive panic reactions in the market. Different funds have different types of liquidity risk concerns. Mutual funds that allow investors to redeem their shares daily need to maintain sufficient liquid assets to meet shareholder redemptions and minimize the impact of the redemptions on the funds' remaining shareholders. Private funds present different concerns because, in most cases, their investors enter into illiquid investments knowing that they could experience several years of holding periods. Private funds generally do not promise daily redemption, and investors in private funds cannot easily sell their positions to meet urgent cash needs. Example s of mitigation controls : Funds that offer frequent redemption as a product feature must maintain liquid assets to meet potential redemptions. Under the SEC liquidity rule, such funds must categorize their investments into four different types and limit their illiquid investments to no more than 15% of the funds' net assets. <4.6.3. Leverage> Context : Leverage generally refers to the use of borrowed funding to invest, which may multiply risks and returns. High leverage could complicate funds' investment structures and increase risks to both individual investors and the financial system as a whole, due to its effects in multiplying both losses and returns. Examples of mitigation controls: Mutual funds and closed-end funds are subject to a 300% asset coverage requirement. This is a leverage ratio of 33%, meaning the fund cannot borrow an amount exceeding a third of its portfolio size. By contrast, most private funds do not have leverage restrictions. <4.6.4. Operational Risks> Context : Operational risks arise from operational challenges and business transaction issues. Operational risks are especially important for the asset management industry because the industry manages client accounts. Accurate client account recordkeeping and transfer, asset safeguards, information sharing, and cybersecurity are some areas of operational importance. Examples of mitigation controls: The SEC's custody rule requires registered investment advisers to engage qualified custodians to (1) have possession and control of assets, (2) undergo annual surprise examinations, (3) have a qualified custodian maintaining client assets, and (4) send account statements directly to the clients instead of to funds, among other requirements. <5. Recent Trends> Over the past several decades, the asset-management industry has undergone several changes that may have important implications for public policy. This section discusses a number of these changes, including (1) the industry's overall growth; (2) increased reliance on capital markets for financing rather than bank loans by American businesses; (3) a shift from active to passive investment style; and (4) the expansion of private securities markets. <5.1. The Asset-Management Industry's Growth> In the past two decades, the asset-management industry has grown significantly because of increased use of defined-contribution retirement plans, asset appreciation, and changes in investment styles and preferences, among other things (see Figure 1 and Figure 2 ). Over the past 70 years, investors have largely shifted from investing directly themselves to investing indirectly through asset managers. For example, in the 1940s, almost all corporate equities were held by households and nonprofits, whereas in 2017, direct holdings by individuals made up less than 40% of total holdings. Some argue that the percentage of equity directly held by individuals could be closer to 20%. As a result of these changes, asset managers now dominate the investment decisionmaking on behalf of retail investors and other institutions. Their influence on both investors and the companies they invest in has expanded. <5.2. Capital Market Financing Outpaces Bank Lending> The importance of the asset-management industry has also increased because of changes in the relative importance of the capital markets and banks. Specifically, growth in capital markets financing (i.e., the issuance of bonds and other debt securities) significantly outpaced growth in bank loans ( Figure 4 ). This general trend has increased the relative importance of asset managers, who represent major holders of such bonds and debt securities. For example, mutual funds and ETFs held about 21% of all U.S. corporate bonds in 2018, more than double their percentage of such holdings in 2009. The International Monetary Fund (IMF) has observed that this shift may be attributable to tighter banking regulation, rising compliance costs, and bank deleveraging following the 2007-2009 financial crisis. As Figure 4 illustrates, U.S. capital markets play a much more dominant role in business financing relative to the Euro area. <5.3. Active to Passive Investment Style Shift> The asset-management industry has also witnessed a trend away from active and toward passive management, whereby asset managers do not actively select funds' portfolio assets, instead pegging investments to an index, such as the S&P 500. In recent years, passive investment through index mutual funds and ETFs has displaced active investment ( Figure 5 ). This trend has mostly been driven by passive funds' lower costs through management fee savings and superior performance. According to a 2016 S&P Global study, for example, active stock managers underperformed their passive-fund targets more than 80% of the time over 1-year, 5-year, and 10-year periods. The rise of passive investing has generated criticism from active asset managers. Some active managers are concerned that the growth of passive investing will undermine price discovery through reduced fundamental research by active asset managers. They argue this could create systemic risk concerns through correlations and volatility, affecting the efficient allocation of capital. Regarding financial stability, a recent Federal Reserve whitepaper concludes that the shift from active to passive investment has probably reduced liquidity transformation risks while amplifying market volatility and asset management industry concentration. Finally, some argued that actively managed funds perform better than passive strategies when markets are less efficient. If this argument is true, then actively managed funds may be able to capitalize on market inefficiencies caused by growth in passive investment, enabling continued growth in active management as well. <5.4. Private Securities Offerings Outpace Public Offerings> The asset-management industry has also taken on increased importance because of a significant rise in the volume of private securities offerings. Because many asset managers purchase large volumes of private securities, this shift has led the asset-management industry to occupy an increasingly central role in U.S. financial markets. In 2018, American companies raised roughly $2.9 trillion through private offerings more than double the size of public offerings that year. The increase in the volume of private securities offerings has also attracted the attention of policymakers, some of whom have proposed measures to increase investor access to private securities markets. For example, a type of closed-end fund, referred to as an interval fund, can conduct periodic repurchases generally every 3, 6, or 12 months. Because of the longer intervals, these funds are better able to involve less liquid assets such as private securities. In a 2017 report, the Treasury recommended the SEC review the rules governing interval funds. The SEC also explored the potential of interval funds in its 2019 concept release regarding private securities markets. <6. Policy Issues> The increased importance of the asset-management industry raises a variety of policy issues. This section discusses several of these issues, including financial stability, investor protection, and financial innovation. <6.1. Financial Stability> Financial stability typically refers to the ability of the financial system to withstand economic shocks and satisfy its basic functions: financial intermediation, risk management, and capital allocation. Policymakers attempting to safeguard financial stability generally focus on the minimization of s ystemic risk the risk that the entire financial system will cease to perform these functions. Former Federal Reserve Governor Daniel Tarullo has identified four possible sources of systemic risk: Domino or spillover effects when one firm's failure imposes debilitating losses on its counterparties. Feedback loops when fire sales of assets depress market prices, thereby imposing losses on all investors holding the same asset class. Contagion effects a run in which investors suddenly withdraw their funds from a class of institutions or assets. Disruptions to critical functions when a market can no longer operate because of a breakdown in market infrastructure. According to an international financial organization, the Financial Stability Board, asset-management companies did not display particularly large financial stability concerns during the 2007-2009 financial crisis, with the exception of money market mutual funds (MMFs). This is a result of the fact that asset managers are generally agents who provide investment services to clients rather than principals who invest for themselves. They manage large amounts of assets, but do not have direct ownership of them. As such, asset managers are largely insulated from client account losses. This does not mean that the industry is free of financial stability concerns. Actual market events show that even perceived-to-be-safe funds could trigger financial system instability. For example, the money market mutual fund industry triggered market disruptions in 2008 and accelerated the 2007-2009 financial crisis. Before that, hedge fund Long-Term Capital Management's failure in 1998 also demonstrated that the transmission of risks from one event can broadly affect the functioning of the financial system. The Financial Stability Board identified several asset management structural vulnerabilities that could present financial stability risks. These vulnerabilities include liquidity mismatch, leverage within investment funds, operational risk and challenges under stressed conditions, and certain lending activities of asset managers and funds. This section uses three examples money market mutual funds, ETFs, and leveraged lending to illustrate the context of selected asset management structural vulnerabilities and the extent to which these vulnerabilities could cause financial stability concerns. <6.1.1. Money Market Mutual Funds139> Money market mutual funds (MMFs) represent one corner of the asset-management industry that has generated systemic-risk issues. MMFs are mutual funds that invest in short-term debt securities, such as U.S. Treasury bills or commercial paper (a type of corporate debt). Because MMFs invest in high-quality, short-term debt securities, investors generally regard them as safe alternatives to bank deposits even though they are not federally insured like bank deposits. Like the shares of other mutual funds, MMF shares are generally redeemed at net asset value (NAV), meaning investors sell shares back to a fund at a per share value of the fund's assets minus its liabilities. Some MMFs, however, operate somewhat differently than most other mutual funds. Specifically, some MMFs aim to keep a stable NAV at $1.00 per share, paying dividends as their value rises and thereby even more closely mimicking the features of bank deposits. If its stable NAV drops below $1.00, which rarely occurs, it is said that the MMF "broke the buck." On September 15, 2008, Lehman Brothers Holdings Inc. filed for bankruptcy . The next day, one MMF, the Reserve Primary Fund, broke the buck when its shares fell to 97 cents after writing off the debt issued by Lehman Brothers. This event triggered an array of market reactions and accelerated the 2007-2009 financial crisis. Ultimately the Treasury Department intervened with an emergency guarantee program for MMFs as one of the ways to address the crises. MMFs thus became a known financial stability concern, demonstrating clearly that they are susceptible to sudden large redemptions (runs) that can cause dislocation in short-term funding markets. MMFs are vulnerable to runs because shareholders have an incentive to redeem their shares before others do when there is a perception that the fund could suffer a loss. To address this concern, the SEC promulgated MMF rules in 2010 and 2014 mandating that institutional municipal and institutional prime MMFs float their NAV from stable value. The SEC also provided new tools to the MMFs' boards, allowing them to impose fees and redemption gates to discourage runs. Policy discussions continued after the 2014 revisions, especially about whether the MMFs' NAV should be floating or stable, generating controversy and attracting congressional interest. For example, the Consumer Financial Choice and Capital Markets Protection Act of 2019 (S. 733) would require the SEC to reverse the floating NAV back to a stable NAV for the affected MMFs. A floating NAV reflects more closely the actual market value of the fund. Proponents believe the floating NAV could (1) reduces investors' incentive in distressed markets to run because of the difference between stable value and the actual market value; (2) allows investors to understand price movements and market fluctuations, and (3) removes the implicit guarantee of zero investor losses through stable value that could lead to unrealistic expectations of safety. Opponents believe that floating NAV does not solve the issue of investors fleeing. For example, one academic research article concludes that European MMFs that offer similar structures to floating NAV did not experience significant reduction in run propensity during market distress. In addition, providing floating NAV requires calculation time and more tax, accounting, and disclosure related business model changes. Opponents also point to the volume decline of affected MMFs since the reform as an example of a shrinking MMF market that may create working capital shortages for business and municipal operations. Others argue that because the MMF reform has been fully implemented since October 2016, it makes sense to study the actual effectiveness and impact of the reform before considering changes. <6.1.2. Exchange-Traded Funds> Some commentators have also argued that ETFs raise certain systemic-risk concerns. The vast majority of all ETF assets are passively managed or index-based; thus investors often view the high growth in ETFs as one of the driving forces behind the passive investment trend the report discusses in the previous section. With U.S. ETFs accounting for more than $3.4 trillion in assets under management and 30% of all U.S. equity trading volume in 2018, ETFs' scale and continued growth give rise to financial stability considerations. The key systemic-risk issue surrounding certain ETFs involves liquidity mismatch . Liquidity mismatch generally points to a relatively complex ETF operational structure that offers buying and selling activities at both the fund level and the portfolio asset level. If the amount of liquidity differs between the two levels, for example, if the ETF shares trade differently than the underlying portfolio ETF holdings of stocks or other assets, there could be a liquidity mismatch. Some argue this liquidity mismatch could amplify market distress and potentially trigger fire sales that further depress asset prices and worsen market conditions. In contrast, others have argued that liquidity provision through the ETF structure is additive, meaning an ETF's liquidity is at least as great as that of its underlying assets. Other commentators have argued that not all ETFs are created equal. The majority of ETFs are "plain-vanilla" index-tracking products that are considered lower risk. However, there is also a growing subset of complex, higher-risk ETFs that is a source of greater concern. To add to the confusion, the industry does not currently have a consistent naming convention to clearly differentiate between the types of products that are higher risk. On September 26, 2019, the SEC established a comprehensive listing standard for ETFs only. Prior to that, prospective ETF issuers typically must have been approved by the SEC under an exemption to the Investment Company Act. The new ETF approval process replaces individual exemptive orders with a single rule for plain-vanilla ETFs. The approach excludes certain higher-risk ETFs and mandates new disclosures and other conditions on index-based and actively managed ETFs. <6.1.3. Leveraged Lending> Leveraged lending, also referred to as leveraged loans, is financing made to below investment grade companies (i.e., companies with a credit rating below BBB-/Baa3), which tend to be highly indebted. Leveraged lending received its name because of the recipients' high-debt-to-earnings leverage. Most leveraged loans are syndicated, meaning that a group of bank or nonbank lenders, including asset managers, collectively funds a single borrower, in contrast to a traditional loan held by a single bank. Some regulators consider syndicated loans to be an emerging regulatory gray area that is not fully overseen by either banking or securities regulators. Leveraged loans generally present higher risks than other forms of lending because they involve riskier borrowers and often feature relatively weak investor safeguards (indicated by a weak "covenant") and relatively weak capabilities for loan repayment, indicated by high ratios of debt to earnings before interest, tax, depreciation and amortization (EBITDA). During the past decade, the U.S. leveraged loan market experienced rapid growth, deteriorating credit quality, and decreased repayment capabilities ( Table 4 ). However, the total amount of leveraged loans outstanding remained relatively low at around $1 trillion as of 2018. Nonbanks make up around 90% of the leveraged loan primary market investor base as of 2017. Mutual funds and hedge funds held 21% and 5% of leveraged loans in 2017 respectively, with mutual funds' share of the market more than doubling between 2006 and 2017. In addition, nearly 60% of U.S. leveraged loans are packaged into a type of structured credit called a collateralized loan obligation (CLO). CLOs are then sold to institutional investors, including asset managers, banks, and others, with the asset management industry holding the riskier CLO tranches and banks holding the higher-quality tranches. Mutual funds and other investment vehicles hold more than 20% of CLOs. Multiple financial regulators and Members of Congress have voiced concerns about leveraged loans' risks and implications for financial stability. However, other commentators have argued that leveraged loans are resilient and stable, claiming unwarranted fears. Leveraged lending raises a variety of policy issues, including the following: Market o pacity . Leveraged lending, particularly the increase of covenant-lite loans, couples high risk with relative lack of transparency, potentially leading to unexpectedly high losses and shocks to the financial system ( Table 4 ). It is unclear, as discussed below, the degree to which contagion across the financial system would result from this. Liquidity mismatch. Public funds expect easy entry and exit through daily redemption or intraday trading, whereas leveraged loans, which could serve as underlying assets to funds, trade infrequently and take longer to settle. These features of leveraged loans have prompted the Chairman of the SEC to caution that investors should be aware of their relative illiquidity. The loan syndication process and federal oversight. Leveraged loans are usually syndicated by groups of institutional investors, including asset managers. Some regulators and researchers worry that certain leveraged loans are less regulated than other financial products like bonds and bank loans. Contagion risk . Given the leveraged loan market's size and investor composition, some experts have argued that leveraged lending raises concerns about financial contagion. However, most investors in leveraged loans are nonbanks, with the asset management industry holding a significant portion of total outstanding exposure. As a result, some commentators have argued that direct financial losses from leveraged loans would largely stop at the investor level, instead of being multiplied throughout the interconnected financial system by banks. The Chairman of the Federal Reserve, for example, has indicated that while leveraged loans raise some concerns, they "do[es] not appear to present notable risks to financial stability." Data gap. Some analysts have argued that the lack of available information through data collection and sharing on CLO holdings has prevented the industry and the regulators from monitoring risks in the leveraged lending market. <6.2. Investor Protection> Investor protections attempt to prevent investors from being harmed due to inappropriate risk exposure, conflicts of interest, or abusive conduct. This section discusses certain policy debates concerning investors' access to private funds, fund disclosures, and asset managers' voting of clients' stocks. <6.2.1. Defining Accredited Investors173> Some private funds are limited to "accredited investors" a limitation that has generated debate about which categories of investors should be eligible for this status. An individual can qualify as an accredited investor if he or she (1) earned more than $200,000 (or $300,000 together with a spouse) in annual gross income during each of the prior two years and can reasonably be expected to earn a gross income above that threshold in the current year, or (2) has a net worth of more than $1 million (either alone or together with a spouse), excluding the value of their primary residence. Institutions can also qualify as accredited investors if they own more than $5 million in assets. A number of regulated entities, such as banks, insurance companies, and registered investment companies, automatically qualify as accredited investors. Some commentators have criticized the SEC's existing rules for determining accredited investor status, arguing that income and net-worth criteria bear little relationship to investor sophistication. These critics contend that the current accredited investor definition is both over- and under-inclusive, capturing wealthy but unsophisticated investors while excluding those who are well-informed but less affluent. In addition, given the trend of private securities offerings outpacing public offerings, some observers are concerned about ensuring equal access to investment opportunities and the diversification benefits from allocating capital across the full spectrum of public and private securities and funds. Commentators have accordingly discussed expanding the accredited investor definition to (1) account for individuals with financial training or demonstrated financial experience, (2) allow investors to opt-in to private market investment opportunities, or (3) expand the eligible accredited investor base in other ways, subject to certain limitations. <6.2.2. Voting of Proxy Shares> Proxy voting represents another issue involving investor protection that has taken on increased significance. Asset managers have fiduciary duties to vote the proxies of their public company voting shares on their clients' behalf. Some asset managers outsource proxy voting and research to proxy advisory firms, whereas others operate these functions in-house. Commentators have identified a number of policy issues involving the proxy system, including (1) stewardship whether asset managers and proxy advisory firms are in fact voting in their clients' best interests; and (2) accuracy whether the actual votes are tabulated correctly. These topics are critically important because proxy voting can often decide the strategic directions of publicly traded companies. To address these issues, the SEC issued a concept release soliciting public feedback on the proxy system in 2010. The SEC has also held multiple roundtables to discuss the proxy process, most recently in November 2018. <6.2.3. Fund Disclosure> Ensuring full and fair disclosure of material information is a key objective of the federal securities laws. To promote these goals, the SEC has implemented a series of initiatives to improve the investor experience by updating the design, delivery, and content of fund disclosure. For example, after longstanding policy debate, the SEC adopted Rule 30e-3 in June 2018 to allow certain investment funds to transmit shareholder reports digitally as the default option. Supporters of this rule point to its environmental and economic benefits, including its estimated $2 billion savings over a 10-year period. In contrast, the rule's opponents have voiced concerns over the usefulness of electronic reports for elderly and rural investors who may lack access to or familiarity with the Internet. The SEC continues to seek public input on the fund disclosure and retail investor experience, including shareholder reports, prospectuses, advertising, and other types of disclosure. <6.3. Financial Innovation> Financial innovation is an integral part of the asset management industry's development. Innovation raises policy and regulatory issues, including (1) whether new technologies and practices have outgrown or are sufficiently served by the existing regulatory system; (2) how the regulatory framework can achieve the goal of "same business, same risk, same regulation"; and (3) how to protect investors without hindering innovation. This section explains policy challenges involving these general issues. <6.3.1. Digital Asset Custody> Digital-asset custody has recently attracted regulatory attention. Under the SEC's Custody Rule, custodians of client assets must abide by certain requirements designed to protect client funds from the possibility of being lost or misappropriated. This rule was developed for the traditional asset management industry that dealt in instruments with more tangible tracks of physical existence and recording, and thus could pose unique challenges for digital assets often without tangible representation. For example, the digital asset industry's common practice thus far focuses on the safeguarding of private keys. Private keys are unique numbers assigned mathematically to digital asset transactions to confirm ownership, raising questions about the nature of "possession" and "control" of a digital asset. A March 2019 letter from the SEC to the digital asset industry solicited public input regarding the custody of digital assets. In the letter, the SEC summarized a number of policy issues involving the custody of digital assets, including the use of distributed ledger technology (DLT) to record ownership, the use of public and private cryptographic key pairings to transfer digital assets, the ability to restore or recover lost digital assets, the generally anonymous nature of DLT transactions, and the challenges auditors face in examining DLT and digital assets. Congressional hearings have also addressed the issue of digital asset custody. <6.3.2. Nonfinancial Technology Platforms> A second recent development in financial technology that raises important policy questions involves the entry of nonfinancial technology platforms into the financial services industry. Large technology firms such as Amazon, Facebook, and Uber have all started financial-services operations as potential competitors and partners to the asset-management industry. Although the scale of this innovation has not been broadly felt, industry experts like the World Economic Forum predict that platforms offering the ability to engage with different financial institutions from a single channel will likely become the dominant model for the delivery of financial services. Technology firms have the potential to disrupt the asset-management industry through digital asset transactions, robo advisory services, and direct asset management product distribution to investors. Investment researchers argue that Amazon, for example, could use the trust of its brand and distribution channels to become "an arms-length distributor of funds." The influence of technology platforms has already been realized in certain overseas markets. For example, Ant Financial an affiliate of Alibaba Group manages the world's largest MMF, with 588 million Alipay users, a third of the Chinese population, among its investors. This entry of technology companies into financial services raises a number of concerns related to these companies' power, their control over user data, and personal privacy. <6.3.3. Facebook Libra's ETF-Like Characteristics> Facebook is among the technology companies that have expressed interest in entering financial services. In June 2019, the social media company announced its intention to develop a new cryptocurrency called Libra a revelation that has attracted congressional interest. At a hearing addressing the issue, several Members of Congress questioned Facebook officials about how Libra should be regulated and whether it meets the existing regulatory definition of an ETF, among other issues. Some commentators have argued that because Libra will be backed by reserve assets that certain authorized sellers can exchange for units of the cryptocurrency, its operational structure is similar to that of ETFs, which rely on a roughly comparable creation and redemption process. Although Facebook officials acknowledged that Libra uses operational mechanisms that are similar to ETFs, the company maintained that the cryptocurrency should not be considered an ETF because it is intended to operate as a payment tool rather than an investment vehicle. If Libra did qualify as an ETF, it would fall under the SEC's oversight and require regulatory approval. The SEC is reportedly evaluating whether the cryptocurrency will fall within that category. Some Members of Congress have also expressed opposition to Facebook's Libra project. Members of the House Financial Services Committee have circulated a discussion draft, the Keep Big Tech Out of Finance Act , which would prevent certain large technology firms from creating digital assets intended to be used widely as a medium of exchange, unit of account, or store of value. <7. Conclusion> The asset-management industry is large, complex, and governed by a host of intersecting federal regulations primarily overseen by the SEC. The industry has undergone a number of changes, including increases in its size, changes in the relative importance of capital markets and banks, shifts away from active and toward passive investment management, and increases in the volume of private securities offerings. Some of these trends raise important policy issues, including financial stability, investor protection, and the promotion of financial innovation. As a general matter, asset-management companies have generated fewer financial-stability concerns than some other financial institutions. This is largely because asset managers generally are agents who provide investment services rather than principals who invest for their own accounts. But it does not mean that the industry is free of financial stability risks. Specific structural vulnerabilities, for example, redemption risk and liquidity mismatch, among other vulnerabilities, could be observed in the context of certain MMFs, ETFs, and leveraged lending, but their implications are uncertain. The asset-management industry is governed by a range of investor-protection rules that raise various policy issues, including the appropriate level of investor access to certain types of funds, fund disclosure, and proxy voting. Finally, the need to balance financial innovation with investor protection has generated a number of important debates surrounding digital asset custody and the entry of technology firms into financial services. <7.1. Appendix. Related CRS Products> CRS Report R45221, Capital Markets, Securities Offerings, and Related Policy Issues , by Eva Su. CRS Report R45318, Exchange-Traded Funds (ETFs): Issues for Congress , by Eva Su. CRS Report R45308, JOBS and Investor Confidence Act (House-Amended S. 488): Capital Markets Provisions , coordinated by Eva Su. CRS Report R43413, Costs of Government Interventions in Response to the Financial Crisis: A Retrospective , by Baird Webel and Marc Labonte. CRS In Focus IF10700, Introduction to Financial Services: Systemic Risk , by Marc Labonte. CRS In Focus IF11062, Introduction to Financial Services: Capital Markets , by Eva Su. CRS In Focus IF11278, Accredited Investor Definition and Private Securities Markets , by Eva Su. CRS In Focus IF10747, Private Securities Offerings: Background and Legislation , by Eva Su. CRS In Focus IF11004, Financial Innovation: Digital Assets and Initial Coin Offerings , by Eva Su. CRS In Focus IF11256, SEC Securities Disclosure: Background and Policy Issues , by Eva Su. CRS In Focus IF11320, Money Market Mutual Funds: A Financial Stability Case Study , by Eva Su.

The asset management industry is large and complex. Asset management companies—also known as investment management companies, or asset managers—are companies that manage money for a fee with the goal of growing it for those who invest with them. The most well-known product these companies create are investment funds. Many types of investment funds exist, including mutual funds, exchange-traded funds (ETFs), hedge funds, private equity, and venture capital. Their business practices and the types of regulatory requirements to which they are subject are far from standardized. Investment funds differ by, among other things, asset risk profile, investor access, portfolio company operations, and the ease of buying or selling their shares. In addition to investment funds, the asset management industry also consists of entities that connect funds to investors and other services, such as investment advice providers and custodians. Asset managers collectively manage trillions in assets, including investment savings, of nearly half of all U.S. households. The industry has experienced periods of high growth largely attributable to retail investors' increased reliance on asset managers to invest their money for them rather than investing their own money themselves. The Securities and Exchange Commission (SEC) is the primary regulator overseeing the asset management industry. The industry is governed by a somewhat fragmented regulatory regime stemming from several different statutes. Most of the regulatory framework was created in the 1930s and 1940s, but the business practices and trends affecting the industry are evolving. Examples of this evolution include (1) the rapid growth of the industry; (2) the increasing dependency of American businesses on capital market financing; (3) the shift from active to passive investment style; and (4) the expansion of the private securities markets. Congress has shown interest in issues relating to the asset management industry. During the 116 th Congress, lawmakers have held related hearings on asset management, financial innovation, investor protection, financial stability, and leveraged lending. Three areas that have been of particular interest to many are as follows: Whether the asset management industry has any implications for financial stability in the United States. Some financial authorities state that asset management companies did not pose much concern to financial stability during the 2007-2009 financial crisis period, with the exception of money market mutual funds. This is because asset managers are generally agents who provide investment services to clients without taking direct risk of financial loss. But some argue that structural vulnerabilities do exist and could be observed in certain financial instruments. Their implications, however, are uncertain. Whether regulation of the asset management industry provides sufficient access and protection for retail investors. The investor protection concerns center on investor access restrictions, especially for private funds. Private funds are perceived to have a higher risk and return profile relative to public funds, thus leading to discussions of investor protection and equal access to investment opportunities. The impact of financial technology on the industry, and whether the current regulatory framework is adequate to address these new technologies. Financial innovation is an integral part of the asset management industry's development, and it creates policy and regulatory debates regarding the extent to which the new technologies are appropriately served by the existing regulatory regime. One of the common goals of policymaking in this area is to protect investors without hindering innovation.

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<1. Introduction> Committee investigations in the House of Representatives can serve several objectives. Most often, an investigation seeks to gather information either to review past legislation or develop future legislation, or to enable a committee to conduct oversight of another branch of government. These inquiries may be called legislative investigations because their legal authority derives implicitly from the House's general legislative power. Much more rarely, House committee investigations have been carried out to determine whether there are grounds to impeach a federal official a form of inquiry known as an impeachment investigation. An impeachment investigation has typically been one of the House's first steps in the exercise of its constitutional impeachment power, and may conclude with the investigating committee recommending articles of impeachment to the full House. While the labels "legislative investigation" and "impeachment investigation" provide some context to the objective or purpose of a House inquiry, investigations may not always fall neatly into one of these categories. To the contrary, distinguishing between legislative and impeachment investigations might sometimes be difficult, especially when an investigation focuses on alleged misconduct by an official subject to impeachment by the House. This ambiguity is reflected in the various ongoing House committee investigations concerning President Trump. On September 24, 2019, Speaker Pelosi announced that these investigations constitute an "official impeachment inquiry." While these committee investigations into allegations of presidential misconduct are proceeding, in the words of the Speaker, under the "umbrella of [an] impeachment inquiry," most appear to blend legislation, oversight, and impeachment purposes. However labeled, many of the House investigations have been hindered by refusals to comply with committee subpoenas for documents or testimony. Various legal explanations have been provided for these refusals, including that federal law prohibits the disclosure of grand jury materials to Congress, that the relevant committee subpoenas lack a required legislative purpose, and that the information sought is protected by executive privilege. These interbranch disputes over information access have raised interest in whether invocation of the impeachment power will improve the House's ability to acquire withheld information. This report addresses that question, with a focus on presidential impeachment investigations. Specifically, the report considers whether the impeachment power may strengthen the House's investigative authorities in a manner that would improve the chamber's ability to obtain information, especially through the courts. Compared to a typical legislative investigation, an impeachment investigation may be more likely to acquire certain categories of information, including grand jury materials, documents and testimony related to either the President's exercise of his exclusive constitutional powers or his conduct occurring prior to taking office, and communications covered by executive privilege. But Congress's right of access to relevant information in a more typical legislative investigation is also substantial. Thus, partly because the line between legislative and impeachment investigations is sometimes blurred, but primarily because both impeachment and legislative investigations constitute an exercise of significant constitutional power, House committees may have adequate authority and tools to obtain much of the information they seek regardless of whether they are engaged in a legislative investigation or one relying on the impeachment power. <2. What Is an Impeachment Investigation?> The Constitution provides the House with the "sole Power of Impeachment," but neither that document, federal statutes, nor House Rules define impeachment investigations. Nor have the courts asserted "any role" in addressing the impeachment power generally or impeachment investigations specifically. In fact, the Rules of Proceeding and Speech or Debate Clauses of the Constitution, along with political question doctrine, all generally prevent the courts from "questioning Congress about actions taken in the impeachment process." The manner by which the House chooses to implement its impeachment powers appears therefore to be textually and historically committed to the discretion of the House. The House, however, has adopted no explicit definition of what constitutes an impeachment investigation. Left with gleaning a definition from the various constitutional provisions governing impeachment and the House's historical practice which includes 19 impeachments (15 of which were federal judges) arising from over 90 past impeachment investigations an impeachment investigation may be defined as an investigation carried out to aid the House in its "constitutional responsibility" of determining whether "sufficient grounds" exist to charge an impeachable official ("[t]he President, Vice President and all civil Officers of the United States" ) with an impeachable offense ("[t]reason, Bribery, or other high Crimes and Misdemeanors" ). Nor has the House established a single, uniform approach to starting impeachment investigations. Instead, the process has evolved, generally along with changes to the House's committee structure and the investigative authorities with which those committees have been vested. Although impeachment investigations have often been authorized by a resolution of the House, there have also been impeachment investigations conducted (and articles of impeachment recommended by the Judiciary Committee and approved by the House) without an explicit authorization. For example, the House explicitly directed the Judiciary Committee to "investigate fully and completely whether sufficient grounds exist for the House" to impeach President Clinton, but in the1980s provided no authorization for investigations into allegations of impeachable conduct against Judges Walter Nixon, Alcee Hastings, and Harry E. Claiborne, who were ultimately impeached by the House. There are still other examples in which a resolution of authorization was provided only after a committee had engaged in a "preliminary" impeachment investigation. For example, although the House eventually authorized the impeachment investigation of President Nixon, the Judiciary Committee began the "preliminary phases of an inquiry into possible impeachment" months earlier. The somewhat inconsistent House practice on the use of authorizing resolutions may be due to any number of practical, procedural, or political factors. For example, at least until the second half of the 20th century, an authorizing resolution from the House was often a practical necessity for an effective impeachment investigation. This is because in the period before standing committees existed an investigating committee needed to be created and authorized. Even after standing committees were established, the House typically still needed to provide the committee with both investigative jurisdiction and compulsory investigative tools such as the power to issue a subpoena to force the disclosure of information. Indeed, although the House often adopted resolutions providing individual committees with limited subpoena powers following the Legislative Reorganization Act of 1946, it was not until 1975 that the House granted its committees standing investigative and subpoena powers under House Rules. Even after 1975, there was still practical value in authorizing resolutions, which typically provided the investigating committee with additional investigative tools beyond what the committee may have otherwise possessed, such as the ability to conduct staff depositions or issue written interrogatories. Thus, for a good portion of the House's history, authorizing resolutions were generally needed to give a committee the tools necessary to carry out an effective and expeditious investigation. Use of an authorizing resolution has also provided the House with the opportunity to assert control over the scope, direction, and conduct of a committee's impeachment investigation. <2.1. The House, Its Committees, and the Delegation of Investigative Powers> Along with the practical explanations discussed above, it is also possible that the different approaches to initiating impeachment investigations reflect different conceptions of the House's impeachment power and the derivative authority that may be conferred to its committees to carry out investigations ancillary to that power. The nature of this power is perhaps best explored in relation to the House's well-established authority to conduct legislative investigations. These investigations are carried out under the House's implied constitutional authority to investigate in "aid of the legislative function." While there are various "legislative functions" that an investigation may fulfill, the prototypical legislative investigation of the executive branch is carried out so that Congress can either inform itself for purposes of lawmaking or conduct oversight of those charged with the "faithful" execution of the law. This familiar exercise of investigative power, though not explicitly enumerated in the Constitution, is so essential to the functioning of a legislature as to be implicit in the "legislative powers" vested in Congress by Article I, 1 of the Constitution. These investigations play a vital role in the constitutional system, as they are intimately and directly tied to Congress's power to legislate. Because "a legislative body cannot legislate wisely or effectively in the absence of information respecting the conditions which the legislation is intended to affect or change," impairment of Congress's authority to gather information leads to the impairment of Congress's core function of legislating. The necessity and importance of legislative investigations are also reflected in the statutory requirement that all committees "exercise continuous watchfulness" over the executive branch's implementation of law and the directive under House Rule X that standing committees "review and study on a continuing basis" the administration of law, the operation of agencies, and "any conditions or circumstances that may indicate the necessity or desirability of" new legislation. House Rules further provide that committees have "general oversight responsibilities" that are generally to be used "to assist the House in its" legislative tasks. To carry out these requirements, the House has extensively delegated investigative powers and tools to its committees to aid the chamber in its traditional legislative functions. Under House Rules, a standing House committee may conduct "such investigations and studies as it considers necessary or appropriate in the exercise of its responsibilities"; hold hearings; take staff depositions; and "require, by subpoena the attendance and testimony of such witnesses and the production of such records as it considers necessary." But by the terms of the delegation, and because committees are creatures of their parent chamber, use of the provided compulsory investigative tools extends only to "subjects within the jurisdiction of a committee" and "for the purposes of carrying" out any of its enumerated "functions and duties." The precise constitutional source (or sources) for impeachment investigations, and the subsequent delegation of investigatory impeachment authority to House committees, is less clear. It would appear that the legal basis for these investigations could be viewed in various ways with each interpretation leading to slightly different roles for both the House and any investigating committee. First, impeachment investigations could be seen as another form of the traditional legislative investigation. Rather than assisting the House for the purpose of lawmaking or oversight, the investigation is made to "aid" the House in a different "legislative function" impeachment. Under this conception, the House holds one broad-based power of inquiry, and if any distinction between legislative and impeachment investigations exists, it is not one of constitutional source of authority, but one based on purpose. If impeachment investigations are an extension of the House's traditional power of inquiry, and therefore derive from the same source as legislative investigations, it would appear that a committee would be free to use its existing investigative authorities, within the jurisdiction delegated to the committee, to assist the House in carrying out the function of impeachment. Under this view, no additional authorization or delegation from the House would be necessary to conduct an impeachment investigation (though it may be desirable if the House wished to either guide the investigation in a specific direction or provide a committee with additional authorities). But it could also be argued that impeachment investigations derive their authority not from the general legislative power, but directly and independently from the House's "sole Power of Impeachment" in Article I, 2 of the Constitution. The U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), for example, has suggested in dicta that the Impeachment Clause is the "express constitutional source" for the "investigative authority" of an "inquiry into presidential impeachment." Although investigations are not explicitly mentioned in Article I, 2, or any of the other impeachment-related clauses, the power to impeach must by necessity include the power to investigate allegations of impeachable conduct. Under this conception, the authority to investigate for impeachment is either implicit in the impeachment power itself, or "necessary and proper to carrying into execution" that power, but in either case is a power that is constitutionally independent of Congress's general power to conduct legislative investigations. If impeachment investigations derive their authority not from the general legislative power, but independently from the House's exclusive impeachment power, it has been argued that some form of additional authorization or delegation may then generally be necessary to transfer that power from the House to its committees since current House Rules are "silent on the issue of impeachment." Committees are "representatives of the parent assembly" and have only the power to inquire into matters that are within the scope of the authority delegated to them by the House. It is that delegation, whether in the form of a free-standing resolution or under House Rules, that is "the controlling charter of the committee's powers." Thus, under the independent power conception, it could be argued that if a committee is going to exercise impeachment powers provided "sole[ly]" to the House, including the "investigative powers that are ancillary" to impeachment, it needs to do so with some adequate authorization or delegation from the House a delegation that the current House Rules have not explicitly made. The argument does not appear to be that the Constitution's impeachment provisions directly require authorization of an impeachment investigation, but rather that as a matter of House Rules and the established relationship between the House and its committees, a House committee can exercise the investigative powers of impeachment only if that authority has been delegated to it by the parent body. Whatever the merits of this interpretation, it would appear to be in tension with those House precedents in which impeachment investigations were undertaken without House authorization, and in conflict with the House General Counsel's current litigating position in multiple cases. In sum, there is neither a clear definition in law or House Rules of what constitutes an impeachment investigation, nor a clearly established House process for how such an investigation is to be initiated. As a result, it would appear that the House has many choices in how it executes an impeachment investigation. House leadership appears to take the view that a specific authorization of an impeachment inquiry is not constitutionally necessary for committees to engage in an impeachment investigation of the President. On the other hand, some might argue that adopting an authorizing resolution is required or even if not legally necessary useful because it provides the House with the opportunity to empower and direct a committee's impeachment investigation, while also providing a clear and forceful imprimatur of the House's support for that inquiry. <2.1.1. The Question of Authorization in the Current House Impeachment Inquiry> In the House's ongoing investigations of President Trump, no committee has received the type of explicit and direct authorization ultimately provided in the Clinton and Nixon investigations. Nevertheless, even if one were to accept for purposes of argument that authorization is a prerequisite to a committee engaging in an impeachment investigation, it could be argued that the House recently provided this authorization, at least for wielding the powers of impeachment in court. In June, the House adopted H.Res. 430 , which provides that "in connection with any judicial proceeding the chair of any standing or permanent select committee exercising authority thereunder has any and all necessary authority under Article I of the Constitution." The accompanying Rules Committee report cites the Judiciary Committee's investigation into whether to recommend articles of impeachment to the House as an "example of a Committee being able to use 'all necessary authority under Article I of the Constitution.'" The White House, however, asserts that House committees are not currently engaged in an impeachment investigation absent a formal authorizing resolution from the House. But there would likely be significant challenges to pursuing this argument in litigation, particularly given the courts' historical reluctance to scrutinize the House's implementation of its own internal powers. Indeed, whether a committee is engaged in an impeachment investigation represents the unique convergence of various areas in which courts are generally reluctant to second-guess the position of the House and its committees, including the House's implementation of its "sole Power of impeachment"; the House's exclusive authority to set and interpret its own rules; and a committee's role in articulating the purpose of an investigation. According to at least one commentator, it seems likely that to obtain judicial recognition of an impeachment investigation the House need only present enough evidence to "persuade the court that its current investigation is sufficiently tied to the impeachment process." While this deferential approach to actions of the House and its committees is not absolute for example, courts sometimes have exercised their judicial powers to ensure that the committee is acting within the scope of the authority delegated to it by the parent chamber it may be reinforced in the current situation because the House General Counsel (HGC) has asserted that there is "no authority for the proposition that the House must vote to authorize the Committee to investigate impeachment." The HGC's position is important because it is overseen by the Bipartisan Legal Advocacy Group, which "articulates the institutional position of the House in all litigation matters." The D.C. Circuit has suggested that when the HGC voices an interpretation of internal House matters it must be "given great weight." That said, an explicit authorization from the House could remove any ambiguity as to the appropriate characterization of the committee investigations. But in many ways, the current focus on whether the House must authorize an impeachment investigation may lead to the misimpression that an impeachment inquiry is the only means by which Congress may investigate and acquire information concerning allegations of executive branch wrongdoing. A committee can investigate executive branch misconduct in an impeachment investigation, a legislative investigation, or some combination of both. Investigations conducted pursuant to the impeachment power may, as discussed below, provide the House with some access advantages, perhaps most significantly if executive privilege is invoked as a justification to deny congressional access to information. But an executive official, including the President, may also be the subject of a legislative investigation, and Congress's ability to access information from the executive branch in these investigations is oftentimes substantial. Accordingly, the degree to which Congress may obtain information through an impeachment inquiry that it cannot acquire in a traditional legislative investigation may not always be as significant as might first appear. Even without invocation of the impeachment power, House committees retain existing authority to investigate allegations of executive branch misconduct, including criminal activity as part of a legislative investigation. Courts have generally recognized that the power to conduct legislative investigations includes the authority to inquire into and investigate the conduct of government officials, especially when a committee is considering possible remedial legislation. As one district court recently stated, even absent any claim that an investigation is being undertaken for purposes of impeachment, committee investigations into misconduct by executive branch officials generally fit "comfortably within the broad scope of Congress's investigative powers" so long as the investigation is within the committee's jurisdiction and is carried out for a legislative purpose. Opinions of the Supreme Court reinforce this notion by holding that Congress's implied investigative power, wholly apart from impeachment, "comprehends probes into departments of the Federal Government to expose corruption, inefficiency or waste," and includes the authority to "inquire into and publicize corruption, maladministration or inefficiency in agencies of the Government." Thus, the line between an impeachment investigation and a legislative investigation into official misconduct may not only be significantly blurred, but in some instances, may also be unnecessary to draw given the tools and authority available to committees to conduct legislative investigations into executive branch misconduct. This authority includes not only the use of compulsory investigative tools like the subpoena, but also other forms of legislative leverage generally available to the House, its committees, and even individual Members. <3. Impeachment Investigations: Scope of Access to Information> Addressing the scope of the House's access to information during an impeachment inquiry requires some brief comparison of impeachment and legislative investigations. To begin, the two types of investigations have much in common: both represent exercises of the House's constitutional power; both act as essential checks on executive overreach and help ensure preservation of the separation of powers; and both are unique and consequential powers characterized by their mix of judicial, legislative, and political features. In addition, whether engaged in an impeachment or legislative investigation, the tools used to gather information are now mostly the same, especially given recent changes to the House Rules that provide committees with authority to carry out investigations in an increasingly prompt manner and without the full participation of the committee. In any investigation, a committee would likely obtain most information through requests for information, voluntary interviews, hearings, subpoenas for documents or testimony, and depositions. But the two investigations arguably contrast in a few notable ways. For example, the frequency with which each is exercised differs greatly. While the House has conducted myriad legislative investigations of the executive branch, there have been comparatively few impeachment investigations of executive branch officials. In addition, the House has previously granted the subject of an impeachment investigation certain procedural rights that are not seen in legislative investigations. For example, during both the Nixon and Clinton impeachment investigations, the House Judiciary Committee adopted resolutions affording the President and his counsel the right to respond to evidence gathered by the committee, raise objections to testimony, and cross-examine witnesses, among others. In another distinguishing feature, the Judiciary Committee's power to issue subpoenas in impeachment investigations has previously been altered in an effort to encourage "a fair, impartial and bipartisan" investigation. In both the Nixon and Clinton investigations, the power to subpoena was provided to "the chairman and the ranking minority member acting jointly, or, if either declines to act, by the other acting alone...." Even so, "[i]n the event either [the Chair or the Ranking Member] so declines," the provisions continued, "either shall have the right to refer to the committee for decision the question whether such authority shall be so exercised " Thus, in the case that the Chairman and the Ranking Member disagreed on issuing a subpoena, the question would be settled by vote of the Judiciary Committee. The functioning of the provision was described by some Members of the Judiciary Committee as "practically nullif[ying] any truly independent subpoena power for the ranking minority member ," as the Chairman's position would likely be upheld by the committee. Significantly, there may be some ways in which the House's investigative authority is either amplified or broadened during an impeachment investigation. The precise extent of any legal advantage, however, is not entirely clear. While there is a reservoir of historical and to a much more limited extent judicial precedents that can be used to analyze the House's authority to obtain information from the executive branch in traditional legislative investigations, the same cannot be said for impeachment investigations. There have been relatively few impeachment investigations of executive branch officials, and none that have been presented to the courts for resolution of constitutional questions of information access. Despite the limited historical precedent, early statements from all three branches support the House's robust and expansive right of access to information pertinent to an impeachment investigation. Since nearly its inception, the House has viewed its impeachment power as including "the right of inquiry to the fullest and most unlimited extent," and "certainly impl[ying] a right to inspect every paper and transaction in any department." Neither the executive nor judicial branches, the House has asserted, can "seek to impede the House in the exercise of its sole power to impeach." And while the Supreme Court has little to no role in reviewing the impeachment power generally, it has compared the House's right to information in an impeachment investigation to that of a court of law, stating that the House may obtain information "in the same manner and by the use of the same means, that courts of justice can in like cases." As one district court has stated about presidential impeachment investigations, [I]t should not be forgotten that we deal in a matter of the most critical moment to the Nation, an impeachment investigation involving the President of the United States. It would be difficult to conceive of a more compelling need than that of this country for an unswervingly fair inquiry based on all the pertinent information. The executive branch appears to have similarly acknowledged the breadth of impeachment investigations, although usually in the context of denying Congress's right of access in a legislative investigation. In an oft-quoted example, President James K. Polk stated that the authority of the House in an impeachment investigation "would penetrate into the most secret recesses of the Executive Department" and would include the authority to "command the attendance of any and every agent of the Government, and compel them to produce all papers, public or private, official or unofficial, and to testify on oath to all facts within their knowledge." "If the House of Representatives, as the grand inquest of the nation should think proper to institute an inquiry," Polk continued, "every facility in the power of the Executive [would] be afforded to enable them to prosecute the investigation." The need for the House to obtain access to relevant information in an impeachment investigation may also be underscored by the essential role impeachment plays in ensuring presidential accountability. For instance, given the Department of Justice's (DOJ's) position that a sitting President is not subject to indictment or criminal prosecution while in office, impeachment and removal may be one of the few available mechanisms to hold a President immediately accountable for criminal conduct. Broad access to evidence either supporting or refuting allegations of presidential misconduct could be seen as essential if the House is to exercise its "right of accusing" and if the impeachment power is to maintain its envisioned role as an "essential check" on the executive branch generally and the President specifically. While these statements and principles establish a general proposition that the House enjoys broad access to information in an impeachment investigation, this access may be subject to certain constitutional limitations that generally attach to congressional investigative activity. For example, provisions of the Bill of Rights that have been found to apply in legislative investigations, including the First Amendment, Fourth Amendment, and the Fifth Amendment's privilege against self-incrimination, may also apply in impeachment investigations. Other constitutional principles that may limit committee access to information in legislative investigations, for example considerations arising from the separation of powers such as executive privilege, may prove less of an obstacle and apply with less strength in an impeachment investigation. <3.1. Potential Investigative Advantages of an Impeachment Investigation> When examining the legal implications of impeachment investigations, and especially whether an investigation may strengthen the House's hand in any information access dispute with the executive branch, it may help to think of interbranch investigative conflicts as proceeding in two, sometimes overlapping, phases: a political phase and (in limited situations) a judicial phase. This staged approach offers a useful analytical framework for assessing the impact an impeachment investigation may have on decision making in all three branches of government. <3.1.1. Impact of the Impeachment Power on the Political Stage of an Investigative Conflict> The first phase of an investigative dispute between Congress and the executive branch is typically political in nature, in that conflicts that may arise are generally steered by political forces, with outcomes dependent upon not only each branch's evaluation of the costs and benefits of a given position, but also each branch's willingness and ability to exert either direct or indirect pressure on the other. This phase is typically characterized by a process of negotiation and accommodation, which though often guided by legal considerations is also influenced by the use of various levers of political or institutional influence. For Congress, these levers are manifold, and include, among other tools, threatened and actual restrictions on appropriations, changes to delegated executive branch authority, delay of nominations, and attempted enforcement of subpoenas through mechanisms such as criminal contempt of Congress. For the executive branch, leverage lies mainly in the fact that it possesses the information Congress seeks, and therefore delays or a continuation of the status quo may work in its favor. The vast majority of information access disputes are resolved at this political stage, typically either by the executive branch agreeing to comply with congressional demands, Congress relinquishing its request, Congress agreeing to narrow its inquiry, or through a settlement or information access agreement in which Congress is provided access under certain restrictions. Because of the nature of interbranch negotiations, and the paucity of impeachments of executive branch officials, it is difficult to assess the impact an impeachment investigation would have on the political phase of an interbranch dispute. Even so, the significance of a possible exercise of the impeachment power, along with a possible resulting increase in political and public pressure, may itself affect the executive's compliance decisions. During the Nixon impeachment investigation, the House Judiciary Committee noted that "not one" subject of the nearly 70 prior impeachment investigations "challenged the power of the committee conducting the impeachment investigation to compel the production of evidence it deemed necessary." President Andrew Johnson, for example, voluntarily provided the Judiciary Committee with sensitive information during that committee's impeachment investigation including confidential communications with advisers and information related to the use of his pardon and veto power. Presidents Nixon and Clinton also pledged cooperation with House impeachment investigations. But an impeachment investigation is not a panacea for access. Both Nixon and Clinton were later viewed by the Judiciary Committee as withholding relevant evidence. President Nixon ultimately refused to comply with numerous committee subpoenas, and President Clinton was accused of either refusing to comply with requests for written admissions or providing the Committee with false or misleading responses. The Judiciary Committee's response to the actions of President Nixon and President Clinton displays another tool of leverage that uniquely attaches to an impeachment investigation: the threat that noncompliance with committee demands for information could rapidly lead to the adoption of an article of impeachment for contempt of Congress. In a legislative investigation, the tools available to a committee to seek enforcement of a demand made to the executive branch are limited. The primary current avenue for forcing compliance with a subpoena appears to be through the judiciary in a civil enforcement action. The Senate Watergate Committee, which was engaged in a legislative investigation, pursued this avenue of enforcement when President Nixon refused to comply with that committee's subpoenas for White House tapes. The House Judiciary Committee, on the other hand, chose not to litigate enforcement of its subpoenas during its impeachment investigation of President Nixon, concluding that it would be "inappropriate to seek the aid of the courts" because the Framers had made clear by vesting the impeachment power "solely" in the House that there was not "any role for the courts in the impeachment process." Instead, the Committee obtained portions of the information it needed from other sources (including the Watergate special prosecutor and grand jury) and recommended to the House an article of impeachment based on President Nixon's failure to comply with the Committee's subpoenas. The Judiciary Committee took the same approach during the Clinton impeachment, approving and recommending to the House an article of impeachment based on the President's "refusing and failing to respond to certain written requests for admission" and for providing incomplete or "false and misleading" information to the Committee. Knowledge that a committee engaged in an impeachment investigation is poised to recommend an independent article of impeachment for failure to comply with a committee subpoena might serve as a tool of leverage during negotiations in the political phase. <3.1.2. Impact of the Impeachment Power at the Judicial Stage of an Investigative Conflict> If there is an impasse at the political phase, either the House, or in very limited circumstances the executive branch, may transition the investigation into the judicial stage by asking the federal judiciary to decide the ongoing disagreement. Because political negotiations tend to continue, resolution of the dispute at this stage may occur either as a result of political accommodations undertaken by political actors, or as a result of the application of legal principles by federal judges. Such cases usually require the courts to consider both the scope of Congress's investigatory power and any legal restrictions or privileges invoked by the executive branch. The involvement of the courts in information access disputes between the legislative and executive branches has been historically rare, but appears to have become more common in recent years, at least with respect to disagreements over House subpoenas. The traditional preference for political rather than judicial solutions seems supported by the fact that neither Congress nor the President appears to have turned to the courts to resolve an investigative dispute until the 1970s. But it is not only the political branches that have been wary of judicially declared outcomes. The courts themselves have also generally sought to avoid adjudicating investigative disputes between the executive and legislative branches, instead encouraging settlement of their differences through a political resolution.0F Consistent with that approach, lower federal courts have suggested that judicial intervention in investigative disputes "should be delayed until all possibilities for settlement have been exhausted." The courts have never resolved an interbranch subpoena dispute in an impeachment investigation. As noted, there are many reasons for this, including the infrequent occasions in which such disputes arise, the fact that the Speech or Debate clause and the political question doctrine appear constitutionally to prevent judicial review of most aspects of the impeachment power, and because the House itself has suggested that seeking judicial involvement in an impeachment investigation is inappropriate. Moreover, because impeachment is an internal House process, any exercise of the power is typically intertwined with the House's authority to set its own rules, an authority courts are reluctant to disrupt or second-guess. Thus, some evidence suggests that both the House and the courts have viewed judicial involvement in an impeachment inquiry as inappropriate or in excess of the judiciary's power. As such, any discussion of the legal impact an impeachment investigation may have on the judicial stage of an investigation is necessarily speculative. If the House were to seek judicial enforcement of a subpoena issued as part of an impeachment investigation, questions surrounding the courts' role may increase the complexity of the case. To be sure, the courts have made clear that, when necessary, they have the authority to adjudicate subpoena enforcement cases. But to the extent a court views an investigative conflict that arises during an impeachment investigation as constituting "judicial review" of the impeachment power, it could feel obligated to leave resolution of the dispute to the political branches. During the Nixon impeachment investigation, the House Judiciary Committee noted that its "determination not to seek to involve the judiciary reflected not only an intent to preserve the constitutional structure, but also the high probability that the courts would decline to rule on the merits of the case because it is nonjusticiable" under the political question doctrine. Were the court to reach this conclusion it would cut off, at least in an impeachment investigation, one of the House's principal legal mechanisms of enforcing subpoenas issued to the executive branch. In such a scenario, the House might need to find other methods of compelling compliance with its investigative demands, including perhaps through the impeachment power itself. Nevertheless, if the House took a dispute to court, and the court was willing to hear it, there appear to be at least three potential ways in which an impeachment investigation could, relative to a legislative investigation, provide the House with a stronger legal position in any attempt to use the judiciary to obtain information. All three are applicable to the current House investigations into the conduct of President Trump. An impeachment investigation may (1) improve the likelihood of a court authorizing committee access to grand jury materials; (2) relieve any possible limitations imposed by the requirement that a committee act with a "legislative purpose"; and (3) improve the likelihood that a committee will be able to overcome claims of executive privilege made in response to congressional demands. However, it is important to note that even in these areas, it is arguable that a congressional committee engaged in a legislative investigation could also obtain much of the same information, as both legislative and impeachment investigations constitute an exercise of significant constitutional authority. As a result, while an impeachment investigation may very well increase the House's access to information, House committees may have substantial authority to obtain a significant amount of information without reliance on the impeachment power. <3.1.2.1. Access To Grand Jury Materials> One area of ongoing dispute between the House and the Trump Administration is congressional access to grand jury materials. House investigations have thus far been unsuccessful in obtaining evidence and materials gathered by the grand jury empaneled for use in Special Counsel Robert Mueller's investigation of Russian interference in the 2016 election and possible obstruction of justice by President Trump. DOJ has asserted that the secrecy requirements of Rule 6(e) of the Federal Rules of Criminal Procedure prevent such a disclosure. Past precedents, however, suggest that a court would likely accord a committee engaged in an impeachment investigation access to grand jury materials. Rule 6(e) establishes a general requirement of grand jury secrecy. Under the Rule, identified persons (including attorneys for the government and grand jurors) may not disclose "a matter occurring before the grand jury" unless the disclosure fits within certain enumerated exceptions, many of which require court approval. Although there is no clear definition of what constitutes a "matter occurring before the grand jury," the rule has generally been interpreted as broadly encompassing anything that might reveal what took place in the grand jury room. None of the exceptions in Rule 6(e) explicitly permit disclosure of grand jury material to Congress in the course of an investigation. But courts have previously provided Congress with access to these materials on various grounds. Disclosure has primarily been approved to a committee engaged in an impeachment investigation through the Rule's exception permitting release of protected materials "preliminary to or in connection with a judicial proceeding." In these cases, courts appear to have viewed an impeachment trial in the Senate as a "judicial proceeding" and the impeachment investigation in the House as "preliminary" to that "judicial" trial. As summarized by a federal district court, "There can be little doubt that an impeachment trial by the Senate is a 'judicial proceeding' in every significant sense and that a House investigation preliminary to impeachment is within the scope of the Rule." These conclusions are further informed by two court opinions determining that committee legislative investigations do not meet the requirements of the judicial proceeding exception, including one in which a committee requested grand jury materials to "fulfill its oversight responsibilities." Notably however, the legislative investigations did not involve an individual official's misconduct or raise impeachment issues. Grand jury materials were disclosed to Congress during both the Nixon and Clinton impeachment inquiries, though there is ambiguity as to the legal reasoning applied by the courts in authorizing those disclosures. During the Nixon impeachment investigation, the House Judiciary Committee requested access to evidence and materials that had been presented to the court by the grand jury. Judge John Sirica of the U.S. District Court for the District of Columbia concluded that disclosure to the Committee was "eminently proper, and indeed obligatory," but his opinion did not include a detailed discussion of Rule 6(e). Judge Sirica appears to have relied on various factors in reaching his decision, including a belief that courts should "presumptively favor disclosure to those for whom the matter is a proper concern and whose need is not disputed"; the fact that the President did not object to the release; and the desire to avoid the "incredible" conclusion that "grand jury matters should lawfully be available to disbarment committees and police disciplinary investigations and yet be unavailable to the House of Representatives in a proceeding of so great import as an impeachment investigation." The D.C. Circuit affirmed in Haldeman v. Sirica by expressing "general agreement" with Judge Sirica's opinion. But it too identified no single or clear reason for permitting disclosure. Despite neither Judge Sirica's district court opinion nor the D.C. Circuit's opinion in Haldeman making any explicit holding as to impeachment and Rule 6(e)'s judicial proceeding clause, a recent D.C. Circuit decision stated that "we read Haldeman ... as fitting within the Rule 6 exception for 'judicial proceedings.' Doing so reads the case to cohere, rather than conflict, with the Supreme Court and D.C. Circuit precedents...." The D.C. Circuit also authorized Independent Counsel Ken Starr to provide the Judiciary Committee with grand jury material in connection to the Clinton impeachment. The reasoning of the judicial order, which occurred before the House had formally authorized the impeachment investigation, was perhaps even more opaque than in the earlier cases interpreting Rule 6(e)'s application to the Nixon impeachment investigation. However, the judicial order in the Clinton case appears to have been influenced by now-expired statutory requirements included in the Independent Counsel Statute (Act). Upon a motion from Starr, the Special Division of the D.C. Circuit (responsible for overseeing the jurisdiction of Independent Counsels) authorized Starr to "deliver to the House of Representatives" material he found necessary to comply with the Act's explicit requirement that he advise the House of "any substantial and credible information which such independent counsel receives that may constitute grounds for an impeachment." Although not providing any analysis, the D.C. Circuit stated that "[t]his authorization constitutes an order for purposes of" the judicial proceeding provision of Rule 6(e). While there is precedent supporting the conclusion that a committee engaged in an impeachment investigation can obtain grand jury materials, there are also ways in which a committee engaged in a legislative investigation may be able to obtain that same information. For example, two courts have authorized disclosure of grand jury materials during a legislative investigation based on a determination that Congress has a "constitutionally independent legal right" to obtain information in furtherance of "legitimate legislative activity" that either overrides Rule 6(e) or requires that the rule be interpreted in a way that does not apply its nondisclosure requirements to legitimate investigative requests of Congress. For example, in In re Grand Jury Investigation of Ven-Fuel , a Florida federal district court held that a congressional subcommittee engaged in "legitimate legislative activity" was entitled to grand jury information because it had "demonstrated [a] constitutionally independent legal right to the documents" sought. The decision was based on the court's reading of the Speech or Debate Clause, which the court interpreted as providing "the inherent, implied power to conduct legislative activity" including investigations, and upon a desire to "avert and minimize" constitutional conflict between the branches. While V en - Fuel has been subject to some judicial criticism for its interpretation of the Speech or Debate Clause, the opinion nevertheless supports the proposition that a committee engaged in legitimate legislative investigative activity has a right of access to grand jury material despite Rule 6(e). As such, while Congress is most likely to obtain access to grand jury materials as part of an impeachment investigation, there are arguments that a committee can potentially gain access to such material as part of a traditional legislative investigation. <3.1.2.2. Implications for Legislative Purpose> The Trump Administration has argued that some of the ongoing House investigations, especially those focusing on the President's conduct before taking office, lack a "legislative purpose" and therefore exceed the committees' investigative authority. Those arguments have thus far been rejected by the three courts that have reached the merits of the question (two district courts and the D.C. Circuit). Nevertheless, the legislative purpose requirement appears to be substantially limited as a defense to a subpoena in an impeachment investigation. As noted, Congress enjoys broad constitutional authority to obtain information relevant to its legislative investigations. But because that authority is derived from the Constitution's delegation of legislative power to Congress, it extends only to those inquiries that can be said to "aid the legislative function." The Supreme Court has generally implemented this constitutional limit on the scope of the investigative power by requiring that committee investigations serve a valid "legislative purpose." The legislative purpose requirement is quite generous, permitting investigations into any topic upon which legislation could be had or over which Congress may properly exercise authority, including investigations undertaken by Congress to inform itself for purposes of lawmaking or possibly to ensure that the executive branch is complying with its obligation to faithfully execute laws passed by Congress. In practice, the legislative purpose requirement rarely acts as a significant restriction on legislative investigations, especially those relating to government officials. This is principally because the scope of what constitutes a permissible legislative purpose is broad and because courts have effectively adopted a presumption that committees act with a valid purpose. But the courts have acknowledged at least two general types of investigations in which Congress likely exceeds its authority. First, Congress does not act with a legislative purpose when investigating private conduct that has no nexus to the legislative function. As summarized by the Supreme Court, a committee "cannot constitutionally inquire 'into the private affairs of individuals who hold no office under the government' when the investigation 'could result in no valid legislation on the subject to which the inquiry referred.'" Second, the Supreme Court has stated that Congress does not act with a legislative purpose when the subject of an investigation is a function "exclusively" committed to another branch of government. As stated in Barenblatt v. United States : "[l]acking the judicial power given to the Judiciary, [Congress] cannot inquire into matters that are exclusively the concern of the Judiciary. Neither can it supplant the Executive in what exclusively belongs to the Executive." The D.C. Circuit recently reaffirmed this restriction, holding that when "no constitutional statute may be enacted on a subject matter, then that subject is off-limits to congressional investigators." The legislative purpose requirement would appear to impose few, if any, consequential restrictions on a committee impeachment investigation. But the manner in which the requirement applies to an impeachment inquiry may depend upon whether the source of authority for such an inquiry is thought to derive from the House's general legislative power or from the Constitution's specific provisions concerning impeachment. If an impeachment investigation derives from Article I's vesting of legislative power in the House and Senate, then the legislative purpose requirement would likely apply as it does to other investigations conducted pursuant to that power. The requirement, however, would appear to be easily satisfied in an impeachment investigation because the legislative function and purpose that is being served is clear: the committee is assisting the House in carrying out its impeachment power. If, on the other hand, the authority for an impeachment investigation does not arise from Article I's vesting of "legislative powers" in a Congress, but instead derives directly and independently from the House's impeachment power, it need not be exercised in "aid of the legislative function," and, as a result, the legislative purpose restriction would not apply. Regardless of how the requirement relates to impeachment, it would appear that the scope of an impeachment investigation is principally governed not by the need for a "legislative purpose," but instead by its relationship to the House's impeachment role. As such, the permissible scope of an impeachment investigation is initially narrow, in that the investigation would presumably need to relate to the House's role in determining whether an impeachable official has committed an impeachable offense. But once an investigation meets that threshold requirement, the scope of the investigation is broad, to potentially include any matter "reasonably relevant" to the possible impeachment. While the legislative purpose requirement is unlikely to impose any substantial restriction on the scope of an impeachment investigation, both the previously discussed Supreme Court case law and more recent decisions from two federal district courts and the D.C. Circuit suggest that the requirement plays a similarly narrow role in legislative investigations focusing on presidential misconduct. For example, both the D.C. federal district court and the D.C. Circuit recently rejected an attempt by President Trump to block his accounting firm from complying with a House Oversight and Reform Committee subpoena for the President's financial records on the ground that the Committee lacked a legislative purpose. In holding that the Committee had authority to seek the financial documents as part of its ongoing legislative investigation, the district court explicitly noted that "Congress plainly views itself as having sweeping authority to investigate illegal conduct of a President," even "before initiating impeachment proceedings." The court was not willing to adopt an interpretation of legislative purpose in legislative investigations that would "roll back the tide of history" regarding congressional investigations of the President. The D.C. Circuit affirmed in Trump v. Mazars USA, LLP , holding in a 2-1 decision that the Committee's subpoena was a valid exercise of the Committee's authority to conduct legislative investigations. In doing so, the court made two key holdings as to the proper application of the legislative purpose requirement, both of which support committee authority to investigate presidential misconduct as part of a legislative investigation. First, the court held that the Committee had articulated "strong evidence" of its legitimate legislative purpose by asserting that the subpoenaed information was needed to "review multiple laws and legislative proposals," including legislation pending before the House. The fact that one of the Committee's purposes was to investigate potential criminal wrongdoing or misconduct by the President did not undermine the committee's legitimate purposes as "an interest in past illegality can be wholly consistent with an intent to enact remedial legislation." Indeed, a committee's "interest in alleged misconduct" can be "in direct furtherance of its legislative purpose." Second, the court held that the subject of the Committee investigation was one "on which legislation may be had." The court evaluated legislation that would require the presidential disclosure of financial information as the appropriate "category of statutes" that could result from the committee investigation. Applying separation-of-powers principles to that general class of statute, the court could "detect no inherent constitutional flaw in laws requiring Presidents to publicly disclose certain financial information." The dissenting judge in Mazars would have concluded that "[i]investigations of impeachable offenses simply are not, and never have been, within Congress's legislative power" because "impeachment provides the exclusive mechanism for Congress to investigate such conduct." In response to this "novel" position, the majority opinion engaged in some limited discussion of the relationship between legislative and impeachment investigations. That discussion was characterized by deference to Congress. As the court noted, the Constitution leaves questions of "whether to commence the impeachment process" and when to "move from legislative investigation to impeachment" to Congress's "judgment." Moreover, Congress, and not the courts, must make the "quintessentially legislative" determination of whether misconduct is "better addressed" through "oversight and legislation" or through the "grave and weighty process of impeachment." In sum, the legislative purpose requirement is unlikely to be construed as posing an obstacle to information access in an impeachment investigation. Nor does the requirement appear to serve as a consequential legal limitation on legislative investigations, including those focusing on executive branch misconduct, so long as a committee can articulate a connection to a "subject on which legislation may be had." <3.1.2.3. Overcoming Claims of Executive Privilege> Executive privilege has been formally asserted as a justification for noncompliance with committee subpoenas in the ongoing House investigations. As discussed, a court may be hesitant to resolve a conflict between a congressional committee and the President over executive privilege instead preferring that the political branches negotiate a resolution or that Congress enforce its demands by use of its own legislative and impeachment powers. However, if a court were to address a privilege dispute, including one over subpoenaed documents or testimony by executive officials, there are reasons to believe that a committee engaged in an impeachment investigation may be more likely to overcome a presidential assertion of the privilege than a committee engaged in a traditional legislative investigation. Even still, a committee engaged in a legislative investigation, depending on the "nature and appropriateness" of the committee's function and its need for the information, may also be able to access certain material covered by the privilege. Executive privilege is a term that has been used to describe the President's power to "resist disclosure of information the confidentiality of which [is] crucial to fulfillment of the unique role and responsibilities of the executive branch of our government." However, there is not one, single "executive privilege." Instead, there is a suite of distinct privileges, each of different though sometimes overlapping scope. These privileges primarily include the presidential communications privilege, which generally protects communications involving the President or his close advisers that relate to presidential decisions; the deliberative process privilege, which generally protects predecisional and deliberative communications made within the executive branch; and, at least under the executive branch's view, the law enforcement privilege, which arguably protects the contents of open (and sometimes closed) law enforcement files, including evidence gathered in an investigation and communications related to investigative and prosecutorial decisionmaking. In a congressional investigation, the precise privilege asserted in response to a subpoena is an important determination because each component privilege arises from a different source of law, with some components more firmly established in judicial precedent than others. For example, while the Supreme Court has recognized that the presidential communications privilege derives from the Constitution, the deliberative process privilege appears to arise principally from the common law, but, at least in the view of one district court, may have a "constitutional dimension." On the other hand, although the executive branch asserts that the law enforcement privilege derives from both the President's powers under Article II and constitutionally based individual trial and privacy rights, those arguments have not been directly tested in court at least not in the context of a congressional subpoena where committees have previously objected to that privilege's use. What is apparent is that none of the executive privileges, even if found to cover subpoenaed information, necessarily presents an absolute bar to congressional access. As announced by the Supreme Court in United States v. Nixon , when faced with an executive privilege dispute courts must "resolve [the] competing interests in a manner that preserves the essential functions of each branch." When the showing of need is adequate, the privilege is overcome. For example, in Nixon , the Court held that the President's "generalized interest in confidentiality must yield to the demonstrated, specific need for evidence in a pending criminal trial...." As such, it would appear that the type of privilege at play, the corresponding executive need for confidentiality, and Congress's interest in obtaining the information all may impact potential judicial outcomes in an executive privilege dispute. The Supreme Court has never addressed executive privilege's application in either a legislative or impeachment investigation. In fact, the leading (and arguably only substantive appellate) case addressing any component of executive privilege in the congressional context is the D.C. Circuit's decision in Senate Select Committee v. Nixon . That case involved an effort by the Senate Watergate Committee to enforce a subpoena issued to President Nixon for recordings of specific conversations he had with presidential advisers in the Oval Office, thus squarely implicating the presidential communications privilege. Notably, the subpoena was issued as part of a legislative, rather than impeachment, investigation. Although ultimately siding with the President, the D.C. Circuit made clear that a President's assertion of executive privilege could be overcome by a "strong showing of need by another institution of government " As applied to Congress in the exercise of its investigative powers, this meant that a committee may overcome the President's privilege when it has shown that "the subpoenaed evidence is demonstrably critical to the responsible fulfillment of the Committee's function." The Senate Watergate Committee sought to make the required showing by asserting it had a "critical" need for the tapes to carry out the two functions that most frequently form the basis of a legislative investigation: oversight and lawmaking. First, pursuant to its oversight function, the Committee argued that access to the tapes was necessary to "oversee the operations of the executive branch, to investigate instances of possible corruption and malfeasance in office, and to expose the results of its investigations to public view." Second, pursuant to its lawmaking function, the Committee argued that "resolution, on the basis of the subpoenaed tapes, of the conflicts in the testimony before it 'would aid in a determination whether legislative involvement in political campaigns is necessary.'" The circuit court rejected both arguments, holding that the Senate Watergate Committee's need was "too attenuated and too tangential to its functions to permit a judicial judgment that the President is required to comply with the Committee's subpoenas." That holding, however, appears to have been based on a pair of unique facts: copies of the tapes had been provided to the House Judiciary Committee under that Committee's impeachment investigation and the President had publicly released partial transcripts of the subpoenaed conversations. Both of these disclosures significantly impacted the appellate court's assessment of the Senate Watergate Committee's need for the tapes. For example, because the House Judiciary Committee had already obtained the tapes, any further oversight need by the Watergate Committee was "merely cumulative." With regard to the Watergate Committee's lawmaking functions, the D.C. Circuit held that the particular content of the conversations was not essential to future legislation, as "legislative judgments normally depend more on the predicted consequences of proposed legislative actions ... than on precise reconstruction of past events." Any "specific legislative decisions" faced by the Committee, the court concluded, could "responsibly be made" based on the released transcripts. There was some suggestion in Senate Select that the case may have been resolved differently if the committee seeking the tapes had been engaged in an impeachment investigation. This line of reasoning was developed in the decision below, where the district court, after holding that the President was not obligated to comply with the Watergate Committee's subpoena, noted that "Congressional demands, if they be forthcoming, for tapes in furtherance of the more juridical constitutional process of impeachment would present wholly different considerations." On appeal in Senate Select , the D.C. Circuit also drew a somewhat similar comparison between the Senate Watergate Committee's oversight function and the House Judiciary Committee's impeachment function. The court did not, however, make any clear statement as to how it would weigh one relative to the other. Instead it stated that we need neither deny that the Congress may have, quite apart from its legislative responsibilities, a general oversight power, nor explore what the lawful reach of that power might be under the Committee's constituent resolution. Since passage of that resolution, the House Committee on the Judiciary has begun an inquiry into presidential impeachment. The investigative authority of the Judiciary Committee with respect to presidential conduct has an express constitutional source. The Supreme Court made a similar suggestion nearly a century earlier in Kilbourn v. Thompson , reasoning in dicta that while the House in that case lacked a valid legislative purpose to compel testimony, if an investigatory purpose "had been avowed to impeach ..., the whole aspect of the case would have been changed." These general statements suggest that courts may treat impeachment investigations differently from legislative investigations, but they do not elaborate on how or why. Although not directly articulated by the courts, there appears to be a variety of reasons an impeachment investigation might be balanced against an invocation of executive privilege in a manner that is more favorable to congressional access. First, it is arguable that the importance of the impeachment function's constitutional role in addressing misconduct by federal officials and preserving the separation of powers requires that impeachment investigations be afforded the utmost deference when weighed against executive branch confidentiality interests. Indeed, there is substantial support for the proposition that executive privilege simply cannot be used to refuse Congress access to relevant information in an impeachment investigation. As previously discussed, Congress has long viewed its power to obtain information in furtherance of its impeachment power to reach "the fullest and most unlimited extent." In its report on the Nixon impeachment investigation, the House Judiciary Committee adopted this argument, concluding that [w]hatever the limits of legislative power in other contexts and whatever need may otherwise exist for preserving the confidentiality of Presidential conversations in the context of an impeachment proceeding the balance was struck in favor of the power of inquiry when the impeachment provision was written into the Constitution. Because the House's need for information in an impeachment investigation has been equated to that of a court in a judicial proceeding, it is possible to analogize the situation to that considered by the Supreme Court in United States v. Nixon , where the Court weighed the privilege in the context of a criminal trial subpoena. It could be argued that as in response to a subpoena in a pending criminal proceeding, a court could similarly view the privilege as insufficient to withstand a subpoena in an impeachment investigation. As articulated by the Judiciary Committee, "[i]f a generalized Presidential interest in confidentiality cannot prevail over 'the fundamental demand of due process of law in the fair administration of justice,' neither can it be permitted to prevail over the fundamental need to obtain all the relevant facts in the impeachment process." This position is buttressed by concerns expressed by all three branches that executive privilege should not be used to hide wrongdoing, which would form the core of any impeachment investigation. Second, courts have suggested that the frequency with which disclosure may occur in a particular context is an important factor in any executive privilege balancing. For example in Nixon , the Supreme Court reasoned that "we cannot conclude that advisers will be moved to temper the candor of their remarks by the infrequent occasions of disclosure because of the possibility that such conversations will be called for in the context of a criminal prosecution." Similar reasoning was applied in Dellums v Powell , in which the D.C. Circuit held that an executive privilege claim by former President Nixon was overcome in a civil suit alleging a civil conspiracy among high-level federal officials to deny a group of citizens their constitutional rights. There, the circuit court held that "the possibility of disclosure" in such a limited class of cases "is not unlike the possibility of disclosure in criminal cases the infrequent occasions of such disclosure militate against any substantial fear that the candor of Presidential advisers will be imperiled." This line of reasoning suggests that a court may be more willing to order disclosure to a committee engaged in a historically rare impeachment investigation than it would to a committee in a much more common legislative investigation. Finally, the need for specific factual evidence in an impeachment investigation may be greater than in a legislative investigation. In Senate Select , the court suggested that specific information was not always necessary for Congress to carry out its lawmaking tasks. In doing so, the court distinguished the role of a legislative investigation from that of a grand jury investigation: There is a clear difference between Congress's legislative tasks and the responsibility of a grand jury, or any institution engaged in like functions. While fact-finding by a legislative committee is undeniably a part of its task, legislative judgments normally depend more on the predicted consequences of proposed legislative actions and their political acceptability, than on precise reconstruction of past events; Congress frequently legislates on the basis of conflicting information provided in its hearings. In contrast, the responsibility of the grand jury turns entirely on its ability to determine whether there is probable cause to believe that certain named individuals did or did not commit specific crimes We see no comparable need in the legislative process, at least not in the circumstances of this case. Impeachment investigations (and impeachment decisions), on the other hand, might require a more exacting factual record. A decision to impeach is not a typical generalized legislative determination, but is perhaps more aptly characterized as a specific finding that the evidence suggests wrongdoing adequate to support the impeachment of a federal official. Impeachment is assuredly a weighty legislative interest, and long-standing visions of the power suggest that a committee engaged in an impeachment investigation may be more likely to overcome the President's privilege than a committee engaged in a legislative investigation. Nevertheless, it remains the case that in certain circumstances, a committee engaged in a legislative investigation may also obtain information protected by executive privilege. History provides numerous examples of the executive branch voluntarily disclosing information to Congress that it initially identified as protected. Moreover, Senate Select cannot be read as establishing that legislative investigations can never overcome claims of executive privilege. As was stated by the Watergate Committee, "the court's decision rested, as the court observed, on 'the peculiar circumstances of this case,' and should not necessarily prevent legislative committees in the future from obtaining materials relating to presidential communications." Instead, it would appear that a committee engaged in a legislative investigation can itself overcome a claim of executive privilege so long as it can show that "the subpoenaed evidence is demonstrably critical to the responsible fulfillment of the Committee's function." <4. Conclusion> An impeachment investigation is a substantial exercise of constitutional power vested exclusively in the House of Representatives. Invocation of the power likely strengthens the House's existing investigative authorities in ways that may allow the House (through its committees) to obtain more information from the executive branch than might otherwise be received through more traditional legislative investigations. Even so, reliance on the impeachment power may not always be necessary for Congress to obtain sensitive categories of information, including grand jury materials, evidence of private misconduct, or information protected by executive privilege. Whether investigating to inform itself for purposes of legislating, to conduct oversight of the executive branch, or to determine whether there is adequate reason to impeach a federal official, the House has broad authority to access relevant and needed information.

Committee investigations in the House of Representatives can serve several objectives. Most often, an investigation seeks to gather information either to review past legislation or develop future legislation, or to enable a committee to conduct oversight of another branch of government. These inquiries may be called legislative investigations because their legal authority derives implicitly from the House's general legislative power. Much more rarely, a House committee may carry out an investigation to determine whether there are grounds to impeach a federal official—a form of inquiry known as an impeachment investigation. While the labels "legislative investigation" and "impeachment investigation" provide some context to the objective or purpose of a House inquiry, an investigation may not always fall neatly into one of these categories. This ambiguity has been a topic of interest to many during the various ongoing House committee investigations concerning President Trump. On September 24, 2019, Speaker Pelosi announced that these investigations constitute an "official impeachment inquiry." Although these committee investigations into allegations of presidential misconduct are proceeding, in the Speaker's words, under the "umbrella of [an] impeachment inquiry," most appear to blend lawmaking, oversight, and impeachment purposes. However an investigation is labeled, because the Constitution provides the House with the "sole Power of Impeachment," implementation of the impeachment power, including any ancillary investigative powers, would appear textually committed to the discretion of the House. Yet the House has not established a single, uniform approach to starting impeachment investigations. The process has instead evolved, generally tracking changes the House has made to its committee structure and the investigative authorities conferred to its committees. Although impeachment investigations have often been authorized by a House resolution, they have also been conducted without an explicit authorization. There are still other examples where the House provided express authorization only after a committee had engaged in a "preliminary" impeachment investigation. An impeachment investigation may be more likely—relative to a traditional legislative investigation—to obtain certain categories of information, especially from the executive branch. For example, it is possible that the significance of an exercise of the impeachment power, in conjunction with a resulting increase in political and public pressure, may itself affect the Executive's compliance decisions. But an impeachment investigation may also have legal impacts. If, in the face of a dispute with the executive branch over access to information, the House chose to seek judicial enforcement of an investigative demand, there appear to be at least three potential ways in which the impeachment power could, relative to a legislative investigation, provide the House with a stronger legal position. An impeachment investigation may (1) improve the likelihood of a court authorizing committee access to grand jury materials; (2) relieve any possible limitations imposed by the requirement that a committee act with a "legislative purpose"; and (3) improve the likelihood that a committee will be able to overcome privilege assertions such as executive privilege. In the past, executive noncompliance with an impeachment investigation has also prompted the investigating committee to recommend to the House an article of impeachment for contempt of Congress. That said, a congressional committee engaged in a legislative investigation could arguably obtain much of the same information as it would during an impeachment inquiry, as both legislative and impeachment investigations constitute an exercise of significant constitutional authority. As a result, while an impeachment investigation may very well increase the House's access to information, House committees may have substantial authority to obtain the information they seek even without reliance on the impeachment power.

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<1. Introduction> As the fifth-largest country and the ninth-largest economy in the world, Brazil plays an important role in global governance (see Figure 1 for a map of Brazil). Over the past 20 years, Brazil has forged coalitions with other large, developing countries to push for changes to multilateral institutions and to ensure that global agreements on issues ranging from trade to climate change adequately protect their interests. Brazil also has taken on a greater role in promoting peace and stability, contributing to U.N. peacekeeping missions and mediating conflicts in South America and further afield. Although recent domestic challenges have led Brazil to turn inward and weakened its appeal globally, the country continues to exert considerable influence on international policy issues that affect the United States. U.S. policymakers have often viewed Brazil as a natural partner in regional and global affairs, given its status as a fellow multicultural democracy. Repeated efforts to forge a close partnership have left both countries frustrated, however, as their occasionally divergent interests and policy approaches have inhibited cooperation. The Trump Administration has viewed the 2018 election of Brazilian President Jair Bolsonaro as a fresh opportunity to deepen the bilateral relationship. Bolsonaro has begun to shift Brazil's foreign policy to bring the country into closer alignment with the United States, and President Trump has designated Brazil a m ajor n on-NATO a lly . Nevertheless, ongoing differences over trade protections and relations with China threaten to leave both the United States and Brazil with unmet expectations once again. The 116 th Congress has expressed renewed interest in Brazil, recognizing Brazil's potential to affect U.S. initiatives and interests. Some Members view Brazil as a strategic partner for addressing regional and global challenges. They have urged the Trump Administration to forge stronger economic, security, and military ties with Brazil to bolster the bilateral relationship and counter the influence of extra-hemispheric powers, such as China and Russia. Other Members have expressed reservations about a close partnership with the Bolsonaro Administration. They are concerned that Bolsonaro is presiding over an erosion of democracy and human rights in Brazil and that his environmental policies threaten the Amazon and global efforts to mitigate climate change. Congress may continue to assess these differing approaches to U.S.-Brazilian relations as it carries out its oversight responsibilities and considers FY2021 appropriations and other legislative initiatives. <2. Brazil's Political and Economic Environment> <2.1. Background> Brazil declared independence from Portugal in 1822, initially establishing a constitutional monarchy and retaining a slave-based, plantation economy. Although the country abolished slavery in 1888 and became a republic in 1889, economic and political power remained concentrated in the hands of large rural landowners and the vast majority of Brazilians remained outside the political system. The authoritarian government of Get lio Vargas (1930-1945) began the incorporation of the working classes but exerted strict control over labor as part of its broader push to centralize power in the federal government. Vargas also began to implement a state-led development model, which endured for much of the 20 th century as successive governments supported the expansion of Brazilian industry. Brazil experienced two decades of multiparty democracy from 1945 to 1964 but struggled with political and economic instability, which ultimately led the military to seize power. A 1964 military coup, encouraged and welcomed by the United States, ushered in two decades of authoritarian rule. Although repressive, the military government was not as brutal as the dictatorships established in several other South American nations. It nominally allowed the judiciary and congress to function during its tenure but stifled representative democracy and civic action, carefully preserving its influence during one of the most protracted transitions to democracy to occur in Latin America. Brazilian security forces killed more than 8,000 indigenous people and at least 434 political dissidents during the dictatorship, and they detained and tortured an estimated 30,000-50,000 others. Brazil restored civilian rule in 1985, and a national constituent assembly, elected in 1986, promulgated a new constitution in 1988. The constitution established a liberal democracy with a strong president, a bicameral congress consisting of the 513-member chamber of deputies and the 81-member senate, and an independent judiciary. Power is somewhat decentralized under the country's federal structure, which includes 26 states, a federal district, and some 5,570 municipalities. Brazil experienced economic recession and political uncertainty during the first decade after its political transition. Numerous efforts to control runaway inflation failed, and two elected presidents did not complete their terms; one died before taking office, and the other was impeached on corruption charges and resigned. The situation began to stabilize, however, under President Fernando Henrique Cardoso (1995-2002) of the center-right Brazilian Social Democracy Party ( Partido da Social Democracia Brasileira , or PSDB). Initially elected on the success of the anti-inflation Real Plan that he implemented as finance minister under President Itamar Franco (1992-1994), Cardoso ushered in a series of market-oriented economic reforms. His administration privatized some state-owned enterprises, gradually opened the economy to foreign trade and investment, and adopted the three main pillars of Brazil's macroeconomic policy: a floating exchange rate, a primary budget surplus, and an inflation-targeting monetary policy. Nevertheless, the Brazilian state maintained an influential role in the economy. The Cardoso Administration's economic reforms and a surge in international demand (particularly from China) for Brazilian commodities such as oil, iron, and soybeans fostered a period of strong economic growth in Brazil during the first decade of the 21 st century. The center-left Workers' Party ( Partido dos Trabalhadores , or PT) administration of President Luiz In cio Lula da Silva (Lula, 2003-2010) used increased export revenues to improve social inclusion and reduce inequality. Among other measures, the PT-led government expanded social welfare programs and raised the minimum wage by 64% above inflation. Between 2003 and 2010, the Brazilian economy expanded by an average of 4.1% per year and the poverty rate fell from 28.2% to 13.6%. The growth of the middle class fueled a domestic consumption boom that reinforced Brazil's economic expansion. Although the poverty rate initially continued to decline under the PT-led administration of President Dilma Rousseff (2011-2016) reaching a low of 8.4% in 2014 socioeconomic conditions deteriorated during Rousseff's final two years in office. <2.2. Recession, Insecurity, and Corruption (2014-2018)> After nearly two decades of relative stability, Brazil has struggled with a series of crises since 2014. The country fell into a deep recession in late 2014, due to a decline in global commodity prices and the Rousseff Administration's economic mismanagement. Brazil's real gross domestic product (GDP) contracted by 8.2% over the course of 2015 and 2016. Although Brazil emerged from recession in mid-2017, recovery has been slow. The economy expanded by just over 1% in 2017 and 2018, and unemployment, which peaked at 13.7% in the first quarter of 2017, has remained above 10% for nearly four years. Largely due to the weak labor market, the real incomes of the bottom half of Brazilian workers have declined by 17% since the onset of the recession, pushing more than 6 million people into poverty. The downturn has disproportionately affected Afro-Brazilians, who comprise about half of the Brazilian population but 64% of the unemployed. Large fiscal deficits at all levels of government have exacerbated the situation, limiting the resources available to provide social services. The deep recession also has hindered federal, state, and local government efforts to address serious challenges such as crime and violence. A record-high 64,000 Brazilians were killed in 2017, and the country's homicide rate of 30.9 per 100,000 residents was more than five times the global average. Although homicides declined by nearly 11% in 2018, feminicide (gender-motivated murders of women) and reports of sexual violence increased. The deterioration in the security situation, like the economic crisis, has disproportionately affected Afro-Brazilians, who account for more than 75% of homicide victims, 75% of those killed by police, and 61% of feminicide victims. A series of corruption scandals have further discredited the country's political establishment. The so-called Car Wash ( Lava Jato ) investigation, launched in 2014, has implicated politicians from across the political spectrum and many prominent business executives. The initial investigation revealed that political appointees at the state-controlled oil company, Petr leo Bra s ileiro S.A. (Petrobras), colluded with construction firms to fix contract bidding processes. The firms then provided kickbacks to Petrobras officials and politicians in the ruling coalition. Parallel investigations have discovered similar practices throughout the public sector, with businesses providing bribes and illegal campaign donations in exchange for contracts or other favorable government treatment. The scandals sapped President Rousseff's political support, contributing to her controversial impeachment and removal from office in August 2016. Michael Temer, who presided over a center-right government for the remainder of Rousseff's term (2016-2018), was entangled in several corruption scandals but managed to hold on to power. Several other high-level politicians, including former President Lula, have been convicted and face potentially lengthy prison sentences (see the text box, below). The inability of Brazil's political leadership to overcome these crises has undermined Brazilians' confidence in their democratic institutions. As of mid-2018, 33% of Brazilians expressed trust in the judiciary, 26% expressed trust in the election system, 12% expressed trust in congress, 7% expressed trust in the federal government, and 6% expressed trust in political parties. Moreover, only 9% of Brazilians expressed satisfaction with the way democracy was working in their country the lowest percentage in all of Latin America. <2.3. Bolsonaro Administration (2019-Present)> Brazilian voters registered their intense dissatisfaction with the situation in the country in the 2018 elections. In addition to ousting 75% of incumbents running for reelection to the senate and 43% of incumbents running for reelection to the chamber of deputies, they elected as president, Jair Bolsonaro, a far-right congressman and retired army captain. Prior to the election, most observers considered Bolsonaro to be a fringe figure in the Brazilian congress. He exercised little influence over policy and was best known for his controversial remarks defending the country's military dictatorship (1964-1985) and expressing prejudice toward marginalized sectors of Brazilian society . Backed by the small Social Liberal Party (PSL), Bolsonaro also lacked the finances and party machinery of his principal competitors. Nevertheless, his social media-driven campaign and populist, law-and-order message attracted a strong base of support. He outflanked his opponents by exploiting anti-PT and antiestablishment sentiment and aligning himself with the few institutions that Brazilians still generally trust: the military and the churches. Bolsonaro largely remained off the campaign trail in the weeks leading up to the election after being stabbed in an assassination attempt, but he easily defeated the PT's Fernando Haddad 55%-45% in a second-round runoff. Bolsonaro's PSL also won the second-most seats in the lower house. Since Bolsonaro began his four-year term on January 1, 2019, he has struggled to advance portions of his agenda due to cabinet infighting and the lack of a working majority in Brazil's fragmented congress, which includes 24 political parties. Whereas previous Brazilian presidents stitched together governing coalitions by distributing control of government jobs and resources to parties in exchange for their support, Bolsonaro has refused to enter into such arrangements. Moreover, he generally has avoided negotiating the details of his proposed policies with legislators. Instead, Bolsonaro has sought to keep his political base mobilized by frequently taking socially conservative stands on cultural issues and verbally attacking perceived enemies, such as the press, nongovernmental organizations (NGOs), and other branches of government. Bolsonaro's confrontational approach to governance has alienated many of his potential allies within the conservative-leaning congress. In November 2019, for example, Bolsonaro abandoned the PSL after a series of disagreements with the party's leadership; he intends to create a new Alliance for Brazil party to contest future elections. During its first year in office, the Bolsonaro Administration began implementing key aspects of its market-oriented ec onomic agenda. As part of a far-reaching privatization program, the Brazilian government began selling off assets, including subsidiaries of state-owned enterprises, stakes in private companies, and infrastructure and energy concessions, yielding revenues of approximately $66 billion in 2019. The Brazilian congress also enacted a major pension reform expected to reduce government expenditures by at least $194 billion over the next decade. Those policies build on a 2016 constitutional amendment that froze inflation-adjusted government spending for 20 years. Although the Bolsonaro Administration has proposed additional measures to simplify the tax system, cut and decentralize government expenditures, and decrease compensation and job security for government employees, political parties may be reluctant to enact austerity measures in the lead-up to Brazil's October 2020 municipal elections. The International Monetary Fund estimates that the Brazilian economy expanded by 1.2% in 2019 and will expand by 2.2% in 2020, due to improved business sentiment following recent market-oriented policy changes. About 11% of Brazilians remain unemployed, however, and some economists argue that rather than reducing the size of the state, Brazil should reorient expenditures to programs that protect the most vulnerable and to productivity-enhancing investments, such as education, training, and infrastructure. Bolsonaro has had difficulty advancing the hard-line security platform that was the centerpiece of his campaign. The Brazilian congress has blocked Bolsonaro's proposal to shield from prosecution police who kill suspected criminals and has pushed back against Bolsonaro's decrees loosening gun controls. Other Bolsonaro Administration proposals, including measures to modernize police investigations and impose stricter criminal sentences, were enacted in December 2019. Preliminary data suggest that security conditions in Brazil improved in 2019, but the number of individuals killed by police in states such as Rio de Janeiro increased significantly. The Bolsonaro Administration has claimed credit for falling crime rates, but some security analysts argue the situation has been improving since late 2017 due to state and municipal initiatives and reduced conflict between the country's largest criminal groups. (See the " Counternarcotics " section for more information.) Anti-corruption efforts in Brazil have experienced a series of recent setbacks. Although President Bolsonaro campaigned on an anti-corruption platform, he has repeatedly interfered in law enforcement agencies, potentially hindering investigations and calling into question the political independence of Brazilian institutions. In August 2019, he dismissed the head of the Brazilian federal police office in Rio de Janeiro, which is investigating potential corruption and money laundering by Bolsonaro's son, Fl vio. In September 2019, Bolsonaro disregarded a norm in place since 2003 of selecting an attorney general from a shortlist approved by the public prosecutors' association. Observers also have questioned changes Bolsonaro has made to Brazil's tax collection agency, financial intelligence unit, and antitrust regulator. At the same time, the Brazilian congress has been reluctant to adopt anti-corruption reforms and the supreme court has issued a series of rulings that could jeopardize convictions obtained in the Car Wash investigation and make it more difficult to investigate and prosecute corruption cases. Many analysts argue there has been an erosion of democracy in Brazil under Bolsonaro. During his first year in office, the president continued to celebrate Brazil's military dictatorship and those installed in other South American countries, and his sons and members of his administration occasionally suggested they could impose authoritarian measures under certain circumstances. Bolsonaro also took steps to weaken the press, exert control over civil society, and roll back rights previously granted to marginalized groups. Civil-military relations have shifted as Bolsonaro has appointed retired and active-duty officers to lead more than a third of his cabinet ministries and to dozens of other positions throughout the government. The Brazilian military is now more involved in politics than it has been at any time since the end of the dictatorship. Some analysts maintain, however, that the military has had a moderating influence on the government. Brazil's civil society, congress, and judiciary also have served as checks on Bolsonaro. Nevertheless, human rights advocates argue the president's statements and actions have fueled attacks against journalists and activists. Polls conducted at the conclusion of his first year in office suggest Brazilian public opinion toward Bolsonaro remains divided. About 32% of Brazilians consider Bolsonaro's government "good" or "great," 32% consider it "average," and 35% consider it "bad" or "terrible." <3. Amazon Conservation and Climate Change> A 30% increase in fires in the Brazilian Amazon in 2019 compared to the previous year led many Brazilians and international observers to express concern about the rainforest and the extent to which its destruction is contributing to regional and global climate change. Covering nearly 2.7 million square miles across seven countries, the Amazon Basin is home to the largest and most biodiverse tropical forest in the world. Scientific studies have found that the Amazon plays an important role in the global carbon cycle by absorbing and sequestering carbon. Although findings vary, one recent study estimated the forest absorbs 560 million tons of carbon dioxide per year and its biomass holds 76 billion tons of carbon an amount equivalent to seven years of global carbon emissions. The Amazon also pumps water into the atmosphere, affecting regional rainfall patterns throughout South America. An estimated 17% of the Amazon basin has been deforested, however, and some scientists have warned that the forest may be nearing a tipping point at which it is no longer able to sustain itself and transitions to a drier, savanna-like ecosystem. Efforts to conserve the forest often focus on Brazil, since the country encompasses about 69% of the Amazon Basin. Within Brazil, the government has established an administrative zone known as the Legal Amazon, which includes nine states: Acre, Amap , Amazonas, Maranh o, Mato Grosso, Par , Rond nia, Roraima, and Tocantins (see Figure 1 ). Although rainforest covers most of the Legal Amazon, savanna ( Cerrado ) and wetlands ( Pantanal ) are present in portions of the region. The Legal Amazon was largely undeveloped until the 1960s, when the military-led government began subsidizing the settlement and development of the region as a matter of national security. Partially due to those incentives, the human population in the Legal Amazon grew from 6 million in 1960 to 25 million in 2010. Forest cover in the Legal Amazon has declined by approximately 20% as settlements, roads, logging, ranching, farming, and other activities have proliferated in the region. <3.1. Brazilian Policies and Deforestation Trends> In 2004, the Brazilian government adopted an action plan to prevent and control deforestation in the Legal Amazon. It increased surveillance in the Amazon region, began to enforce environmental laws and regulations more rigorously, and took steps to consolidate and expand protected lands. Nearly 20% of the Brazilian Amazon now has some sort of federal or state protected status, and the Brazilian government has recognized an additional 22% of the Brazilian Amazon as indigenous territories. Brazil's forest code also requires private landowners in the Legal Amazon to maintain native vegetation on 80% of their properties. Other Brazilian initiatives have sought to support sustainable development in the Amazon while limiting the extent to which the country's agricultural sector drives deforestation. In 2008, the Brazilian government began conditioning credit on farmers' compliance with environmental laws; in 2009, the government banned new sugarcane plantations in the Legal Amazon. The Brazilian government also supported private sector conservation initiatives. Those included a 2006 voluntary agreement among most major soybean traders not to purchase soybeans grown on lands deforested after 2006 (later revised to 2008) and a 2009 voluntary agreement among meatpackers not to purchase cattle raised on lands deforested in the Amazon after 2008. Brazil's public and private conservation efforts, combined with economic factors that made agricultural commodity exports less profitable, led to an 83% decline in deforestation in the Legal Amazon between 2004 and 2012. Deforestation has been trending upward in recent years, however, rising from a low of 1,765 square miles in 2012 to 3,769 square miles in the 12-month monitoring period that ended in July 2019 (see Figure 2 ). Analysts have linked the increase in deforestation to a series of policy reversals that have cut funding for environmental enforcement, reduced the size of protected areas, and relaxed conservation requirements. Market incentives, such as the growth in Chinese imports of Brazilian beef and soybeans, also have contributed to recent deforestation trends. For example, China purchased nearly 76% of its soybean imports from Brazil in 2018, up from roughly 50% in prior years, after imposing a retaliatory tariff on U.S. soybeans. Although changes that weakened Brazil's environmental policies began under President Rousseff and continued under President Temer, some analysts argue that the Bolsonaro Administration's approach to the Amazon has led to further increases in deforestation. Bolsonaro has fiercely defended Brazil's sovereignty over the Legal Amazon and its right to develop the region. Since taking office, his administration has lifted the ban on new sugarcane plantations in the Legal Amazon and called for an end to the soy moratorium. It also has proposed measures to allow commercial agriculture, mining, and hydroelectric projects in indigenous territories, arguing that such economic activities will benefit those living in the region and reduce incentives for illegal deforestation. At the same time, Bolsonaro has questioned the Brazilian government's deforestation data and repeatedly criticized the agencies responsible for enforcing environmental laws. Those statements and actions reportedly have emboldened some loggers, miners, and ranchers, contributing to the surge in fires in 2019 and a 30% increase in deforestation in the annual monitoring period that included the first seven months of Bolsonaro's term. Bolsonaro initially dismissed environmental concerns about the Amazon, asserting that deforestation and burning are cultural practices that will never end. In January 2020, however, he announced the creation of a new security force to protect the environment and a new Amazon Council, headed by Vice President Hamilton Mour o, to coordinate conservation and sustainable development efforts. As of the close of 2019, a majority (54%) of Brazilians disapproved of Bolsonaro's environmental policies. <3.2. Paris Agreement> The rising levels of Amazon deforestation call into question whether Brazil will meet its Paris Agreement commitment to reduce greenhouse gas emissions by 37% below 2005 levels (to 1.3 gigatonnes of carbon dioxide equivalent (GtCO e) by 2025. According to a 2018 assessment by the U.N. Environment Program, Brazil's greenhouse gas emissions declined by 12% per year from 2006 to 2016, as significant declines in deforestation offset slight increases in emissions from other sources. Those reductions had put Brazil on track to meet its Paris Agreement commitment, but emissions have begun to rise again due to increased deforestation. In 2018, Brazil's greenhouse gas emissions increased by an estimated 0.3% (to 1.9 GtCO e), even as emissions from the energy sector declined by nearly 5%. President Bolsonaro had pledged to withdraw from the Paris Agreement during his 2018 election campaign, but he reversed course following his inauguration, stating that Brazil would remain in the agreement "for now." At the 25 th Conference of Parties to the U.N. Framework Convention on Climate Change (COP 25), Brazil pushed developed countries to meet their 2009 goal to mobilize $100 billion from public and private sources, annually, by 2020, to help developing countries mitigate and adapt to climate change. Brazil's environmental minister has asserted that Brazil should receive at least 10% of those funds. Brazil also insisted that carbon credits developed under the 1997 Kyoto Protocol should carry over into the Paris Agreement's new international carbon markets and that countries that host emissions-cutting projects should not have to report the transfers of those credits to other countries. Many other negotiators expressed concern that Brazil's proposals could allow poorly validated credits from the Kyoto mechanisms to undermine the new Paris Agreement markets, as well as risk double-counting the credits both internationally and toward the host countries' domestic mitigation goals. Those disagreements reportedly impeded efforts to finalize rules for new carbon markets under the Paris Agreement. Even as the Brazilian government has called for greater international financial support, it has deprioritized domestic efforts to combat climate change. During Bolsonaro's first year in office, his administration closed the climate change departments within the environment and foreign ministries and cut funding for the implementation of Brazil's National Plan on Climate Change by 95%. Moreover, the Bolsonaro Administration lost one of Brazil's primary sources of international assistance when it unilaterally restructured the governance of the Amazon Fund a mechanism launched in 2008 to attract funding for conservation and sustainable development efforts. In response, the governments of Norway and Germany, which have donated nearly $1.3 billion to the fund since 2009, suspended their contributions in August 2019. State governments in the Legal Amazon have sought to negotiate directly with Norway and Germany to restore the funding. <4. U.S.-Brazilian Relations> The United States and Brazil historically have enjoyed robust political and economic relations, but the countries' divergent perceptions of their national interests have inhibited the development of a close partnership. Those perceptions have changed somewhat under President Bolsonaro. Whereas the past several Brazilian administrations sought to maintain autonomy in foreign affairs, Bolsonaro has called for close alignment with the United States. Within Latin America, for example, the Bolsonaro Administration has adopted a more confrontational approach toward Cuba and has closely coordinated with the Trump Administration on measures to address the crisis in Venezuela. The Bolsonaro Administration also has expressed support for controversial U.S. actions outside the region, such as the killing of Iranian military commander Qaasem Soleimani. Bolsonaro's realignment of Brazilian foreign policy has been controversial domestically, with some analysts arguing it has not resulted in many concrete benefits for Brazil. They note, for example, that the Trump Administration maintained and threatened to impose trade barriers on key Brazilian exports, such as beef and steel, despite having signed several bilateral commercial agreements during Bolsonaro's official visit to the White House in March 2019 (see " Recent Trade Negotiations "). Likewise, U.S. officials reportedly have warned Brazil that the closer defense ties implied by President Trump's designation of Brazil as a major non-NATO ally could be in jeopardy if Brazil allows Chinese telecommunications company Huawei to participate in Brazil's 5G cellular network (see the " Defense Cooperation " section). Some Brazilian analysts also argue that abandoning the country's commitment to autonomy in foreign affairs has weakened Brazil's international standing and caused tensions in its relations with other important partners, such as fellow members of the BRICS (Brazil, Russia, India, China, and South Africa) group. There does not appear to be public support for the Trump Administration's foreign policy within Brazil; in 2019, 60% of Brazilians expressed no confidence in President Trump to "do the right thing regarding world affairs." In some cases, domestic opposition has prevented Bolsonaro from aligning Brazilian foreign policy more closely with the United States. For example, during his 2018 presidential campaign, Bolsonaro indicated he would follow President Trump's lead in withdrawing from the Paris Agreement on climate change and taking a more confrontational approach toward Chinese trade and investment. He has backed away from those positions since taking office, reportedly due to concerns about losing access to foreign markets, particularly within the powerful agribusiness sector, which accounts for 21% of Brazil's GDP and is a major component of Bolsonaro's political base. Although some Members of the 116 th Congress have urged the Trump Administration to seize on Bolsonaro's goodwill to develop a strategic partnership with Brazil, others have expressed reservations about the current Brazilian administration. They are concerned about Bolsonaro's commitment to democracy, human rights, and the rule of law, as well as about changes to Brazil's environmental policies that appear to have contributed to fires and deforestation in the Brazilian Amazon (see " U.S. Support for Amazon Conservation "). <4.1. Commercial Relations> Trade policy often has been a contentious issue in U.S.-Brazilian relations. Since the early 1990s, Brazil's trade policy has prioritized integration with its South American neighbors through the Southern Common Market ( Mercosur ) and multilateral negotiations at the World Trade Organization (WTO). Brazil is the industrial hub of Mercosur, which it established in 1991 with Argentina, Paraguay, and Uruguay. Although the bloc was intended to advance incrementally toward full economic integration, only a limited customs union has been achieved thus far. Mercosur also has evolved into a somewhat protectionist arrangement, shielding its members from external competition rather than serving as a platform for insertion into the global economy, as originally envisioned. Within the WTO, Brazil traditionally has joined with other developing nations to push the United States and other developed countries to reduce their agricultural tariffs and subsidies while resisting developed countries' calls for increased access to developing countries' industrial and services sectors. Those differences blocked conclusion of the most recent round of multilateral trade negotiations (the WTO's Doha Round), as well as U.S. efforts in the 1990s and 2000s to establish a hemisphere-wide Free Trade Area of the Americas. <4.1.1. Recent Trade Negotiations> The Bolsonaro and Trump Administrations have negotiated several agreements intended to strengthen the bilateral commercial relationship. During Bolsonaro's March 2019 official visit to Washington, the United States and Brazil agreed to take steps toward lowering trade barriers for certain agricultural products. Brazil agreed to adopt a tariff rate quota implemented in November 2019 to allow the importation of 750,000 tons of U.S. wheat annually without tariffs. Brazil also agreed to adopt "science-based conditions" that could enable imports of U.S. pork. In exchange, the United States agreed to send a U.S. Department of Agriculture Food Safety and Inspection Service (FSIS) team to Brazil to audit the country's raw beef inspection system. The United States had suspended imports of raw beef from Brazil in June 2017, after Brazilian investigators discovered that some of the country's top meat processing companies, including JBS and BRF, had bribed food inspectors to approve the sale of tainted products. FSIS began inspecting all meat products arriving from Brazil and refused entry to 11% of Brazilian fresh beef products in the months leading up to the suspension. The Bolsonaro Administration had hoped an FSIS audit would quickly reopen the U.S. market to Brazilian beef and expressed frustration that U.S. import restrictions remained in place through the end of 2019. On February 21, 2020, however, the Trump Administration reportedly lifted the suspension after determining that "Brazil's food safety inspection system governing raw intact beef is equivalent to that of the [United States]." Some consumer advocates, industry groups, and Members of Congress remained concerned about Brazilian meat. A bill introduced in April 2019 ( S. 1124 , Tester) would suspend all beef and poultry imports from Brazil while a working group evaluates the extent to which those imports pose a threat to food safety. The United States and Brazil announced several other agreements during Bolsonaro's March 2019 official visit. A technology safeguards agreement, which the Brazilian congress ratified in November 2019, will enable the launch of U.S.-licensed satellites from Alc ntara space center in Brazil's northeastern state of Maranh o. The United States also endorsed Brazil's accession to the Organisation for Economic Co-operation and Development in exchange for Brazil agreeing to gradually give up its "special and differential treatment" status, which grants special rights to developing nations at the WTO. Building on those measures, U.S. and Brazilian officials reportedly have begun discussing a more comprehensive trade agreement. Barring changes to Mercosur's rules, any agreement to reduce tariffs would need to be negotiated with the broader bloc. In 2019, Mercosur signed free trade agreements with the European Union and the European Free Trade Association. Those agreements have yet to be ratified, however, and the recent political shift in Argentina could make the negotiation of new agreements more difficult. It is not clear that the Bolsonaro and Trump Administrations would be willing to expose their domestic producers to increased foreign competition. Industry associations in Brazil reportedly have been lobbying the Bolsonaro Administration to focus on reducing costs for domestic business before pursuing trade liberalization. U.S. businesses also have sought protections, and President Trump has occasionally threatened to impose tariffs on Brazilian products (see the text box, below). <4.1.2. Trade and Investment Flows> U.S.-Brazilian trade has increased significantly over the past two decades but has suffered from economic volatility, such as the 2007-2008 global financial crisis and Brazil's 2014-2017 recession (see Figure 3 ). In 2019, total bilateral merchandise trade amounted to $73.9 billion. U.S. goods exports to Brazil totaled $43.1 billion, and U.S. goods imports from Brazil totaled $30.9 billion, giving the United States a $12.2 billion trade surplus. The top U.S. exports to Brazil were mineral fuels, aircraft, machinery, and organic chemicals. The top U.S. imports from Brazil included mineral fuels, iron and steel, aircraft, machinery, and wood and wood pulp. In 2019, Brazil was the 14 th -largest trading partner of the United States. The United States was Brazil's second-largest trading partner, accounting for 14.8% of Brazil's total merchandise trade, compared to 24.4% for China. Brazil benefits from the Generalized System of Preferences program, which provides nonreciprocal, duty-free tariff treatment to certain products imported from designated developing countries. Brazil was the fourth-largest beneficiary of the program in 2019, with duty-free imports to the United States valued at $2.3 billion equivalent to 7.4% of all U.S. merchandise imports from Brazil. U.S.-Brazilian services trade is also significant. In 2018 (the most recent year for which data are available), total bilateral services trade amounted to $34.4 billion. U.S. services exports to Brazil totaled $28.2 billion, and U.S. services imports from Brazil totaled $6.1 billion, giving the United States a $22.1 billion surplus. Travel, transport, and telecommunications were the top categories of U.S. services exports to Brazil, and business services was the top category of U.S. imports from Brazil. In 2018, more than 2.2 million Brazilians visited the United States, spending $11.5 billion on travel and tourism. Brazil began exempting U.S. citizens from the country's tourist and business visa requirements in June 2019, which could increase U.S. travel to Brazil in the coming years. U.S. foreign direct investment (FDI) in Brazil has increased by more than 60% since 2008. As of 2018 (the most recent year for which data are available), the accumulated stock of U.S. FDI in Brazil was $70.9 billion, with significant investments in manufacturing, finance, and mining, among other sectors. <4.2. Security Cooperation> Although U.S.-Brazilian cooperation on security issues traditionally has been limited, law enforcement and military ties have grown closer in recent years. In 2018, the countries launched a new Permanent Forum on Security that aims to foster "strategic, intense, on-going bilateral cooperation" on a range of security challenges, including arms and drug trafficking, cybercrime, financial crimes, and terrorism. The United States and Brazil also engage in high-level security discussions under the long-standing Political-Military Dialogue and a new Strategic Partnership Dialogue, which met for the first time in September 2019. <4.2.1. Counternarcotics> Brazil is not a major drug-producing country, but it is the world's second-largest consumer of cocaine hydrochloride and likely the world's largest consumer of cocaine base. It is also a major transit country for cocaine bound for Europe. Organized crime in Brazil has increased in scope and scale over the past decade, as some of the country's large, well-organized, and heavily armed criminal groups such as the Red Command ( Comando Vermelho , or CV) and the First Capital Command ( Primeiro Comando da Capital , or PCC) have increased their transnational operations. Security analysts have attributed much of the recent violence in Brazil, particularly in the northern portion of the country, to clashes among the CV, PCC, and their local affiliates over control of strategic trafficking corridors. The Brazilian government has responded to the challenges posed by organized crime by bolstering security along the 9,767-mile border it shares with 10 nations, including the region's cocaine producers Bolivia, Colombia, and Peru. Under its Strategic Border Plan, introduced in 2011, the Brazilian government has deployed interagency resources, including unmanned aerial vehicles, to monitor illicit activity in high-risk locations along its borders and in the remote Amazon region. It also has carried out joint operations with neighboring countries. More recently, the Brazilian government has begun acquiring low-altitude mobile radars and other equipment to support its Integrated Border Monitoring System. That system was initially scheduled to be operational along the entire Brazilian border in 2022, but the Brazilian government now estimates that the system may not be completely in place until 2035 due to budget constraints. The United States supports counternarcotics capacity-building efforts in Brazil under a 2008 U.S.-Brazil Memorandum of Understanding on Narcotics Control and Law Enforcement. In 2018, the United States trained nearly 1,000 Brazilian police officers on combatting money laundering and community policing, among other topics. <4.2.2. Counterterrorism> Despite having little history of terrorism, Brazil began working closely with the United States and other international partners to assess and mitigate potential terrorist threats in the lead-up to hosting the 2014 World Cup and the 2016 Summer Olympic Games. Among other support, U.S. authorities trained Brazilian law enforcement on topics such as countering international terrorism, preventing attacks on soft targets, and identifying fraudulent documents. The Brazilian government also enacted legislation that criminalized terrorism and terrorist financing in 2016, closing a long-standing legal gap that reportedly had hindered counterterrorism investigations and prosecutions. Brazil further strengthened its legal framework for identifying and freezing terrorist assets in 2019 to address deficiencies identified by the intergovernmental Financial Action Task Force. Brazilian officials have used the new legal framework several times in recent years. In the weeks leading up to the 2016 Olympics, they dismantled a loose, online network of Islamic State sympathizers; 12 individuals were detained, and 8 ultimately were convicted and sentenced to between 5 and 15 years in prison for promoting the Islamic State and terrorist attacks through social media. In 2018, Brazilian prosecutors charged 11 individuals with planning to establish an Islamic State cell in Brazil and attempting to recruit fighters to send to Syria. Although some observers have applauded such efforts, others argue that Brazilian authorities are improperly surveilling, and stoking prejudice toward, the country's small Muslim population. Brazil historically had been reluctant to adopt specific antiterrorism legislation due to concerns about criminalizing the activities of social movements and other groups that engage in actions of political dissent. President Bolsonaro has reinvigorated those concerns by comparing Brazil's Landless Workers' Movement ( Movimento dos Trabalhadores Sem Terra , or MST) and protesters in Chile to terrorists. The Brazilian congress recently restricted the ability of the country's financial intelligence unit to report on terrorist financing, reportedly to prevent Bolsonaro from targeting political and social activists. That restriction could jeopardize Brazil's compliance with global anti-money laundering and antiterrorism financing standards. In December 2019, the U.S. Department of State allocated $700,000 of FY2019 Nonproliferation, Anti-Terrorism, Demining and Related Programs aid to Brazil to improve Brazilian law enforcement's capability to deter, detect, and respond to terrorism-related activities. The assistance will fund border security training and other initiatives, with a particular focus on preventing suspected terrorists and terrorist facilitators from transiting the so-called Tri-Border Area (TBA) of Brazil, Argentina, and Paraguay. The TBA has long been a haven for smuggling, money laundering, and other illicit activities. In September 2018, for example, Brazilian police arrested an alleged Hezbollah financier in the TBA who the U.S. Department of the Treasury had previously sanctioned as a Specially Designated Global Terrorist pursuant to Executive Order 13224. Brazil does not consider Hezbollah a terrorist organization, but the Bolsonaro Administration reportedly is considering measures to designate it as such. <4.2.3. Defense Cooperation> U.S.-Brazilian military ties have grown considerably over the past decade but have faced occasional setbacks. In the aftermath of a massive January 2010 earthquake in Haiti, U.S. and Brazilian military forces providing humanitarian assistance engaged in their largest combined operations since World War II. Later in 2010, the countries signed a Defense Cooperation Agreement and a General Security of Military Information Agreement intended to facilitate the sharing of classified information. The Brazilian congress did not approve those agreements until 2015, however, due to a cooling of relations after press reports revealed that the U.S. National Security Agency had engaged in extensive espionage in Brazil. A Master Information Exchange Agreement, signed in 2017, implemented the two previous agreements and enabled the countries to pursue bilateral defense-related technology projects. In July 2019, President Trump designated Brazil as a major non-NATO ally for the purposes of the Arms Export Control Act (22 U.S.C. 2751 et seq.). Among other benefits, that designation offers Brazil privileged access to the U.S. defense industry and increased joint military exchanges, exercises, and training. In FY2019, the U.S. government provided an estimated $666,000 in International Military Education and Training (IMET) assistance to Brazil to strengthen military-to-military relationships, increase the professionalization of Brazilian forces, and enhance the Brazilian military's capabilities. The U.S. government also delivered to Brazil $11.2 million of equipment under the Excess Defense Articles program and $96.7 million of equipment and services under the Foreign Military Sales program. The Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), does not specifically allocate any military assistance for Brazil, but the Trump Administration requested $625,000 in IMET for Brazil in FY2020. The Trump Administration's FY2021 budget proposal also includes $625,000 in IMET for Brazil. Although recent bilateral agreements and the U.S. designation of Brazil as a major non-NATO ally have laid a foundation for closer military ties, the long-term trajectory of the defense relationship may depend on broader geopolitical considerations. For example, U.S. officials reportedly have warned that bilateral military and intelligence cooperation could be in jeopardy if Brazil allows the Chinese telecommunications company Huawei to participate in Brazil's5G cellular network. Brazil may be reluctant to exclude Huawei, however, since the financial and economic benefits of using the company's lower cost components to deploy Brazil's 5G network more quickly may outweigh the less tangible benefits of closer defense ties with the United States. Moreover, the Bolsonaro Administration generally has sought to avoid confrontations with China Brazil's top trade partner and an important source of foreign investment. During his first year in office, Bolsonaro shifted from expressing concern that China was exerting too much control over key sectors of the Brazilian economy to lauding the strategic partnership between Brazil and China and calling for closer bilateral cooperation in various areas, including science and technology. More broadly, influential sectors of Brazil's military and foreign policy establishments are wary of becoming embroiled in global power rivalries or becoming technologically dependent on any one country. Congress has expressed interest in ensuring that U.S. military engagement with Brazil does not contribute to human rights abuses. The National Defense Authorization Act for Fiscal Year 2020 ( P.L. 116-92 ) directs the Secretary of Defense, in coordination with the Secretary of State, to submit a report to Congress regarding U.S.-Brazilian security cooperation. The report is to assess the capabilities of Brazil's military forces and describe the U.S. security cooperation relationship with Brazil, including U.S. objectives, ongoing or planned activities, and the Brazilian military capabilities that U.S. cooperation could enhance. The report is also to assess the human rights climate in Brazil, including the Brazilian military's adherence to human rights and an identification of any Brazilian military or security forces credibly alleged to have engaged in human rights violations that have received or purchased U.S. equipment or training. Moreover, the report is to describe ongoing or planned U.S. cooperation activities with Brazil focused on human rights and the extent to which U.S. security cooperation with Brazil could encourage accountability and promote reform through training on human rights, rule of law, and rules of engagement. Some Members of Congress also have called for changes to U.S. security cooperation with Brazil. A resolution introduced in September 2019 expressing profound concerns about threats to human rights, the rule of law, democracy, and the environment in Brazil ( H.Res. 594 , Grijalva) would call for the United States to rescind Brazil's designation as a major non-NATO ally and suspend assistance to Brazilian security forces, among other actions. In contrast, other Members have called for closer U.S. security ties with Brazil, including its inclusion in NATO partnership programs. <4.3. U.S. Support for Amazon Conservation> The U.S. government has supported conservation efforts in Brazil since the 1980s. Current U.S. Agency for International Development (USAID) activities are coordinated through the U.S.-Brazil Partnership for the Conservation of Amazon Biodiversity (PCAB). Launched in 2014, the PCAB brings together U.S. and Brazilian governments, private sector companies, and NGOs to strengthen protected area management and promote sustainable development in the Amazon. In addition to providing assistance for federally and state-managed protected areas, USAID works with indigenous and quilombola communities to strengthen their capacities to manage their resources and improve their livelihoods. USAID also supports the private sector-led Partnership Platform for the Amazon, which facilitates private investment in innovative conservation and sustainable development activities. In November 2019, USAID helped establish the Athelia Biodiversity Fund, a Brazilian equity fund that aims to raise $100 million of mostly private capital to invest in similar efforts. In addition to those long-term development programs, USAID's Office of Foreign Disaster Assistance deployed a team of wildfire experts to assist Brazilian fire investigators in 2019. Several other U.S. agencies are engaged in Brazil, often in collaboration with or with funding transferred from USAID. The U.S. Forest Service, for example, provides technical assistance to the Brazilian government, NGOs, and cooperatives intended to improve protected area management, reduce the threat of fire, conserve migratory bird habitat, and facilitate the establishment of sustainable value chains for forest products. NASA also has provided data and technical support to Brazil to help the country better monitor Amazon deforestation. President Trump has not requested funding for environmental programs in Brazil in any of his budget proposals. Nevertheless, Congress has continued to fund conservation activities in the country. In the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), Congress appropriated $15 million for the Brazilian Amazon, including $5 million to address fires in the region. Some Members of Congress have called on the Brazilian and U.S. governments to do more to conserve the Amazon. For example, a resolution introduced in the Senate in September 2019 ( S.Res. 337 , Schatz) would express bipartisan concern about fires and illegal deforestation in the Amazon, call on the Brazilian government to strengthen environmental enforcement and reinstate protections for indigenous communities, and back continued U.S. assistance to the Brazilian government and NGOs. The Act for the Amazon Act ( H.R. 4263 , DeFazio), introduced in September 2019, would take a more punitive approach. It would ban the importation of certain fossil fuels and agricultural products from Brazil, prohibit certain types of military-to-military engagement and security assistance to Brazil, and forbid U.S. agencies from entering into free trade negotiations with Brazil. <5. Outlook> More than five years after the country fell into recession and more than three years after the controversial impeachment and removal from office of President Rousseff, Brazil remains mired in difficult domestic circumstances. There are some signs that economic growth may be accelerating slowly, but tens of millions of Brazilians continue to struggle with poverty and precarious employment conditions. Repeated budget cuts have reduced social services for the most vulnerable and have weakened the Brazilian government's capacity to address other challenges, such as high levels of crime and increasing deforestation. President Bolsonaro was elected, in part, on his pledge to clean up the political system, but his interference in justice sector agencies and frequent attacks on the press, civil society groups, and other branches of government have placed additional stress on the country's already-strained democratic institutions. Brazilian policymakers are likely to remain focused on these internal challenges for the next several years, limiting Brazil's ability to take on regional responsibilities or exert its influence internationally. U.S.-Brazilian relations have grown closer since 2019, as President Bolsonaro's foreign policy has prioritized alignment with the Trump Administration. In addition to coordinating on international affairs, the U.S. and Brazilian governments have taken steps to bolster commercial ties and enhance security cooperation. Nonetheless, policy differences have emerged over sensitive issues, such as bilateral trade barriers and relations with China, which affect the economic and geopolitical interests of both countries. Those disagreements suggest the Trump and Bolsonaro Administrations may need to engage in more extensive consultations and confidence-building measures if they intend to avoid the historic pattern of U.S.-Brazilian relations, in which heightened expectations give way to mutual disappointment and mistrust. The 116 th Congress may continue to shape U.S.-Brazilian relations using its legislative and oversight powers. Although there appears to be considerable support in Congress for forging a long-term strategic partnership with Brazil, many Members may be reluctant to advance major bilateral commercial or security cooperation initiatives in the near term, given their concerns about democracy, human rights, and the environment in Brazil. For the time being, Congress may continue appropriating funding for programs with broad support, such as Amazon conservation efforts, while Members continue to advocate for divergent policy approaches toward the Bolsonaro Administration.

Occupying almost half of South America, Brazil is the fifth-largest and fifth-most-populous country in the world. Given its size and tremendous natural resources, Brazil has long had the potential to become a world power and periodically has been the focal point of U.S. policy in Latin America. Brazil's rise to prominence has been hindered, however, by uneven economic performance and political instability. After a period of strong economic growth and increased international influence during the first decade of the 21 st century, Brazil has struggled with a series of domestic crises in recent years. Since 2014, the country has experienced a deep recession, record-high homicide rate, and massive corruption scandal. Those combined crises contributed to the controversial impeachment and removal from office of President Dilma Rousseff (2011-2016). They also discredited much of Brazil's political class, paving the way for right-wing populist Jair Bolsonaro to win the presidency in October 2018. Since taking office in January 2019, President Bolsonaro has maintained the support of his political base by taking socially conservative stands on cultural issues and proposing hard-line security policies intended to reduce crime and violence. He also has begun implementing economic and regulatory reforms favored by international investors and Brazilian businesses. Bolsonaro's confrontational approach to governance has alienated many potential congressional allies, however, slowing the enactment of his policy agenda. Brazilian civil society groups also have pushed back against Bolsonaro and raised concerns about environmental destruction and the erosion of democratic institutions, human rights, and the rule of law in Brazil. In international affairs, the Bolsonaro Administration has moved away from Brazil's traditional commitment to autonomy and toward alignment with the United States. Bolsonaro has coordinated closely with the Trump Administration on challenges such as the crisis in Venezuela. On other matters, such as commercial ties with China, Bolsonaro has adopted a pragmatic approach intended to ensure continued access to Brazil's major export markets. The Trump Administration has welcomed Bolsonaro's rapprochement and sought to strengthen U.S.-Brazilian relations. In 2019, the Trump Administration took steps to bolster bilateral cooperation on counternarcotics and counterterrorism efforts and designated Brazil as a m ajor n on-NATO a lly . The United States and Brazil also agreed to several measures intended to facilitate trade and investment. Nevertheless, some Brazilians have questioned the benefits of partnership with the United States, as the Trump Administration has maintained certain import restrictions and threatened to impose tariffs on other key Brazilian products. The 116 th Congress has expressed renewed interest in Brazil and U.S.-Brazilian relations. Environmental conservation has been a major focus, with Congress appropriating $15 million for foreign assistance programs in the Brazilian Amazon, including $5 million to address fires in the region, in the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ). Likewise, Members introduced legislative proposals that would express support for Amazon conservation efforts ( S.Res. 337 ) and restrict U.S. defense and trade relations with Brazil in response to deforestation ( H.R. 4263 ). Congress also has expressed concerns about the state of democracy and human rights in Brazil. A provision of the National Defense Authorization Act for FY2020 ( P.L. 116-92 ) directs the Secretary of Defense, in coordination with the Secretary of State, to submit a report to Congress regarding Brazil's human rights climate and U.S.-Brazilian security cooperation. Another resolution ( H.Res. 594 ) would express concerns about threats to human rights, the rule of law, democracy, and the environment in Brazil.

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The economic effects of the Coronavirus Disease 2019 (COVID-19) pandemic has led Congress to consider general fiscal stimulus in the form of tax cuts. Additional stimulus proposals are under consideration. This report discusses tax cuts proposed or enacted during the Great Recession, current enacted provisions, and potential ones, and their potential effectiveness. <1. Tax Cuts During the Great Recession> Several tax cuts were discussed during consideration of fiscal stimulus in response to the Great Recession, and the specific proposal (the American Recovery and Reinvestment Act of 2009, P.L. 111-5 ). This stimulus as enacted included individual tax cuts directed at lower- and middle-income individuals and also included business tax cuts. An earlier fiscal stimulus ( P.L. 110 - 185 ) adopted in February 2008 included rebates and accelerated depreciation (bonus depreciation) for businesses. Some of these types of provisions were included in stimulus tax cut legislation in 2001-2003 and some of the debate centered on the effectiveness of alternatives. Among the tax cuts discussed in 2001 were tax rebates targeted toward lower-income individuals, a speed-up of tax rate reductions for higher-income individuals, a temporary sales tax holiday, a temporary payroll tax holiday, a temporary investment stimulus, corporate tax cuts (primarily repealing the alternative minimum tax), and dividend reductions. The 2001 tax cut included a rebate and the final version of the 2002 tax cut bill included a temporary investment stimulus. President Bush proposed accelerated rate cuts and dividend relief in his stimulus package for 2003. Proposals such as rebates were made by Democratic leaders. Although the economy recovered from the recession, issues of fiscal stimulus arose again in the 109 th Congress in the wake of Hurricane Katrina. The tax stimulus enacted in response included rebates for both low- and middle-income individuals and temporary bonus depreciation for businesses. In February of 2009, Congress passed a much larger package ( P.L. 111-5 ), which included spending and tax cuts. Among tax cuts the single largest provision was a two-year refundable earnings credit, the making-work-pay credit, with a dollar cap that was provided through a change in withholding rather than a rebate. Other tax components targeted lower-income individuals and businesses. The business provisions included a bonus depreciation extension and a carryback of net operating losses. The legislation also extended the Alternative Minimum Tax, which tends to go to higher-income individuals. In December of 2010, along with extending expiring tax cuts (which tended to benefit middle- and higher-income individuals) and unemployment benefits, P.L. 111-312 adopted a temporary two-percentage-point reduction in the payroll tax. As with the making-work-pay credit, its benefits were received in paychecks over time. Unlike the rebate or making-work-pay credit, the payroll tax reduction was not targeted to lower- and middle-income families. Many, but not all, tax cuts that were expiring after 2012 were extended permanently. The payroll tax reduction was not extended, and bonus depreciation was extended for a year. <2. Tax Cuts In Response to the Coronavirus> Congress has enacted four measures relating to the coronavirus. The first was an appropriations bill, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 ), which provided $8.3 billion in emergency funding for federal agencies to respond to the coronavirus. This measure was followed by two relief measures that contained tax provisions. The Families First Coronavirus Response Act ( P.L. 116-127 ) provided refundable employer tax credits against payroll taxes to compensate for family and medical leave mandated in the bill. The estimated cost is $95 billion in revenue loss along with $10 billion in outlays because the credit is refundable. The bill also had spending provisions that increased the total cost to $191 billion. The Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136 ) had much larger revenue effects, including a refundable rebate, phased out at high-income levels, of $393 billion ($142 billion in revenue loss and $151 billion in outlays), $229 billion in business tax provisions (primarily increasing the use of net operating losses but including a tax credit for retaining employees costing $55 billion), and a number of minor individual tax provisions costing $11 billion. The bill also provided a delay in the payment of payroll taxes, increasing cash flow by $352 billion in the first two years, which were subsequently offset by later payments. The CARES Act also included another relief provision, the Paycheck Protection Program (PPP), which was structured as a loan for small business that could be forgiven if the business retained workers. The PPP was estimated to cost $377 billion, and it also contained a provision excluding the forgiven loan from being included in income (which the tax law otherwise would have counted as income). The exclusion may be negated by IRS guidance disallowing the deduction of expenses. Although structured as a loan forgiveness, such a program has a similar effect as the employee retention tax credit. The PPP can also be considered as an alternative to unemployment benefits because loan forgiveness is contingent on retaining and paying employees. The CARES Act also had direct spending, transfers, and other deferrals or loans that increased its overall cost to $1.7 trillion; the largest of these provisions in dollar terms was an expansion in unemployment benefits that cost $268 billion. The final bill, The Paycheck Protection Program and Health Care Enhancement Act ( P.L. 116-139 ) did not include tax provisions. It would add $321 billion to the PPP, $62 billion in additional small business loan authority, and $100 billion in health-related spending ($75 billion for health providers and $25 billion for COVID-19 testing). Additional stimulus legislation may be considered, which might include aid to state and local governments and additional funds for the PPP. <3. The Effectiveness of Alternative Tax Cuts> Effectiveness of a tax cut for short run stimulus purposes is judged by the extent to which the tax cut increases private demand (either consumption or investment spending). A tax cut that is saved will have no short term stimulative economic effect (or long term one, if the cut is financed by a deficit, since increased private saving would be offset by decreased government saving). Thus, in general, tax cuts received by individuals will not be successful as a short-run stimulus if they lead to additional saving, and tax cuts received by firms will not be successful unless they lead to spending on investment (or lead quickly to spending on consumption by shareholders). Because part of a tax cut is saved, no tax cut will be as stimulative as government spending. The following four propositions can generally be supported by economic theory and empirical evidence: (1) Individual income tax cuts directed at lower-income individuals will likely have a larger effect than cuts directed at higher income individuals, other things equal. This distributional effect suggests that the most effective tax cut would be a rebate which is not only a flat amount but specifically directed at lower-income individuals (who did not have tax liability). While payroll and sales taxes are more concentrated among lower-and moderate-income individuals than the normal income tax, they are largely proportional taxes and the bulk of them will still go to middle- and higher-income individuals. Most income tax cuts actually exclude the bottom 44% of the population who do not pay income tax unless they are refundable (as with the February 2008 cut). Similarly, payroll tax cuts exclude 16% of the population who do not pay payroll taxes. Tax reductions enacted in 2001 were concentrated among the upper part of the income distribution as are dividend and capital gains tax reduction. A flat dollar reduction, if refundable, would be more concentrated on lower and middle incomes than tax cuts that reduce rates or allow deductions. (2) There is weak empirical evidence and even weaker theoretical basis that a lump sum tax cut is less likely to be spent than one received in small increments (e.g. through withholding). This effect could make a rebate less effective than alternative individual tax cuts if it were not for the distributional evidence. However, the distributional effect is more solidly grounded in economic theory, and is based on more concrete and extensive empirical evidence. (3) Certain types of temporary tax cuts are likely to be more effective than permanent ones while, in other cases, they are less effective. The most important illustration of this effect is a temporary investment subsidy, but it could also apply to a temporary sales tax holiday or any design where spending is required to obtain the subsidy and is for a limited duration. Otherwise, temporary cuts are likely to be less effective than permanent ones. (4) Corporate tax cuts that do not make new investments more profitable are unlikely to have much effect on investment or consumer spending, especially when the economy is in a recession, and the effect of corporate rate cuts is likely small. The remainder of this report provides a summary of the evidence and economic reasoning supporting these propositions, followed by a brief discussion of current policies. Before discussing these propositions, however, it is important to note the differences between a model where individuals consume based primarily on current income compared to those where individuals consume primarily out of permanent (lifetime) income, because much of the empirical analysis focuses on this issue. Optimal lifetime consumption models imply that consumption is based on permanent income and suggest very little will be spent out of transitory income (because it has little effect on permanent income). Thus, a temporary tax cut, which is the normal mode of a fiscal stimulus, would be ineffective. Extensive empirical investigation has rejected this permanent income model in its pure form and suggests that consumption responds to permanent and current income. Proposition 1: A tax cut directed at lower - income individuals should have a larger effect on spending than one directed at higher - income individuals. Data show that the fraction of income saved rises as income rises. One study found that the savings rate for the top 1% was at least 300 times the average. Arraying families by wealth, another study found that the top 1% saved 37%, the next 9% saved 15%, and the bottom 90% saved 0%. This pattern is far too pronounced to be accounted for by business cycle reasons and cannot be explained by life-cycle patterns and thus implies a departure from the permanent income model of consumption. A saving rate that rises across incomes could be expected even in a permanent income model if each individual has the same permanent saving rate. At any time, some individuals may be earning lower than average amounts and others higher than average amounts. Thus the transitory income would understate permanent income in some cases and overstate it in others. Since more individuals with unusually low incomes would fall into the lower groups (and more with higher incomes into the high groups), some pattern of rising saving rates is expected. But empirically the effect is far too large to be explained by this phenomenon (which can be examined by looking at variations over time for an individual). A rising saving share with income could also arise from life-cycle reasons. Typically income is low in the early years of life, rises during the working career and falls at retirement. If individuals want consumption to be smoother than income, they will save less when they are young and old and have lower incomes, and save more in the middle when they have higher incomes. However, when examining the data, age does very little to explain saving behavior and the patterns of rising saving rates with income persist within age groups. Aside from these empirical observations, there are theoretical reasons to expect that lower-income individuals are likely to spend more of an additional dollar of income than do higher-income individuals, especially in the case of a temporary tax cut, which is the kind of cut normally associated with fiscal stimulus. They may have a lower-lifetime saving rate because social welfare programs are likely to have a higher wage replacement rate during instances of bad luck (e.g., disability) or old age and because they are less likely to wish to leave bequests. Indeed, for some means-tested programs, assets can disqualify an individual from coverage. They may have less information with which to optimize over time and, if they save at all, simply have a target amount (at least in the short run), so that additional income is spent (including temporary income increases). Finally, they are more likely to be subject to liquidity constraints; that is, to prefer to spend more than their earnings and not be able to because they cannot borrow and have no assets. Indeed, permanent income theories suggest that temporary tax cuts for non-liquidity constrained individuals may have virtually no effect, while tax cuts for liquidity constrained individuals will be largely spent. Proposition 2. A tax cut provided through a lump sum payment may be less likely to be spent than one which shows up in withholding, but the evidence is weak. This differential effect (which would not occur in a permanent income model) was pointed out by the Congressional Budget Office (CBO) in its studies of the effectiveness of alternative tax cuts. CBO referred to a comparison of results from two studies that examined the effect of income tax refunds, and of expected rate cuts from pre-announced tax cuts of the early 1980s. Both studies rejected the permanent income model (suggesting some spending effects from a transitory tax cut), but larger effects were found for the rate reductions. There are, however, two reservations about comparing these two events to gain insight into the effects of lump-sum tax cuts versus tax cuts reflected in paychecks over time. First, to the extent that individuals use over-withholding as a means of forcing themselves to save, one would not expect spending to rise when the refund is received, even though it might rise when an unplanned rebate is received. Thus, finding a smaller amount of spending out of a refund than out of tax cuts reflected in paychecks may not be very meaningful. Secondly, the model assumes that individuals were certain that the later phases of the Reagan tax cuts would be received. If there was some uncertainty, however, the fact that spending did not increase until the tax cut was actually received may partially reflect not the failure of the permanent income model, but the lack of certainty about receipt of the cut. If a differential does indeed exist, this effect could make the payroll tax cut (and sales tax holidays) more effective than a rebate. However, these "lump sum" effects would have to be offset by the distributional effects discussed in proposition I and supported by considerable empirical evidence. For that reason, it would be difficult to conclude that a payroll tax holiday would be more effective than a rebate directed at low-income individuals. In addition, some evidence on the 2001 and 2008 tax rebates suggested that a large fraction of that rebate was spent. Evidence on the payroll tax cut in 2011 found a smaller share of that tax cut spent than the rebate, but that difference may reflect methodological and distributional differences or differences in economic conditions. Proposition 3. Certain types of temporary tax cuts may be more effective than permanent ones. In general, the permanent income modeling of consumption, even when it does not hold in a pure form, suggests that temporary tax cuts will be less effective than permanent ones, presenting something of a dilemma because tax cuts motivated for fiscal policy reasons need to be temporary (if they are not to hamper long-term growth). However, temporary tax cuts that depend on spending (rather than receiving income) are likely to be more effective in the short run than permanent ones. During a period of slack employment, a payroll or individual income tax cut is simply a temporary windfall which can be spent at any time without any further consequence for the size of the tax cut. But if the tax benefit is triggered by spending, a temporary tax cut will be more effective (just as a temporary sale tends to induce a large response). The most common example is the investment tax credit or a similar subsidy, such as temporary partial expensing of investment, but the same would be true of a temporary sales tax holiday. Although expensing of equipment is no longer an option (as 100% is currently allowed following the 2017 tax cut), investment credits would still be a possible investment incentive. Note that while this feature may make a temporary tax cut more effective than a permanent one, it does not mean that the stimulus is more effective than other alternatives when all factors are considered. Most evidence suggests that investment subsidies have a small effect on investment and that the temporary investment subsidy enacted in 2006 was not very effective. And, it may be particularly difficult to induce investment (even with a temporary subsidy) when excess capacity exists. While firms benefit from the temporary subsidy, they lose the benefit of delaying cash outlays. If investment is insensitive to these cost effects, a subsidy directed at increasing consumption may be more effective even if the latter is not the type where the temporary nature provides a benefit. In the case of the sales tax holiday versus other individual cuts, there may be a substantial implementation lag in arranging the sales tax holiday since sales taxes are imposed by the states, and fiscal stimulus may be applied at the wrong time. Moreover, the anticipation of the holiday should be contractionary. That is, a pre-announced future temporary spending subsidy is initially contractionary. Proposition 4. Corporate tax cuts that do not make new investments more profitable would not have much effect; corporate rate cuts are less effective than investment subsidies. One proposal considered in the past was a repeal of the corporate alternative minimum tax with a refund of existing credits. Such a change does not necessarily make new investment more profitable; indeed, it is possible that new investment may be subject to higher tax burdens under the regular rates than under the lower rates in the AMT. The corporate AMT was permanently repealed after the 2017 tax cut, but other measures of a similar nature might be considered. An extension of net operating loss (NOL) carrybacks was proposed in the 2009 stimulus package and would likely not make investments more profitable although a temporary restoration of NOL carrybacks (which were eliminated in the 2017 tax cut), as well as additional measures to allow benefits of losses was included in proposals to aid businesses severely affected by COVID-19. Economic theory suggests that the investment decision should be driven by its expected profitability. A tax decrease not associated with that profitability should have no effect on investment. Rather, a tax decrease (which increases a firm's cash flow) is more likely to be spent on reducing debt, or paying out dividends. Both choices would not expand aggregate demand. Similarly, a corporate rate reduction, which largely benefits existing capital, would have modest effect compared to a stimulus directed at new investment. There is a potential constraint, however: if the firm does not have access to outside capital or finds outside capital excessively costly, cash flow might have an effect on investment. This effect would be likely, however, to be focused on small firms. There is some empirical evidence of a positive relationship between firm investment and cash flow. However, interpreting this evidence with respect to the effectiveness of a corporate cash flow as a stimulus to investment spending during an economic contraction is hampered by two important reservations. First, in most cases, cash flow is correlated with the productivity of investment and investment growth, and investment may be responding not to cash flow but to investment outlook. Secondly, even if there is some independent effect of cash flow in normal circumstances, then whether an increase in cash flow would induce a firm to make new investments during periods of excess capacity is doubtful. In any case, a choice that is more focused on investment (such as an investment subsidy) would have a more pronounced effect than one that is not. During the period of tight credit now being experienced a net operating loss carryback may have more effect because distressed firms are finding it more difficult to borrow. General corporate rate cuts are less likely to be effective than investment subsidies because they have a smaller "bang-for-the-buck" because much of their cost is a windfall that only affects cash flow and not the return to new investment. Since even temporary investment subsidies do not appear to have worked effectively, a corporate rate cut or other provision that primarily affects cash flow would be expected to have a small effect. <4. Multipliers and the Effectiveness of Stimulus Proposals> This evidence on the effectiveness of alternative stimulus methods is reflected in multipliers. A multiplier indicates how much additional output is produced by a given amount of revenue loss or spending increases. For example, a multiplier of 0.5 estimates that a dollar of revenue loss produces $0.50 of additional output, whereas a multiplier of 1.5 indicates that a dollar of revenue loss will produce $1.50 of additional output. Multipliers differ among policies and also depend on how close the economy is to full employment. During the Great Recession, multipliers for a refundable rebate (constituting most of the individual tax relief in the CARES Act) were estimated in a range of 0.4 to 1.22 by the Congressional Budget Office (CBO) and at 1.22 by a private forecaster (Moody's). Net operating loss benefits (constituting most of the business provisions in the CARES Act) were estimated at 0 to 0.4 by CBO and 0.25 by Moody's. Non-tax options, such as direct transfers to individuals and aid to state and local governments had multipliers similar to, or larger than, refundable rebates. CBO estimated multipliers of between 0.4 and 2.1 for direct transfers (such as unemployment) whereas Moody's estimated multipliers between 1.55 and 1.71. Aid to state and local governments has multipliers estimated at 0.4 to 1.8 by CBO and 1.34 by Moody's. The larger multipliers for these options reflected the greater share of the benefit spent. It is possible that standard multipliers do not apply in this recession when consumers face supply constraints that inhibit spending due to the closure of businesses. By contrast, employment has declined very rapidly since March. Some families receiving tax rebates include workers who have lost their jobs or otherwise seen their incomes diminish due to COVID-19. Although only a subset of the population, their rate of spending may be higher than the standard multiplier would suggest. Penn-Wharton Budget Model researchers estimate that the effects of the CARES Act implies a multiplier of 0.4 for the rebates and 0.2 for business provisions. This study assigned similar multipliers of around 0.4 to the PPP and most other provisions but estimated higher multipliers for spending on health and disaster (0.8) and aid to state and local governments (0.7). Even if the CARES Act and other measures enacted to address the effects of the coronavirus are not very effective as stimulus measures, the measures could also be thought of as relief measures more than stimulus measures. For example, if individuals and businesses use payments to pay debt, these payments do not increase spending, but they may help individuals to avoid credit problems and businesses to survive. They may also make it easier for individual and businesses to comply with social distancing measures to help prevent the spread of the coronavirus.

The economic effects of the Coronavirus Disease 2019 (COVID-19) pandemic has led Congress to enact general fiscal stimulus in the form of tax cuts and spending increases. Further stimulus may be considered. This report discusses tax cuts enacted during the Great Recession, as well as those recently enacted and those under consideration. In response to the Great Recession several types of tax cuts were debated as possible fiscal stimulus—with fiscal stimulus legislation enacted in February 2008 ( P.L. 110-185 ) and a much larger one in February 2009 ( P.L. 111-5 ). Both bills included individual tax cuts aimed at lower- and middle-income individuals, along with business tax cuts. In December 2010, along with an extension of expiring tax cuts, a temporary payroll tax cut was adopted. Many, but not all, tax cuts that were expiring after 2012 were extended permanently. A tax cut for stimulus is more effective the greater the fraction of it that is spent. Empirical evidence suggests individual tax cuts will be more likely to be spent if they go to lower-income individuals, making the tax rebate for lower-income individuals likely more effective than several other tax cuts. There is some weak evidence that tax cuts received in a lump sum will have a smaller stimulative effect than those reflected in paychecks, but this evidence is uncertain. However, studies of the 2001 rebate found that a significant amount of that rebate was spent. While temporary individual tax cuts likely have smaller effects than permanent ones, temporary cuts contingent on spending (such as temporary investment subsidies or a sales tax holiday) are likely more effective than permanent cuts. (Sales tax holidays may, however, be very difficult to implement.) The effect of business tax cuts is uncertain, but likely small for tax cuts whose main effects are through cash flow. Multiplier estimates reflect these considerations. Multiplier estimates from fiscal stimulus enacted during the Great Recession suggest that the most effective tax stimulus provisions in the recent legislation addressing the COVID-19 pandemic were likely the individual rebates, with business provisions having smaller effects. The Paycheck Protection Program and spending and transfer programs were also likely to have larger effects, although some of these demand-side stimulus programs that transferred incomes to individuals may be less effective due to the unique nature of the supply constraints in the current environment. Even if they do not stimulate spending, these measures could also be viewed as relief measures that may help individuals and businesses deal with debt and be more able to comply with social distancing measures designed to prevent the spread of the coronavirus.

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<1. Introduction> Poverty is an ongoing topic of interest for Congress, in various capacities: as a factor to be considered when allocating funding for certain programs, as an eligibility criterion for some low-income assistance programs, and to gauge the well-being of individuals, families, or the economy as a whole. The poverty rate fell to 11.8% in 2018 from 12.3% in 2017. In both years, the poverty rate was lower than the pre-recessionary level of 12.5% in 2007. However, since the end of the Great Recession in 2009, the poverty rate remained elevated for approximately the first four years after the recession's end, and despite reductions in the poverty rate in recent years, it remains higher than its record-low of 11.1% in 1973. Poverty's persistence alongside indicators of economic strength has led policymakers to continually examine the drivers of poverty both economic and social and the effectiveness of various policy responses. As the conversations about poverty and public policy continue, it may be useful to consider the question: Who are the people who are poor in the United States? This report provides a snapshot of who was poor in 2018 by selected demographic, economic, and social characteristics. The data presented here show that people in poverty are not a monolithic group, but rather a diverse collection of families and individuals at different stages of life, living in different circumstances. Special attention is paid in this report to the role of work in the lives of people who are poor. Income from work, or the lack thereof, is central to the economic fortunes not only of those considered "working-age," but also of children, who are generally dependent on working-age adults, and persons who are aged (age 65 and older), who generally have prior experience in the workforce that shapes their economic well-being after they retire. Attention is also paid to living arrangements. Because poverty is measured at the family level, considerations such as whether someone lives alone, or whom someone lives and potentially shares resources with, influence economic well-being. Other factors that affect family well-being, and that influence individuals' attachment to and success in the labor market, are important for considering individuals' experiences of poverty but are beyond the scope of this report. This snapshot looks at the composition of people in poverty what groups comprise what share of the poverty population rather than at poverty rates among different groups. This provides a different perspective in viewing poverty. A large population group such as non-Hispanic whites might have relatively low poverty rates, but because of the group's size in the overall population it represents a relatively large share of the poverty population. A small population, such as American Indians and Alaska Natives, might have relatively high poverty rates, but because of the group's size it represents a relatively small share of the poverty population. Both perspectives on poverty are valid and relevant to public policy. Readers interested in an examination of poverty rates for different demographic groups and trends in poverty over time should see CRS Report R46000, Poverty in the United States in 2018: In Brief , by Joseph Dalaker. <1.1. Data Used in this Report> Poverty, in general, is a lack of resources to meet basic needs. This report uses the official measure of poverty used by the U.S. Census Bureau to identify individuals as "poor." However, it is important to note that the Census poverty measure is actually family -based. Whether a person is considered poor depends on his or her money income and the income of any other family members those related to a family head by birth, marriage, or adoption with whom the person lives and presumably shares resources. If an individual is living alone or with people who are not relatives, that individual is considered a family of one and only his or her income is counted in determining his or her poverty status. That money income is then compared with a dollar threshold, which is based on that individual's family composition. For example, the poverty threshold for a working-age single person (who does not live in a family) in 2018 was $13,064. A single person with income below that amount is considered poor. The poverty threshold for a family of two adults and two children was $25,465. If the combined income of all family members was below that amount, all people in that family would be considered poor. The current official poverty measure has existed for about 50 years and is widely used, but it does have limitations. For example, the official measure looks only at pre-tax money income and does not examine the impact of government taxes and non-cash benefits on family well-being. The official measure also generally does not take the value of assets into account, though a recent change in measurement now considers distributions from retirement savings as income. The official measure is also the same across the country, and does not take into consideration differences in living costs in different geographical areas. Additionally, the measure's current definition of family does not take into account modern resource-sharing arrangements, such as those of cohabiting couples. The Census Bureau now publishes a supplemental poverty measure (SPM) for research purposes that does take into account taxes and transfers, make adjustments for housing costs by geographical area, and use an expanded definition of family. <2. How Many People Were Poor in 2018?> In 2018, an estimated 38.1 million people had pre-tax money income below the poverty threshold. As shown in Figure 1 , people who were poor accounted for 11.8% of the total noninstitutionalized population. The number and percentage of people in poverty reflect those whose family income fell short of the poverty threshold by any dollar amount. Of course, some people are poorer than others. One area of policy focus has been on the very poor: those considered to be in "deep poverty." Deep poverty is usually defined as having income below 50% of the poverty threshold. In 2018, an estimated 17.3 million persons, close to half of all people in poverty (45.3%), were counted as living in deep poverty. <3. Who Was Poor in 2018? An Overview> The population of people living in poverty comprised individuals of all ages and sexes, and across all racial and ethnic groups. <3.1. Age> Figure 2 shows the composition of the population living in poverty and the overall population (for context) by age group in 2018. Three categories are presented: children (those under age 18), working-age adults (those ages 18 to 64), and the aged (those age 65 and older). As shown in the figure, slightly less than one-third (11.9 million) of all people in poverty were children. Children were over-represented among people in poverty relative to the overall population 31.1% compared to 22.6%. People who were working age (18-64) made up the largest share of the population who were poor, but they were under-represented among people in poverty relative to the overall population (55.4% compared to 61.1%). Among persons who were poor, 13.5% were age 65 and older, a smaller representation than their share of the overall population (16.3%). <3.2. Race and Ethnicity> Figure 3 shows the composition of people in the poverty population and the total population (for context) by race and ethnicity for 2018. The racial and ethnic groups presented are ranked by the size of their total population (which is the same in both cases). Non-Hispanic whites were the largest racial/ethnic group overall (60.2% of the total population), and represented the largest racial/ethnic group within the poverty population (41.2%). Hispanics (of any race) were the second largest group (18.5% of the total population) and represented 27.6% of all those who were poor. Non-Hispanic African-Americans were the third largest racial/ethnic group in both the total and poverty populations, representing 12.3% and 21.9%, respectively. Note that most minority groups were over-represented in the poverty population relative to their share of the overall population. The over-represented groups were Hispanics, non-Hispanic African-Americans, and non-Hispanic American Indians and Alaska Natives. Under-represented racial/ethnic groups were non-Hispanic whites and Asians. The racial and ethnic composition of people in poverty by age group is shaped by the overall demographic trends affecting each age group. As illustrated in Figure 4 , children (under age 18), both poor and overall, are more racially and ethnically diverse than adults, especially the aged (age 65+). However, minorities were over-represented in the poverty population for all age groups in 2018. For instance, Hispanic children (of any race) made up the largest share of poor children (37.4%) whereas non-Hispanic white children made up the largest share (50.0%) of children overall. <3.3. Sex> Women slightly outnumber men in the overall population, accounting for 51.0% of the total population in 2018. However, as shown in Figure 5 , women represented an even larger share (56.0%) of the population in poverty. This over-representation may be due, in part, to the fact that women are more likely than men to head single-parent households, a family type that is more likely to be poor. Additionally, men's earnings are higher than women's on average, even accounting for differences in full-time year-round employment status. <4. Poverty Among Children, Working-Age Adults, and Aged Adults> Poverty raises different public policy considerations for children, working-age adults, and aged adults. Children are not expected to support themselves economically they are dependents of their parents or other adult caretakers who are assumed to fulfill that responsibility. Policies affecting the family income and poverty status of children generally apply to their parents or other adult caretakers. Working-age adults aside from those who are severely disabled are expected to work and to support themselves and their children, if they have any. Aged adults may retire from work and draw income from public or private benefits, which are based primarily on their past work. The remainder of this report separately explores poverty among children, working-age adults, and aged adults. Though relevant policy considerations may differ among the three groups, the central role played by work as the primary means of economic support for individuals and families is highlighted. That work could be one's own work, the work of the parents or other family members, or past work providing retirement income. Similarly, because poverty is a family-based measure and the ability to share resources is an important consideration in economic well-being, living arrangements are also explored. <4.1. Children> As noted earlier, children made up slightly less than one-third of all people in poverty in America in 2018, even though they made up less than a quarter of the total population. Thus, children in America are disproportionately poor. Of the three age groups examined in this report, children had the highest poverty rate in 2018, 16.2%. Children rely on their parents or other adult caretakers for their support. That support, even for children who are poor, is likely to come from earnings from the work of their parents or other adult caretakers. Figure 6 shows the composition of children who were poor and children in the total population by number of adult workers in the family for 2018. Note that the number of adult workers can exceed two, as it would include all adults in the family (such as siblings older than 18, grandparents, or other relatives over the age of 18). The figure shows that among children in the total population, 93.0% lived in families with at least one adult worker and roughly half (51.4%) lived in families with two or more adult workers. Among children who were poor, just over two-thirds lived in families with one or more workers. A majority of children in poor families (57.1%) lived in families with one worker, compared with 11.0% who lived in families with two or more workers. The remaining 31.9% lived in families with no workers. The number of potential adult workers in a child's family is affected by the type of family a child lives in. A single parent family might have only one potential adult worker, while a married-couple family has at least two potential adult workers. Figure 7 shows the distribution of children who were poor and children in the total population by family type in 2018. Children living in female-headed families accounted for a majority (57.5%) of all children who were poor, a disproportionate share relative to children in the total population. However, children in married-couple families still accounted for nearly one-third (32.2%) of all children who were poor. Despite a relatively low poverty rate for children in married-couple families in 2018, the large size of this population overall (children in married-couple families accounted for over two-thirds of all children) meant that a substantial number of children who were poor lived in this family type. Married-couple families were the only family type that was significantly under - represented among the population of children in poverty relative to the overall population. Children who are poor are also more likely to live in larger families. Larger families require more income to meet needs, and thus the poverty thresholds for larger families are higher than for small families. However, since most children live in families with earnings, and earnings are not determined by family size they are determined by what the worker can command in the labor market larger families are more likely to be poor. Figure 8 shows the composition of children who were poor and children in the overall population by number of children in the family in 2018. In that year, 24.7% of all children who were poor were in families with four or more children, which is disproportionately higher than the 14.2% of children in the overall population living in families of that size. In contrast, 46.0% of children who were poor were in families with only one or two children. <4.2. Working-Age Adults> The majority of people in poverty in America are working-age adults (18-64 years old). This age group represented 55.4% (21.1 million individuals) of all people in poverty in 2018. Overall, this age group had a poverty rate of 10.7%, a lower rate than that of the overall population. Because poverty is a state of low income, and income generally comes from work, it is useful to explore the work status of working-age adults who are poor. In the overall population of working-age adults, the majority (77.3%) worked in 2018. However, among working-age adults who were poor, the majority (63.2%) did not work. As shown in Figure 9 , 36.8% of working-age adults who were poor were working in some capacity, either full- or part-time, full- or part-year. However, a relatively small share (12.0%) of working-age adults who were poor worked full-time all year. When working-age adults, both the poor and those in the overall population, were asked why they were not working, a wide range of reasons were given. Of non-working adults who were poor, one-third reported being ill or disabled, one-fourth reported taking care of family members, 18.8% said they were going to school, 11.4% said they were retired, and 6.0% said they could not find a job. For those not working in the overall population, a greater proportion (16.2%) reported being retired and a smaller proportion (27.1%) reported being ill or disabled. A large body of research has shown that success in the workforce is related to educational attainment. Credentials indicating higher levels of education tend to be reflected in higher earnings and steadier work. Figure 10 shows both working-age adults who were poor and all working-age adults by educational credential. The largest group (54.7%) of poor working-age adults in 2018 were those who obtained a high school diploma but no post-secondary educational credential. (High school graduates without a post-secondary credential were also the largest group (45.8%) within the total population of working-age adults.) Those lacking a high school diploma accounted for another 24.2% of all poor working-age adults, more than twice the share represented in the overall population (10.2%). The remaining 21.1% of 18 to 64 year olds below poverty had some postsecondary credential; the corresponding figure for all 18 to 64 year olds was 44.0%. It should be noted that the working-age adult group includes young adults, whose education might not be finished. Working-age adults represented a diverse group in terms of their family and living arrangements. Figure 11 shows both poor and all working-age adults by their living arrangements. A majority of both groups lived in families, although family living arrangements were more prevalent in the overall population (77.8%) than among the poor (56.4%). (As noted previously, "family," as used by the Census Bureau, includes people related by birth, marriage, or adoption.) Working-age adults who did not live in families were disproportionately poor in 2018; 43.6% of all working-age adults in poverty lived outside of a family. Included in this group were those living alone (19.0%) and those living with cohabiting partners (13.0%) or other unrelated adults/roommates (11.7%). However, determination of the poverty status of people living outside of families but with others is not straightforward. The poverty status of individuals with cohabiting partners or who are living with other adults is based on each individual's income; no "pooling" of income is assumed in the official poverty measure, including among cohabiting partners who may be sharing resources. <4.3. Aged Persons> Of the three age groups discussed in this report, aged adults are the least likely to be living below the poverty line. In 2018, they accounted for 16.3% of the total population, compared with 13.5% of the population in poverty. The poverty rate among aged adults was 9.7% in 2018. Aged adults may retire from the workforce with the support of both public and private sector policies, and in 2018, 76.4% of all adults aged 65 and older did not work. However, income derived from work past work, the earnings of other family members, and the earnings of the minority of aged adults who continue to work plays a key role in determining the economic well-being of aged adults. Figure 12 explores various forms of work-related income received directly by aged persons or their families, including the following: Social Security income is earned through past work, with the initial benefit determined based on past earnings, with the benefit replacing a portion of those earnings. In 2018, Social Security was received by the families of 63.8% of all aged persons who are poor, compared to 85.1% of aged persons in the total population. Aged persons also frequently receive income from pensions and other benefits earned from jobs held during their working careers. These include private pensions or government pensions paid to former public sector employees. Far fewer aged adults in poverty receive these benefits compared to the overall aged population. In 2018, retirement, disability, or survivor pensions were received by the families of 51.6% of all aged persons, compared with 10.4% of the families of aged persons who were poor. Earnings from current work either by the aged adult member or other family members are also often received by families with aged persons. In 2018, earnings were received by the families of 41.4% of aged persons. In comparison, 10.5% of families of aged persons who were poor received earnings from work. When considering all of these various forms of work-derived income, most aged adults (97.1%) in the total population lived in families with income derived from work: either past work where Social Security or pension income was earned, or the current work of the aged adult or a family member. This share was smaller among aged persons who were poor, but still, almost three in four (74.2%) lived in families with income derived from work. Figure 13 shows aged adults living in poverty by living arrangement, which is, as previously mentioned, an important consideration because of the possibility of resource-sharing. In 2018, roughly half (49.9%) of aged adults who were poor lived alone, which is a significantly higher rate than in the overall population of aged adults (28.0%). Aged adults in poverty were much less likely to be living in families than the overall aged population (43.1% compared to 68.4%). <5. Conclusion> This report presents basic information about the 38.1 million people in America who had income below the poverty line in 2018. Although it is presumed that they are all subject to income constraints, these data illustrate that they are not a homogenous group. For example, they are children, working-age adults, and aged adults; full-time full-year workers, caretakers for family members, or outside the workforce for other or unknown reasons; and living alone or in families. As this report shows, certain groups are over-represented among those living in poverty relative to the total population. These include, among others, women, minorities, children, and people living outside of families or alone. The report also shows the central role of income from work in determining whether a group is over-represented among those living in poverty. For children, this income is based on the work of their parents or other family members. For working-age adults, it is their own work that generally determines their poverty status. For aged adults, who are often retired from the workforce, it is primarily their past work or the work of those they live with that determines their status. However, sometimes earnings from work are not enough to prevent poverty. Two-thirds of children living in poverty in 2018 were in families with at least one adult earning income during the year. In 2018, more than 7 out of 10 poor aged persons had some form of work-based income. The complexity of circumstances that result in individuals experiencing poverty both individual and systemic are beyond the scope of this report. However, those circumstances warrant further exploration when considering federal policy interventions designed to reduce the incidence, or ameliorate the effects of, poverty. <5.1. Appendix. Data Tables>

This report provides a snapshot of the characteristics of the poor in the United States in 2018. It shows that people from families whose income falls below the federal poverty thresholds represent a diverse subset of the overall population. There were 38.1 million people living below the federal poverty level in 2018, representing 11.8% of the total population. Nearly half (45.3%) of all people in poverty lived in deep poverty (with income below 50% of the poverty threshold). The largest share of people in poverty were non-Hispanic white (41.2%) but the majority were not. Almost all other racial and ethnic groups were over-represented among the poor, relative to their prevalence in the overall population. Similar to the overall population, children who were poor were more racially and ethnically diverse than adults who were poor, especially aged adults. A majority (56.0%) of poor people were women. Children (under age 18) were disproportionately represented among people in poverty, constituting slightly less than one-third (31.1%) of this group. Over two-thirds of poor children (68.1%) lived in families where there was at least one worker, compared with 11.0% who lived in families with at least two workers. Conversely, in the overall population, half of all children lived in families with two workers. Most poor children lived in single parent homes, but nearly one-third (32.2%) lived in married-couple families. Over two-thirds (68.2%) of children in the overall population lived in married-couple families. The majority of people in poverty were working-age adults (age 18-64). While most (77.3%) working-age adults in the overall population were working in 2018, most (63.2%) working-age adults in poverty were not working in 2018. The most common reasons reported for non-work among those in poverty were illness or disability, the need to meet caretaking responsibilities, or being enrolled in school. Although most working-aged adults in poverty were not working, 36.8% were working in 2018; 12.0% were working full-time, full-year. Most working-age adults in poverty lacked a post-secondary educational credential; 78.9% had a high school diploma or less, compared to 56.0% in the overall population. Among people in poverty, 13.5% were aged (age 65 and older); because aged adults make up 16.3% of the overall population, this means they are underrepresented among people in poverty. The vast majority of aged adults in poverty either had, or lived in families that had, income from work or from retirement or other social insurance tied to prior work. Aged adults in poverty are far more likely to live alone than aged adults overall (49.9% compared to 28.0%).

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Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services, as well as long-term services and supports. Historically, Medicaid eligibility generally has been limited to low-income children, pregnant women, parents of dependent children, the elderly, and individuals with disabilities. Since 2014, however, states have had the option to cover nonelderly adults with income up to 133% of the federal poverty level (FPL) under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended) Medicaid expansion. Medicaid is jointly financed by the federal government and the states. The federal government's share of most Medicaid expenditures is called the federal medical assistance percentage (FMAP). The remainder is referred to as the state share. Medicaid is a countercyclical program, meaning the rate of growth for Medicaid enrollment tends to accelerate when the economy weakens and tends to slow when the economy gains strength. During recessions, the rate of growth for Medicaid enrollment increases, which also increases the rate of growth for Medicaid expenditures at the same time that state revenues are decreasing. The federal government provided states with fiscal relief through temporary FMAP rate increases in response to the 2001 recession (March 2001 through November 2001) and the Great Recession (December 2007 through June 2009). The Families First Coronavirus Response Act (FFCRA; P.L. 116-127 ), enacted on March 18, 2020, recently added a temporary Medicaid FMAP increase, beginning January 1, 2020, and continuing through the Coronavirus Disease 2019 (COVID-19) public health emergency period. This report begins with an overview of the FMAP rate. Then, it discusses the recession-related impact on the Medicaid program based on the experiences of the 2001 recession and the Great Recession. The final section of this report describes the three recession-related FMAP increases and compares them according to their various aspects, such as time periods for the FMAP increases, the amounts of the increases, and the requirements for states to receive the increases. <1. The FMAP Rate> The FMAP rate generally is determined annually and varies by state according to each state's per capita income relative to the U.S. per capita income. The formula provides higher FMAP rates, or federal reimbursement rates, to states with lower per capita incomes, and it provides lower FMAP rates to states with higher per capita incomes. FMAP rates have a statutory minimum of 50% and a statutory maximum of 83%. For a state with an FMAP of 60%, the state gets 60 cents back from the federal government for every dollar the state spends on its Medicaid program. In FY2020, FMAP rates range from 50.00% (13 states) to 76.98% (Mississippi). The FMAP formula relies on each state's per capita personal income in relation to the U.S. average per capita personal income. The national economy is basically the sum of all state economies. As a result, the national response to an economic change is the sum of the state responses to economic change. If more states (or larger states) were to experience an economic decline, the national economy would reflect this decline to some extent. However, the extent of the total decline would be offset by states with small decreases or even increases (i.e., states with growing economies). The U.S. per capita personal income, because of this balancing of positive and negative, usually has only a small percentage change each year. Because the FMAP formula compares state changes in per capita personal income (which can have large changes each year) with changes in the U.S. per capita personal income, states' FMAP rates often change from year to year. For most of the states experiencing annual FMAP rate changes, the change has been be less than one percentage point but that can translate to a significant dollar amount. The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures, but exceptions to the regular FMAP rate have been made for certain states (e.g., the District of Columbia and the territories), situations (e.g., during economic downturns), populations (e.g., ACA Medicaid expansion population and certain women with breast or cervical cancer), providers (e.g., Indian Health Service facilities), and services (e.g., family planning and home health services). The FMAP is also used to determine the federal share of other federal programs. For instance, it is used to determine the federal share of spending for foster care maintenance, adoption assistance, and guardianship assistance payments authorized by Title IV-E of the Social Security Act. The FMAP rate is also used to determine the relative federal and state shares of the "mandatory matching funds" provided by the Child Care Entitlement to States. In addition, it determines the federal share of funding under the Temporary Assistance for Needy Families (TANF) Contingency Funds and the federal share of collections under the Child Support Enforcement program. Separate from the regular FMAP rate, the enhanced FMAP (E-FMAP) rate is provided for services and administration under the State Children's Health Insurance Program (CHIP), subject to the availability of funds from a state's federal allotment for CHIP. The E-FMAP rate is calculated by reducing the state share under the regular FMAP rate by 30%. <2. Medicaid and Recessions> Medicaid expenditures are influenced by a number of economic, demographic, and programmatic factors. Economic factors include health care prices, unemployment rates, and individuals' wages. Demographic factors include population growth and the age distribution. Programmatic factors include changes to eligibility and benefits or other program changes. Other factors include the number of eligible individuals who enroll and their utilization of covered services. Medicaid is a countercyclical program. During recessions, growth in the unemployment rate results in an increase in the rate of growth for Medicaid enrollment, which increases the rate of growth for Medicaid expenditures at the same time that state revenues decline. Reduced state revenues can make it difficult for states to continue financing their Medicaid programs, especially with the recession-related growth in Medicaid enrollment. The effect of recessions on Medicaid enrollment, Medicaid expenditures, and state tax revenues are generally not isolated to the recession period and can continue after the recession has officially ended. <2.1. Growth in Medicaid Enrollment> Individuals and their dependents may become eligible for Medicaid because they experience reductions in their incomes due to reduced hours or job loss. During economic downturns, the number of individuals with reduced hours or job losses increases, and the rate of job losses are considerably higher among low-income workers. This increases the number of individuals eligible for Medicaid. Individuals and their dependents also may lose access to employer-sponsored health insurance. When individuals have reduced hours or experience job loss, they may lose the health insurance coverage they had through their employer for themselves and their dependents. These individuals may be eligible for the Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage, which provides temporary access to a former employer's health insurance. However, employers are not required to pay for the cost of COBRA coverage, which may be more expensive than an individual's prior cost of insurance. Some individuals, or their dependents, might already be Medicaid eligible and have employer-sponsored health insurance. During economic downturns, employers may lower the amount they contribute to the cost of health benefits or decide to no longer provide health insurance coverage to these employees. This increase in the cost of or loss of employer-sponsored health insurance may result in these individuals enrolling for Medicaid coverage. As discussed below, there is a relationship between the unemployment rate and Medicaid enrollment. The ACA Medicaid expansion, which was implemented after the last recession, is expected to increase the effects of a recession on Medicaid enrollment. <2.1.1. Medicaid Enrollment Growth During Recent Recessions> Medicaid enrollment follows economic cycles, with enrollment growth increasing at a faster rate during economic downturns and Medicaid enrollment growth increasing at a slower rate when economic conditions improve. The U.S. Government Accountability Office (GAO) analyzed federal Medicaid enrollment data during the 2001 recession and the Great Recession. GAO found that during the 2001 recession, the national unemployment rate increased from 4.3% to 5.5%, and total Medicaid enrollment increased by approximately 2 million (or 5.6%). GAO also found that during the Great Recession, the national unemployment rate grew from 5.0% to 9.5%, and Medicaid enrollment rose by nearly 4.3 million (or 9.7%). <2.1.2. Potential Impact of Medicaid Expansion on Enrollment Growth> The ACA Medicaid expansion that went into effect in 2014 is expected to increase the effects of a recession on Medicaid enrollment. As there has not been a recession since states have had the option to implement the Medicaid expansion, there is no experience available to quantify the impact. During the Great Recession, Medicaid eligibility in most states was not available to many of the individuals who lost their jobs. This is because nonelderly adults without dependent children were not eligible for Medicaid. Prior to the Medicaid expansion, Medicaid eligibility for nonelderly adults, in most states, was limited to individuals with disabilities, pregnant women, and parents of poor children. Also, states' Medicaid income eligibility thresholds for parents were significantly lower than the income eligibility level for the Medicaid expansion of up to 133% of FPL. As a result of the Medicaid expansion, the percentage of adults eligible for Medicaid during future periods of high unemployment is expected to be larger than in the past. An increase in the rate of enrollment growth for the Medicaid expansion in response to an increase in the unemployment rate would have less of an impact on state budgets than an increase in the rate of enrollment growth for the traditional Medicaid populations because the federal matching rate for the Medicaid expansion is 90%, which is higher than the regular FMAP rate. Although the state share of the Medicaid expansion is 10% of the expenditures, the increase in the enrollment for the Medicaid expansion during economic downturns could contribute to states' budget pressures. <2.2. Medicaid Expenditures and State Revenues> Increases in Medicaid enrollment growth during economic downturns generally result in an increased rate of growth for total Medicaid expenditures. As with Medicaid enrollment, when the economic conditions improve, Medicaid expenditure growth tends to slow. At the same time that unemployment rate increases during economic downturns cause Medicaid enrollment and expenditures to increase at a faster rate, states general revenues are negatively affected. During the 2001 recession, states experienced a 4.2% decline in state tax revenue from state FY2001 to state FY2002. In the study described in the " Medicaid Enrollment Growth During Recent Recessions " section, GAO also looked at the impact of the Great Recession on total state tax revenues. Nationally, GAO found that the Great Recession led to a 10.2% decline in state tax revenues from the fourth quarter of 2007 to the fourth quarter of 2009. The impact of the Great Recession on state tax revenue varied significantly from state to state. Although state tax revenue for most states (44 states and the District of Columbia) decreased, these revenue decreases ranged from 1% in Iowa to 23% in Arizona. Medicaid accounts for almost 20% of state general fund expenditures, and it is the second largest category of general fund expenditures for states. The reduction in state tax revenue during economic downturns can make it difficult for states to finance the state share of Medicaid, especially while Medicaid enrollment and expenditures are increasing. Since most states are required to balance their budgets, the reduced state tax revenues and increased Medicaid expenditures, among other budget pressures, may lead states to increase taxes, reduce expenditures including for the Medicaid program or both. In response to the 2001 recession, 34 states reduced Medicaid expenditures by freezing or reducing provider payments, eliminating coverage for optional services, increasing premiums, and increasing copayments for prescription drugs. As a result of the Great Recession, 31 states froze or reduced Medicaid provider rates or increased Medicaid provider taxes, and other states reduced prescription drug costs and limited or eliminated coverage for optional services, such as mental health or dental care. <2.3. After Recessions> The impacts of recessions on Medicaid enrollment, Medicaid expenditures, and state tax revenues have continued even after the recessions have officially ended. For example, the 2001 recession officially ended in November 2001, but state tax revenue continued to decline through the second quarter of 2002, and the national unemployment rate remained above prerecession levels through June 2003. Medicaid enrollment increased at higher than average rates of growth through 2003. Although the Great Recession officially ended in June 2009, 25 states continued to experience unemployment rates above 9%, until at least December 2010. Some states were still feeling the effects of the recession in 2011 and 2012. The timing and duration of the continued impact of national recessions on states have varied according to the economic conditions and revenue structures of each state, along with the mix of each state's industries and resources. <3. Recession-Related FMAP Increases> In the past, two laws have provided states with fiscal relief through temporary FMAP rate increases due to recessions: the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA; P.L. 108-27 ) and the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 , as amended by P.L. 111-226 ). In addition, the Families First Coronavirus Response Act (FFCRA; P.L. 116-127 ) recently provided a temporary FMAP increase during the COVID-19 public health emergency period. As noted by GAO, "the FMAP is a readily available mechanism for providing temporary assistance to states because assistance can be distributed quickly, with states obtaining funds on a quarterly basis through Medicaid's existing payment system." The increased FMAP rates help states maintain their Medicaid programs during economic downturns. Also, the increased FMAP rates effectively reduce the state share of Medicaid expenditures for states, allowing states to use the state funding that would have been used for the state share of Medicaid if there were not a recession-related FMAP rate for non-Medicaid state budget needs. As shown in Table 1 , the recession-related FMAP increases have similar components, but there are differences. All three recession-related FMAP increases had across-the-board increases to the regular FMAP rates as their main component. The JGTRRA across-the-board increase of 2.95 percentage points was lower than the 6.2 percentage point across-the-board increases for ARRA and FFCRA. The ARRA across-the-board increase phased out at the end of the time period for the FMAP increase, but the other two increases do not phase down. In addition, the JGTRRA and ARRA FMAP increases included hold-harmless provisions that kept states' regular FMAP rates from declining, and these increases did not apply to certain Medicaid expenditures that use the regular FMAP rate. The FFCRA FMAP increase, however, does not exclude Medicaid expenditures that use the regular FMAP rate. Also, the ARRA FMAP increase included an unemployment-related additional increase to the FMAP, but the JGTRRA and FFCRA FMAP increases do not. JGTRRA and FFCRA applied the FMAP increases to the territories and provided the territories additional federal Medicaid funding, but ARRA gave the territories a choice of the across-the-board FMAP increase, along with increased funding or a larger increase in funding without an FMAP increase. All three of the recession-related FMAP increases have requirements for states in order to qualify for the FMAP increase. For example, all three FMAP increases require states to maintain Medicaid eligibility standards that are no more restrictive than those that were in effect on a certain date. All three also prohibit states from increasing the percentage local governments are required to contribute to the state share of Medicaid. The JGTRRA FMAP increase did not have additional requirements for states, but the ARRA and FFCRA FMAP increases include differing sets of additional requirements for states, which are listed in Table 1 . The following sections provide summaries of the recession-related FMAP rate increases from JGTRRA, ARRA, and FFCRA, as well as the time period for the FMAP increases, the amount of the increases, and the requirements for states to receive them. <3.1. JGTRRA FMAP Increase> As part of the state fiscal relief for FY2003 and FY2004 included in JGTRRA, FMAP rates for the 50 states, the District of Columbia, and the territories were held harmless and increased in the last two quarters of FY2003 and the first three quarters of FY2004. This provision was statutorily limited to $10 billion. Table A-1 shows JGTRRA FMAP increases for the 50 states, the District of Columbia, and the territories. The FMAP rates were increased by an across-the-board 2.95 percentage points for each state (i.e., the 50 states, the District of Columbia, and the territories). The FMAP increase did not apply to Medicaid disproportionate share hospital (DSH) payments and Medicaid payments that were matched using the E-FMAP (e.g., breast and cervical cancer treatment). The hold-harmless provision kept the FMAP rates from declining during that period. Specifically, for FY2003, if a state's FY2002 FMAP rate was higher than the FY2003 rate (without the 2.95 percentage point increase), then the FY2002 rate was substituted for the FY2003 rate for the last two quarters of FY2003. Similarly in FY2004, if a state's FY2003 FMAP rate was higher than the FY2004 rate (without the 2.95 percentage point increase), then the FY2003 rate was substituted for the FY2004 rate for the first three quarters of FY2004. To qualify for the JGTRRA FMAP increase, a state could not have had a Medicaid plan with more restrictive eligibility rules than the plan in effect on September 2, 2003. If a state restored program eligibility to the levels in effect on September 2, 2003, then the state would have qualified for the increased FMAP rate for the entire quarter in which eligibility was reinstated. States also needed to ensure that local governments were not required to contribute a larger percentage of the state's nonfederal Medicaid expenditures than otherwise would have been required on April 1, 2003, for the last two quarters of FY2003 and the first three quarters of FY2004. In addition to the JGTRRA FMAP increase, JGTRRA increased the federal Medicaid funding available for each of the territories by 5.9%. The JGTRRA FMAP increase was provided to states in FY2003 and FY2004, well after the recession ended in November 2001. All states received the same FMAP increase, and the increase was not based on need using measures such as unemployment rates or state tax revenues. States indicated that the JGTRRA FMAP increase prevented states from making additional cuts to the Medicaid program and other portions of state budgets. Specifically, 36 states said the JGTRRA FMAP increase helped to fund increased Medicaid expenditures, and 31 states said the increase allowed states to minimize or postpone Medicaid cuts or freezes. <3.2. ARRA FMAP Increase> ARRA provided an FMAP rate increase to states, which was later extended by P.L. 111-226 . The ARRA FMAP rate increase lasted for nine quarters, starting October 2008 and continuing through December 2010, and totaled an estimated $89 billion. This temporary FMAP rate increase was extended by six months as part of P.L. 111-226 the extension totaled an estimated $16.1 billion. With the extension, the ARRA FMAP rate increase ran for a total of 11 quarters, from the first quarter of FY2009 through the third quarter of FY2011 (i.e., October 2008 through June 2011), subject to certain requirements. Table B-1 shows the ARRA FMAP increase for the 50 states and the District of Columbia. For a "recession adjustment period" that began with the first quarter of FY2009 and ran through the third quarter of FY2011 (i.e., October 2008 through June 2011), ARRA held all states harmless from any decline in their regular FMAP rates throughout the period. All states (i.e., the 50 states and the District of Columbia) received an across-the-board increase of 6.2 percentage points to their regular FMAP rates until the last two quarters of the period, at which point the across-the-board percentage point increase phased down to 3.2 and then 1.2 percentage points. Throughout the period, states with unemployment rates that had increased by certain amounts in a quarter received an additional unemployment-related increase. There were three tiers of this unemployment-related increase. See "ARRA Unemployment-Related FMAP Increase" for details about the unemployment related increase, including how it was calculated. The ARRA FMAP increase was not available to the territories, but each territory was allowed to make a one-time choice between (1) an FMAP rate increase of 6.2 percentage points along with a 15% increase in its annual capped funding or (2) the regular FMAP rate along with a 30% increase in its capped funding. All territories chose the latter. The full amount of the temporary ARRA FMAP rate increase applied to most Medicaid expenditures, but not to the following Medicaid expenditures: (1) DSH payments, (2) Medicaid payments that were matched using the E-FMAP (e.g., breast and cervical cancer treatment), and (3) most expenditures for individuals who were eligible for Medicaid because of a state expansion of eligibility implemented after July 1, 2008. To receive ARRA FMAP rate increases, states were required to do the following: (1) ensure their Medicaid "eligibility standards, methodologies, and procedures" were no more restrictive than those that were in effect on July 1, 2008; (2) comply with requirements for prompt payment of health care providers under Medicaid; (3) not deposit or credit the additional federal funds paid as a result of the increase to any reserve or rainy day fund; (4) ensure that local governments did not pay a larger percentage of the state's nonfederal Medicaid expenditures (or a greater percentage of the nonfederal share of Medicaid DSH payments) than otherwise would have been required on September 30, 2008; and (5) submit a report to the Secretary of the Department of Health and Human Services regarding how the additional federal funds paid as a result of the temporary FMAP increase were expended. P.L. 111-226 added a requirement for the last six months (i.e., January 1, 2011, through June 30, 2011) that states certify that they would request and use the funds. FMAP rate increases reduced the amount of state funding required to maintain a given level of Medicaid services. For states that contemplated cuts in order to slow the growth of or reduce Medicaid spending (e.g., by eliminating coverage of certain benefits, freezing or reducing provider reimbursement rates, or increasing cost-sharing or premiums for beneficiaries), increased federal funding enabled them to avoid those cuts. For others, the state savings that resulted from an FMAP rate increase were used for various purposes that were not limited to Medicaid. For example, 36 states reported that they used funds from the ARRA FMAP rate increase to close or reduce their Medicaid budget shortfall, and 44 states used the funds to close or reduce state general fund shortfalls. In addition to avoiding cuts to Medicaid, the Congressional Budget Office (CBO) indicated in 2009 that providing additional federal aid to states that were facing fiscal pressures would probably stimulate the economy. However, CBO noted that the effects would vary. Federal aid to states with relatively healthy budgets would have provided little stimulus if the aid were used to build up rainy day funds (a prohibited use of the ARRA FMAP rate increase), rather than to increase spending or reduce taxes. One study found the ARRA FMAP increase "had an economically large and statistically robust positive effect on employment." GAO determined that the ARRA FMAP increase was better timed than the JGTRRA FMAP increase because the ARRA FMAP increase began during the recession, when all states were experiencing Medicaid enrollment increases and state tax revenue decreases. GAO also found that the ARRA FMAP increase was better targeted than the JGTRRA FMAP increase because the ARRA increase included unemployment-related adjustments for certain states. <3.3. FFCRA FMAP Increase> FFCRA provides an increase to the FMAP rate for all states, the District of Columbia, and the territories of 6.2 percentage points, beginning on the first day of the calendar quarter in which the COVID-19 public health emergency period began (i.e., January 1, 2020) and ending on the last day of the calendar quarter in which the last day of the COVID-19 public health emergency period ends. Table C-1 shows the FY2020 FMAP rates for the states, the District of Columbia, and the territories and those FMAP rates plus 6.2 percentage points. To receive this increased FMAP rate, states, the District of Columbia, and the territories are required to (1) ensure that their Medicaid "eligibility standards, methodologies, and procedures" are no more restrictive than those that were in effect on January 1, 2020; (2) not impose premiums exceeding the amounts in place as of January 1, 2020; (3) provide continuous coverage of Medicaid enrollees during the COVID-19 public health emergency period; and (4) provide coverage (without the imposition of cost sharing) for testing services and treatments for COVID 19 (including vaccines, specialized equipment, and therapies). Another condition to receive the FFCRA FMAP increase is that states, the District of Columbia, and the territories cannot require local governments to fund a larger percentage of the state's nonfederal Medicaid expenditures for the Medicaid state plan or Medicaid DSH payments than what was required on March 11, 2020. The FFCRA FMAP increase does not apply to most FMAP exceptions, including the FMAP exceptions for the ACA Medicaid expansion, family planning, and home health services. However, the FFCRA FMAP increase does apply to a few FMAP exceptions. For Community First Choice services, the FFCRA FMAP increase is added to the six percentage point FMAP increase under Section 1915(k) of the Social Security Act, if the expenditures otherwise qualify. Also, FMAP exceptions calculated based on the regular FMAP use the regular FMAP plus the FFCRA FMAP increase for the calculation. These FMAP exceptions are for individuals eligible on the basis of breast and cervical cancer, Certified Community Behavioral Health Clinics, and Money Follows the Person. In addition to the territories receiving the FFCRA FMAP increase, FFCRA increases the federal Medicaid funding available for each territory in FY2020 and FY2021. The aggregate additional funding for the territories increases from $3.0 billion to $3.1 billion in FY2020 and from $3.1 billion to $3.2 billion in FY2021. In the past, GAO developed a prototype formula for temporary FMAP increases. One of the key components of the GAO prototype was making the temporary FMAP increase automatic so the FMAP increase could begin closer to the onset of a national recession. Although the FFCRA does not provide an automatic increase, the FFCRA FMAP increase is starting prior to an expected economic downturn. <4. Conclusion> The FMAP rate has been used as a means to provide fiscal relief to states in response to the 2001 recession, the Great Recession, and current economic conditions due to the COVID-19 public health emergency. These recession-related FMAP increases have been provided at times when states have experienced growth in unemployment rates that results in increases in the rate of growth for Medicaid enrollment, which in turn increases the rate of growth for Medicaid expenditures at the same time that state revenues decline. These recession-related FMAP increases are similar but have some significant differences. All three of these recession-related FMAP increases have across-the-board FMAP increases; requirements to maintain Medicaid eligibility standards that are no more restrictive than they were prior to the FMAP increases; and requirements to ensure that states do not increase the percentage that local governments contribute to Medicaid expenditures. However, the JGTRRA and ARRA FMAP increases included hold-harmless provisions that kept the states' regular FMAP rates from declining, and these increases excluded certain Medicaid expenditures from the FMAP increases. The ARRA FMAP increase had an unemployment-related increase that the JGTRRA and FFCRA increases did not have. Also, the JGTRRA FMAP increase did not have additional requirements for states, but ARRA and FFCRA have differing sets of additional requirements for states to adhere to in order to qualify for the FMAP increases. In addition, many states indicated that the JGTRRA and ARRA FMAP increases provided fiscal relief that allowed the states to prevent further reductions to the Medicaid programs and other portions of their state budgets. Appendix A. Jobs and Growth Tax Relief Reconciliation Act of 2003 FMAP Increase The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA; P.L. 108-27 ) included a provision that increased federal medical assistance percentage (FMAP) rates for the 50 states, the District of Columbia, and the territories during the last two quarters of FY2003 and the first three quarters of FY2004. The FMAP rates were held harmless and increased by an across-the-board 2.95 percentage points for each state (i.e., the 50 states, the District of Columbia, and the territories). The JGTRRA FMAP increases were subject to certain requirements for states. For more detail about the JGTRRA FMAP increase, see " JGTRRA FMAP Increase ." Table A-1 shows states' regular FMAP rates and JGTRRA FMAP rates for FY2003 and FY2004. Appendix B. American Recovery and Reinvestment Act of 2009 FMAP Increase The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ) provided a temporary FMAP rate increase to the 50 states and the District of Columbia that was later extended by P.L. 111-226 . With the extension, the ARRA FMAP increase lasted from the first quarter of FY2009 through the third quarter of FY2011 (i.e., October 2008 through June 2011). ARRA held all states harmless from any decline in their regular FMAP rates throughout the period. Under the ARRA FMAP increases, all states (i.e., the 50 states and the District of Columbia) received an across-the-board increase of 6.2 percentage points to their regular FMAP through the first quarter of FY2011, at which point the across-the-board percentage point increase phased down to 3.2 and then 1.2 percentage points for the second and third quarters of FY2011, respectively. Throughout the period, states with unemployment rates that had increased by certain amounts for a quarter received an additional unemployment-related increase. There were three tiers of the unemployment-related increase. See "ARRA Unemployment-Related Increase" for details about the unemployment-related increase, including how it was calculated. The ARRA FMAP increases were subject to certain requirements for states. For more information about the ARRA FMAP increases and these requirements, see " ARRA FMAP Increase ." Table B-1 shows the FMAP rate increases under ARRA and extended by P.L. 111-226 for each quarter, from the first quarter of FY2009 through the third quarter of FY2011. Table B-2 provides an example of how the FMAPs under ARRA with the hold-harmless and the unemployment-related increases were calculated for the second quarter of FY2010. Appendix C. Families First Coronavirus Response Act FMAP Increase The Families First Coronavirus Response Act (FFCRA; P.L. 116-127 ) provides an increase to the FMAP rate for the 50 states, the District of Columbia, and the territories of 6.2 percentage points, beginning on the first day of calendar quarter in which the public health emergency period began (i.e., January 1, 2020) and ending on the last day of the calendar quarter in which the last day of the public health emergency period ends. See the " FFCRA FMAP Increase " section for information about the state requirements for receiving the FFCRA FMAP increase. Table C-1 shows states' FY2020 FMAP rates and those FMAP rates plus the 6.2 percentage points added by FFCRA.

Medicaid is jointly financed by the federal government and the states. States incur Medicaid costs by making payments to service providers (e.g., for doctor visits) and performing administrative activities (e.g., making eligibility determinations), and the federal government reimburses states for a share of these costs. The federal government's share of a state's expenditures for most Medicaid services is called the federal medical assistance percentage (FMAP). The FMAP varies by state and is inversely related to each state's per capita income. For FY2020, FMAP rates range from 50% (13 states) to 77% (Mississippi). Medicaid is a countercyclical program, which means that the rate of growth for Medicaid enrollment tends to accelerate when the economy weakens and tends to slow when the economy gains strength. During recessions, growth in the unemployment rate results in an increase in the rate of growth for Medicaid enrollment, which increases the rate of growth for Medicaid expenditures at the same time that state revenues decline. Reduced state revenues can make it difficult for states to continue financing their Medicaid program, especially with the recession-related growth in Medicaid enrollment. Federal fiscal relief to states is provided during recessions through adjustments to the FMAP rate because this process for getting federal Medicaid funding to states is already in place. Many states have indicated that past FMAP increases allowed the states to prevent further reductions to their Medicaid programs and other portions of their state budgets. The federal government provided states with temporary FMAP rate increases to provide states with fiscal relief on two past occasions: in response to the 2001 recession through the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA; P.L. 108-27 ) and in response to the Great Recession through the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 , as amended by P.L. 111-226 ). The JGTRRA FMAP increase provided a 2.95 percentage point increase to FMAP rates for the last two quarters of FY2003 and the first three quarters of FY2004. The ARRA FMAP increase provided an across-the-board increase, along with an unemployment-related increase for eligible states. The ARRA across-the-board increase was a 6.2 percentage point FMAP increase, starting in the first quarter of FY2009 and lasting through the first quarter of FY2011; the increase phased down to 3.2 and 1.2 percentage points for the second and third quarters of FY2011, respectively. Most recently, the Families First Coronavirus Response Act (FFCRA; P.L. 116-127 ) added a temporary Medicaid FMAP increase of 6.2 percentage points beginning January 1, 2020, and continuing through the Coronavirus Disease 2019 (COVID-19) public health emergency period. Although the country had not officially entered into a recession at the time FFCRA was enacted, a recession with significant increases in the unemployment rate was expected in the near term. The recession-related FMAP increases have similar components, but there are differences. Similarities of all three of these recession-related FMAP increases include across-the-board FMAP increases; requirements to maintain Medicaid eligibility standards that are no more restrictive than they were prior to the FMAP increases; and requirements to ensure that states do not increase the percentage that local governments contribute to Medicaid expenditures. However, there are differences in how the recession-related FMAP increases were determined. For instance, the JGTRRA and ARRA FMAP increases included hold-harmless provisions that kept the states' regular FMAP rates from declining, and these increases excluded certain Medicaid expenditures from the FMAP increases. The ARRA FMAP increase had an unemployment-related increase that the JGTRRA and FFCRA increases did not have. Also, the JGTRRA FMAP increase did not have additional requirements for states, but ARRA and FFCRA have differing sets of additional requirements for states to adhere to in order to qualify for the FMAP increases.

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<1. Background> The People's Republic of China (PRC or China) has significantly increased its overseas investments since launching its "Go Global Strategy" in 1999 in an effort to make Chinese firms more globally competitive and advance domestic economic development ( Figure 1 ). Since then, Chinese firms have acquired foreign assets and pledged billions of dollars to develop infrastructure abroad. China's push overseas has been particularly visible in the Indo-Pacific region, a major focus of China's effort to increase global trade connectivity through the "Belt and Road Initiative" (BRI, initially known as "One Belt, One Road"), which launched in 2013. However, China's overseas, global economic activities include the purchase, financing, development, and operation of assets and infrastructure across Africa, Asia, Europe, Latin America and the Caribbean, North America, and Oceania. Links to Select Databases on China's Foreign Direct Investment (FDI) Many in Congress and the Trump Administration are focusing attention on possible critical implications of China's growing global economic reach for U.S. economic and geopolitical strategic interests. Some analysts view China's activities as largely commercial in nature, following the path that some Western multinational firms forged in the 1980s and 1990s in expanding and integrating into global markets. Others contend that China's activities are ultimately in support of alleged efforts by Beijing to challenge and undermine U.S. global influence. This report does not provide figures or estimates of China's global economic activities. Nor is it an in-depth analysis of recent trends and developments. Rather, it provides an overview of select issues and challenges encountered when compiling, interpreting, and analyzing statistics on Chinese investment, construction, financing, and development assistance around the world. <2. Framing the Debate on China's Global Reach> Economic- and resource-related imperatives play an important role in China's expanding global economic footprint. Analysts see strong domestic economic development as a primary objective for China's leaders for a number of reasons, including those leaders' desire to raise the living standards of the population, dampen social disaffection about economic and other inequities, and sustain regime legitimacy. In addition, China's rapid economic growth has created a domestic appetite for greater resources and technology, as well as for creating markets for Chinese goods all of which have served as powerful drivers of China's integration into the global economy and enthusiasm for international trade and investment agreements. For example, as China's energy demands have continued to rise, the Chinese government has sought bilateral agreements, oil and gas contracts, scientific and technological cooperation, and de-facto multilateral security arrangements with energy-rich countries, both in its periphery and around the world. Moreover, China's recent relative economic slowdown (in the aftermath of the government-financed boom of the post-global recession years) has created excess capacity and the need to find overseas markets and employment opportunities for its infrastructure and construction sectors. In pursuing commercial opportunities abroad, Chinese firms many of them state owned have become global leaders in these sectors (e.g., transport infrastructure, such as ports and high-speed rail). Some observers contend that these investment and construction trends may reflect an attempt by China to bolster its position as a global power, gain control of vital sea-lanes and energy-supply routes, secure key supply chains, aggregate control over communications infrastructure and standards, and build up geo-economic leverage to ensure support for its foreign policy objectives. In particular, some U.S. officials have expressed concerns that China's growing international economic engagement goes hand-in-hand with expanding political influence. The seemingly though debatable "no strings attached" nature and looser terms of Beijing's overseas loans and investments may be attractive to foreign governments wanting swifter, more "efficient," and relatively less intrusive solutions to their development problems than those offered by bilateral and international financial institutions, such as the International Monetary Fund (IMF), World Bank, and Asian Development Bank (ADB). Unlike these institutions, many of the Chinese financial institutions and enterprises involved in China's overseas investment, lending and construction are owned or subsidized by the government. As such, they are not accountable to shareholders, do not generally impose safeguards or international standards related to transparency, human rights, and environmental protection, and can afford short-term losses in pursuit of longer-term, strategic goals. Although some analysts and policymakers suggest that Chinese officials and state-owned enterprises (SOEs) appear more comfortable working with undemocratic or authoritarian governments, China's outreach also has extended to the United States, key U.S. allies and partners, and regions where U.S. economic linkages and diplomatic sway have been, until recently, predominant. These developments have led some observers to conclude that Beijing intends to challenge or is already challenging U.S. global leadership directly. As a result, some Members of Congress and Administration officials are focusing attention on the critical implications that China's increasing international economic engagements could have for U.S. economic and strategic interests. Some observers have sought to compare China's activities to those of the United States. In contrast to China's, however, U.S. global economic engagements have tended to be more diverse and not government-directed or -funded. They have been driven primarily by the U.S. private sector, whose global presence is long-standing and comprehensive. <3. Data Limitations> A major challenge when researching global investment and construction projects and related loans is the accuracy of the data. While this challenge is not unique to projects involving Chinese players, it is exacerbated by the nature of many Chinese projects and loans, whose terms are not always publicly available or transparent. No comprehensive, standardized, or authoritative data are available on all Chinese overseas economic activities from either the Chinese government or international organizations. A number of think tanks and private research firms have developed datasets to track investment, loans, and grants by Chinese-owned firms and institutions using commercial databases, news reports, and official government sources, when available ( Appendix A ). These datasets often record the value of projects, loans, and grants when they are publicly announced (e.g., at press conferences). However, many publicly announced projects are never formalized, and if they are, project and loan details may change, and projects may not always come to fruition for various reasons (e.g., changing economic and political conditions, or concerns about sovereignty, debt structure, or environmental impact). Despite these limitations, figures derived from such "data trackers" often drive the policy debate. Because U.S. policymakers may rely on them to assess the overall scope and magnitude of Chinese activities, it is important to recognize the problems with the data and the limitations of existing databases. While they might be valuable and informative, they may also provide vastly different figures that are not necessarily comparable. For example, for 2015 the most recent year for which complete annual data are available from all major sources figures on China's investment flows into the United States vary from $2.6 billion (which only includes nonfinancial gross foreign direct investment (FDI) flows and is reported by MOFCOM ) to $16.4 billion (which includes gross announced transaction flows of $100 million or more and is tracked by AEI/Heritage ) ( Figure 2 ). Similarly, China's total outward investment flows for the same year range from $117.9 billion (AEI/Heritage) to $174.4 billion (OECD ) ( Figure 3 and Table 1 ). Comparability issues also arise when trying to differentiate loan, investment, and construction projects that overlap, since datasets only capture a certain type of activity. Various datasets' categorizations may not cover the full range of activity that is taking place. China's official foreign direct investment (FDI) statistics are compiled by two government agencies according to different criteria. The Ministry of Commerce of the People's Republic of China (MOFCOM)'s data are based on officially approved investments by nonfinancial institutions that is, information recorded during the approval process rather than through surveys or questionnaires as in the United States (see textbox below). They are generally separated out by country and industry. The State Administration of Foreign Exchange of the People's Republic of China (SAFE), on the other hand, reports Balance of Payments (BoP) data at the aggregate level. SAFE, in theory, follows IMF guidelines. While both agencies are supposed to reconcile their figures in their annual revisions, discrepancies in the total amounts reported are common and significant. Much of China's official outbound FDI also has traditionally been registered in Hong Kong, the former British colony that has been a Special Administrative Region of the PRC since 1997, or in tax havens such as the Cayman Islands or British Virgin Islands. Chinese firms, in particular, are known to use holding companies and offshore vehicles to structure their investments. "Round-tripping" (the practice of firms routing themselves funds through localities that offer beneficial tax policies or special incentives), "trans-shipping" (the practice of firms routing funds through countries that offer favorable tax policies to later reinvest these funds in third countries), and indirect holdings all make it difficult to track and disaggregate investments accurately. Chinese domestic investors have also been known to rely on these schemes to take advantage of favorable conditions granted only to foreign investors. As the Economist Intelligence Unit notes, "Chinese statistics record approved projects rather than actual money transfers," and "[c]ompanies often list the initial port of call of their capital, rather than its final destination, thus falsely inflating the importance of stop-over locations." In addition to data reliability and comparability issues, it is not always possible to determine if an asset or project is wholly or partially owned, financed, built, or operated by a Chinese entity. Thus, the lack of consistent, disaggregated, and detailed information limits the proper assessment of the size, scope, and implications of these activities. Moreover, because major projects generally involve several phases and a sometimes-evolving cast of stakeholders, it is not always possible to distinguish between the phases of acquisition or construction and those of operations as they are often blended in terms of time and firms involved. Many of the overseas infrastructure projects in which Chinese entities are involved particularly ports also present distinct challenges not always encountered in the analysis of traditional foreign direct investments (e.g., multinational corporations building a new factory or acquiring an existing domestic firm). In the case of infrastructure, to attract foreign investment and transfer risks to the private sector, it is common for host countries to offer long-term concessions or leases for both construction and operation. These typically allow the grantee firm the right to use land and facilities (e.g., ports and highways) for a defined period in exchange for providing services. Because these lands and facilities tend to be owned by the host government, the investments can come in the form of use-rights through leases or joint ventures. These challenges, together with the opacity of China's terms and conditions, can limit the ability to assess accurately the extent of Chinese involvement. Data availability limitations also may arise since China often finances infrastructure development through its export credit agencies and development banks. China is not a member of the Organization for Economic Cooperation and Development (OECD) or part of its Arrangement on Officially Supported Export Credits, which includes rules on transparency procedures for government-backed export credit financing. The United States, China, and other countries have been working to develop a new set of international rules, but progress reportedly has been limited. Finally, some of China's global economic activities are portrayed inaccurately as "foreign aid" or "development assistance." While certain aspects may resemble assistance in the conventional sense, they generally do not meet the OECD standards of "official development assistance" (ODA). The terms of China's "ODA-like" loans are less concessional than those of other major actors such as the United States and Japan, have large commercial elements with economic benefits accruing to Chinese actors, and are rarely government-to-government. Details on specific Chinese deals and overall flows are opaque because the PRC government rarely releases data on any of its lending activities abroad or those of its state firms and entities. China also is not part of the OECD's Development Assistance Committee, which "monitors development finance flows, reviews and provides guidance on development co-operation policies, promotes sharing of good practices," and helps set ODA standards. <4. Issues and Options for Congress> Data limitations and lack of transparency, combined with the number of unknown variables that drive China's foreign economic policy decision-making processes, can affect how Members of Congress perceive and address the challenges that China's overseas economic activities pose to U.S. and global interests. These limitations also complicate efforts to compare accurately the extent to which China's global economic reach differs from that of the United States. Little consensus exists within the United States and the international community on China's ultimate foreign economic policy goals or what motivates and informs its economic activities abroad either in general or with regard to specific regions or countries. Debate is ongoing over whether China's global economic engagements have a pragmatic, overarching strategy, or are a series of marginally-related tactical moves to achieve specific economic and political goals. Similarly, some analysts argue that Beijing, through its global economic activities, is trying to supplant the United States as a global power, while others maintain that it is focused mainly on fostering its own national economic development. In the absence of sufficient transparency in China's international economic activities, Members of Congress may seek to support current and new U.S. efforts to better track, analyze, and publicize actual Chinese investment, construction, assistance, and lending activities. Better data and information on China's activities may help U.S. policymakers assess the scope and address key questions over China's international engagements and growing economic role, including: How could the United States more accurately assess and respond to increasing competition by China for leverage and influence, both in countries where the United States is seeking to expand its economic and political ties, as well as in those with strong existing U.S. relationships? To what extent are the terms of China's global investments and economic assistance less restrictive than U.S. activities and how does this affect U.S. efforts to promote good governance around the world? What commercial advantages does China's arguably unique approach to global economic engagement provide its companies, how does this affect the ability of U.S. companies to compete for international business, and what policies and agreements should the United States put in place to mitigate these effects? How can the United States expose where China is in violation of the rules and norms of global institutions particularly where it has or is seeking leadership positions and use this knowledge to require China to adhere to international norms and condition its investments and assistance on widely accepted best practices? What are the implications for the United States and international financial institutions (IFIs) that often promote good governance when China competes directly as an international lender and may offer less encumbered "assistance" in ways that directly undermine U.S. and IFI values and principles? How should the IFIs and the United States respond to this challenge, particularly when China is seeking influence and leadership in both current IFIs and these alternative paths? Should China's leadership role be challenged if it is found to be undermining the goals and principles of the organizations it leads or seeks to lead, including with respect to transparency commitments? How do differences in approach and scale of U.S. and Chinese global economic activities affect global perceptions of U.S. engagement around the world? U.S. policymakers could seek to improve their own knowledge base in ways that may enable them to advance U.S. foreign economic interests more effectively, while at the same time encouraging more transparency by China. This could include: Collecting, maintaining, and publicizing to the extent that is possible a more accurate calculus of actual Chinese economic activities, particularly by tracking investment and assistance that is delivered, as opposed to that which is merely announced (e.g., either unilaterally or by encouraging or requiring greater disclosure through the international financial institutions and WTO). Directing agencies within the executive branch to develop a whole-of-government approach and guidance to better assess the global investment, construction, and lending activities of U.S., Chinese, and other major actors. As part of this effort, the U.S. government could harmonize U.S. programs for gathering information and streamline data centralization. In addition, it could study the adequacy of data and information recording, collection, disclosure, reporting, and analysis at the U.S. and international levels and recommend necessary improvements. Establishing a U.S. statistical office or program tasked with collecting current information on international capital flows and other information related to international investment, public procurement, and export and investment promotion, financing, and insurance by U.S., Chinese, and other major economic actors. Conducting oversight and examining more closely data collection and transparency commitments in various institutions, including the Organization for Economic Co-operation and Development (OECD), International Monetary Fund (IMF), the World Bank, and United Nations Conference on Trade and Development (UNCTAD) on investment, loans, and government procurement to determine if these mechanisms are sufficient and/or are being adhered to. Determining whether the World Trade Organization (WTO) should play a greater role to enhance transparency and set standards for dissemination of investment data through future reforms to key agreements or new agreements on investment. Examining the activities of international and regional organizations to determine if they are sufficient to address emerging data requirements or whether a major U.S. and/or internationally-coordinated effort is required. Supporting U.S. and international efforts to provide training courses, workshops, and technical assistance programs for countries to implement international statistical guidelines and improve comparable data compilation and dissemination practices. Holding hearings on Chinese overseas lending and investment practices. The United States could consider a combination of pressure and collaboration to strengthen its economic engagement efforts and encourage China to adopt international best practices. While the success of past efforts has arguably been limited, the United States could continue to: Work with other countries and international economic institutions to improve the collection and accuracy of data, address data deficiencies, and harmonize data reporting requirements by China and other major economies. Encourage China to participate more vigorously in adopting or developing rules on export credit financing and related areas, while urging China to sign on to public-private sector good governance initiatives and agreements. Coordinate efforts with other countries to set terms for data transparency and best practices for China to participate in multilateral and country-level donor foreign assistance dialogues and related efforts to prioritize key development goals and coordinate aid efforts in order to create synergies, avoid duplication and tied aid, and maximize each donor's strengths. Offer to work collaboratively with China either bilaterally or through multilateral fora to more clearly differentiate its official grant-based aid from its subsidization of trade and commerce credit; monitor the effectiveness of its aid strategies; harmonize aid reporting with other donor governments; and develop best practices in support of transparency and accountability. Appendix A. Databases and Resources Appendix B. China's FDI in the United States

The People's Republic of China (PRC or China) has significantly increased its overseas investments since launching its "Go Global Strategy" in 1999 in an effort to support the overseas expansion of Chinese firms and make them more globally competitive. Since then, these firms—many of which are closely tied to the Chinese government—have acquired foreign assets and capabilities and pledged billions of dollars to develop infrastructure abroad. As a result, many in Congress and the Trump Administration are focusing on the critical implications of China's growing global economic reach for U.S. economic and geopolitical strategic interests. Some analysts see these Chinese activities as primarily commercial in nature. Others contend that the surge in global economic activity is also part of a concerted effort by China's leaders to bolster China's position as a global power and ensure support for their foreign policy objectives. There is also growing concern about the terms of China's economic engagement, particularly over the ways that Chinese lending may be creating unsustainable debt burdens for some countries and over how much of China's lending is tied to commercial projects and Chinese state firms that benefit from the investment. A major challenge to understanding the implications of China's growing global economic reach is the critical gap in the availability and accuracy of data and information. Most notable is the fact that no comprehensive, standardized, or authoritative data—from either the Chinese government or international organizations—are available on Chinese overseas economic activities. Given the complexity and multifaceted nature of the projects in which Chinese entities are involved, attempts to assess the size and scope of these projects are rough estimates, at best, and should be regarded as such. Figures cited in news articles, think-tank reports, and academic studies may not be entirely accurate and should be interpreted with caution. For instance, many publicly and privately available unofficial "trackers"—from which these data are often sourced—are based on initial public announcements of Chinese overseas projects, which may differ significantly from actual capital flows because such projects may evolve or may never come to fruition. In the absence of accurate and sufficient data, Members of Congress may seek ways to improve their own understanding by supporting U.S. and international efforts to better track, analyze, and publicize actual Chinese investment, construction, assistance, and lending activities. Congress, for example, may direct agencies within the executive branch to develop a whole-of-government approach to better assess the global economic activities of U.S., Chinese, and other major actors. Additionally, Congress could require these agencies to study the adequacy of data and information recording, collection, disclosure, reporting, and analysis at the U.S. and international levels. Better information could facilitate clearer, deeper, and better informed assessment of such activities and their (1) impact on U.S. interests and (2) ramifications for the norms and rules of the global economic system—a system whose chief architect and dominant player to date largely has been the United States.

crs_R46178

crs_R46178_0

<1. Introduction> This report provides a brief history of the major legislative changes to the charitable deduction for individuals, from its enactment in 1917 through the recent changes enacted at the end of 2017. Policymakers considering changes to this tax benefit may find it helpful to understand how this benefit has evolved over the past 100 years. This report does not address all the legislative changes made to this tax benefit, nor does it provide a broad overview of charitable giving in general, charitable giving tax incentives, their economic effects, or policy options to modify them. Those issues are discussed in CRS Report R45922, Tax Issues Relating to Charitable Contributions and Organizations , by Jane G. Gravelle, Donald J. Marples, and Molly F. Sherlock, and CRS In Focus IF11022, The Charitable Deduction for Individuals , by Margot L. Crandall-Hollick and Molly F. Sherlock. This report begins with a brief overview of the current charitable deduction for individuals. It then describes major legislative changes made to the deduction from 1917 through the present day, with the most recent changes being those made in 2017. For the purposes of this report, major legislative changes include those that changed the amount that taxpayers could deduct. The bills summarized in this report do not include those that temporarily modified the charitable deduction in response to a disaster. Laws that modified definitions or changed substantiation requirements for taxpayers claiming the deduction are also generally excluded. This report will be updated as necessary to reflect future legislative changes. <2. Current Tax Benefit for Individual Charitable Donations> Under current law, taxpayers who itemize their deductions can subject to certain limitations deduct charitable donations to qualifying organizations. (Individuals who take the standard deduction may not deduct their charitable contributions.) Deductions that cannot be claimed in the current tax year can be carried forward for up to five years, subject to certain limitations. <2.1. Types of Qualifying Organizations> Under current law, charitable contributions are tax deductible when made to qualifying Section 501(c)(3) organizations, governmental units, veterans' organizations, fraternal organizations, and cemetery companies. A Section 501(c)(3) organization is either a public charity or private foundation. Private foundations often are tightly controlled, receive significant portions of their funds from a small number of donors or a single source, and make grants to other organizations rather than directly carry out charitable activities. Most private foundations 91% of all private foundations in 2015 primarily make grants to other charitable organizations and to individuals. These foundations are referred to as nonoperating foundations . Foundations that directly operate their own charitable programs are referred to as operating foundations . In contrast, public charities tend to have broad public support and provide charitable services directly to beneficiaries. Public charities include organizations "organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals." <2.2. Types of Donations> Tax-deductible donations to qualifying organizations can be in the form of cash, securities, or property. Properties or securities held for more than a year are often referred to as long - term capital gain properties . Properties or securities held for less than a year are often referred to as short - term capital gain properties. (For more information on general valuation rules of noncash property, see Appendix B .) Depending on (1) the type of property donated and (2) the type of qualifying organization that receives the donations, there are limitations on the total dollar amount that the taxpayer can deduct, as illustrated in Table 1 . The limitations are defined as a percentage of the taxpayer's adjusted gross income (AGI). <3. History of the Charitable Deduction> Enacted in 1917, the deduction for charitable giving has changed over the years from "a short statutory provision into a complex set of rules." Below is a brief legislative history of the major legislative changes to the charitable deduction that have occurred over the past 100 years, focusing on changes to the amount that taxpayers could deduct. Table 2 summarizes these changes. Over the past 100 years, Congress has generally increased the amount that eligible taxpayers can deduct for their charitable donation. The history of the charitable deduction illustrates two main policy objectives of this benefit. In its early years, the charitable deduction served to ensure that resources given to charity would not be treated as income for the purposes of taxation. When the charitable deduction was created, the income tax was in its early years, and applied only to the very top of the income distribution. Thus, when the deduction was created, it could be viewed as having been designed to "protect voluntary giving to public goods by rich industrialists who had made their fortunes in business." Today, many policymakers are focused on the charitable deduction's impact on giving, and its efficacy at inducing additional giving. As the deduction has changed over time, policymakers have continued to discuss its effectiveness at increasing charitable giving, the broader role of the government in the philanthropic sector, and reform proposals a discussion that continues to this day. <3.1. The War Income Tax Revenue Act of 1917> The charitable deduction was initially enacted to offset the potential negative effects of increased income taxes on charitable giving among the wealthy. The federal income tax, enacted four years earlier as part of the Tariff Act of 1913, generally applied a top rate of 7% to only the wealthiest Americans. The War Income Tax Revenue Act of 1917 (P.L. 65-50) increased federal income tax rates the top rate on individuals rose to 67% by 1917 as a way to pay for the costs of the United States' involvement in World War I. According to the Joint Committee on Taxation (JCT), some [l]egislators feared that the [tax] increase would reduce individuals' income "surplus" from which they supported charity. It was thought that a decrease in private support would create an increased need for public support and even higher rates, so the [charitable] deduction was offered as a compromise. In short, some policymakers were concerned that without the charitable deduction, wealthy taxpayers subjected to these higher tax rates would no longer contribute to charities or institutions of higher education (or would contribute less). As Senator Hollis stated, Usually people contribute to charities and educational objects out of their surplus. After they have done everything else they want to do, after they have educated their children and traveled and spent their money on everything they really want or think they want, then, if they have something left over, they will contribute it to a college or to the Red Cross or for some scientific purposes. Now when war comes and we impose these very heavy taxes on income, that will be the first place where wealthy men will be tempted to economize, namely in donations to charity. They will say, "Charity begins at home." I should not favor allowing any man to deduct all of his contributions to these objects from his income-tax return, but if we limit it to 20 percent of his income we cannot be doing much harm to the Public Treasury. Look at it this way: For every dollar that a man contributes for these public charities, educational, scientific, or otherwise, the public gets 100 percent; it is all devoted to that purpose. And since "many believed charities could deliver social services better than the government," a drop in funding to charitable groups could have led to what many may have perceived as the inefficient provision of social services and public goods by the government. The law allowed a deduction for cash or gifts made to organizations operated for religious, charitable, scientific, or education purposes, or for the prevention of cruelty to animals or children. The overall amount that could be deducted was limited to 15% of net taxable income "to ensure that individual taxpayers could not eliminate their tax liability through the deduction." <3.2. The Revenue Act of 1924> Several years later, Congress waived the 15% limitation for taxpayers who made consistently large charitable donations. Specifically, as a result of the Revenue Act of 1924 (P.L. 68-176), taxpayers who donated "more than 90% of their net taxable income in the current year and in each of the previous 10 years" were not subject to the 15% net taxable income limitation. This provision was often referred to as the "Philadelphia nun" provision, after Mary Katherine Drexel, a wealthy Philadelphia native who became a nun and underwrote her charitable activities from her sizable inheritance. (In later years, it was also referred to as the "unlimited charitable deduction" (UCD), or "unlimited charitable contribution deduction.") <3.3. The Individual Income Tax Act of 1944> In 1944, Congress changed the limitation of the charitable deduction, which effectively increased the maximum amount that taxpayers could deduct. As previously discussed, for most taxpayers the charitable deduction was limited to 15% of net taxable income. The Individual Income Tax Act of 1944 (P.L. 78-315) changed the measurement of this limitation from net taxable income to adjusted gross income. Since AGI was generally larger than net taxable income, the maximum amount that could be deducted in dollar terms was larger. This law also created a standard deduction, which some charities worried would result in a reduction in charitable giving. The federal income tax, which before the early 1940s had been levied only on high-income Americans, was expanded to apply to most working-age Americans by the end of World War II. According to the IRS, In 1939 only about five percent of American workers paid income tax. The United States' entrance into World War II changed that figure. The demands of war production put almost every American back to work, but the expense of the war still exceeded tax-generated revenue. President Roosevelt's proposed Revenue Act of 1942 introduced the broadest and most progressive tax in American history, the Victory Tax. Now, about 75 percent of American workers would pay income taxes. This expansion was driven by increasing needs for revenue to finance World War II expenses. As more Americans became subject to the federal income tax, Congress became interested in simplifying tax preparation for these new taxpayers, which motivated the creation of a standard deduction. However, some worried that among those who used the standard deduction, there would be a reduction in charitable giving since there would be no additional tax benefit for these donations. Others who advocated for the standard deduction contended that charitable contributions were made for more than just financial reasons, and that especially among lower- and middle-income taxpayers (who were most likely to claim the standard deduction), the tax benefit for giving was not an important factor in their decisions to give. According to Senator Walter George, Chairman of the Senate Finance Committee, The committee does not believe that it can be proved that a tax incentive has been an important factor in the making of such gifts by individuals having less than $5,000 of adjusted gross income, and certainly the $500 standard deduction will not remove the tax incentive for persons in the higher brackets, upon whom the charities depend for contributions in substantial amounts. <3.4. Acts Increasing the AGI Limitations: 1952-1964> In 1952, as part of P.L. 82-465, Congress further increased the maximum amount taxpayers could deduct, raising the limitation to 20% of AGI. In 1954, Congress further increased the maximum deduction limit to 30% of AGI (P.L. 83-591) for any contributions to certain charitable organizations namely churches, educational institutions, or hospitals. The 10% of additional AGI that taxpayers could deduct was allowable only for contributions made to one of these eligible organizations. Deductible donations to other eligible organizations were still limited to 20% of AGI. One commentator noted that this was "the first time that Congress encouraged certain charitable giving by granting more generous deductions for donations to certain charitable organizations than to others [to] encourage additional contributions to these organizations to offset their rising costs and modest returns on endowment funds." Congress expanded the list of organizations for which taxpayers could claim the 30% charitable deduction as part of the Revenue Act of 1964 (P.L. 88-272) to include those that "receive a substantial part of [their] support from a governmental unit or from direct or indirect contributions from the general public." This effectively expanded the 30% AGI limitation to most charitable organizations except private nonoperating foundations, which were still subject to the 20% limitation. In addition, the law included a provision that allowed for charitable contributions in excess of the AGI limits to be carried forward up to five years. This five-year carryforward allows taxpayers who contributions exceed the AGI limit in a given year to still potentially receive a tax benefit from that contribution in future years. <3.5. The Tax Reform of 1969> The Tax Reform of 1969 (P.L. 91-172) made several modifications to the charitable deduction, including increasing the maximum AGI limits, phasing out the "Philadelphia nun" provision, and creating certain limitations on donations of appreciated property. Many of the current parameters of the charitable deduction for individuals were enacted as part of this law. At the time that Congress was debating this legislation, there was increased concern that taxpayers were using tax benefits like the charitable deduction to avoid paying income taxes. In particular, the unlimited charitable contribution deduction (UCD) had become a sanctuary in which many of the very wealthy were sheltered from the income tax. Prior to its repeal, the UCD was being used by an estimated 100 taxpayers who generally had economic income in excess of one million dollars. Since the UCD had a particular appeal to taxpayers having large amounts of appreciated capital which could be donated to charitable institutions, with the deduction based on the full market value rather than acquisition value, it not surprisingly became a prime target for reformers. The Tax Reform Act of 1969 phased out the "Philadelphia nun provision" over five years while also raising the maximum AGI limitation to 50% of AGI for donations of cash/short-term capital gain property to public charities. The increase in the AGI limit was intended to "offset any decreased incentive resulting from the repeal of the unlimited charitable contributions deduction." In addition, the increased AGI limitation was intended to [s]trengthen the incentive effect of the charitable contributions deduction for taxpayers. It is believed that the increase in the limitation will benefit taxpayers who donate substantial portions of their income to charity and for whom the incentive effect of the deduction is strong primarily taxpayers in the middle- and upper-income ranges. The new 50% limitation generally did not apply to gifts of property that had appreciated in value (e.g., capital gains), which were still generally subject to the 30% AGI limitation. In addition, the 20% AGI limitation for donations to private nonoperating foundations (irrespective of the form of the donation) was unchanged by the law. <3.6. The Economic Recovery Act of 1981> Under the Economic Recovery Act of 1981 ( P.L. 97-34 ), taxpayers who did not itemize their deductions i.e., those who took the standard deduction could claim a new deduction for charitable giving. This was a temporary provision that went into effect in 1982 and was scheduled to expire at the end of 1986. (The law made no change to the itemized deduction for charitable giving.) The amount that nonitemizers could deduct was limited to a percentage of the contributed amount, subject in some years to an additional fixed dollar cap. In 1982 and 1983, 25% of contributions could be deducted, subject to a $100 cap. In 1984, the contribution percentage remained unchanged (25%), but the dollar cap rose to $300. In 1985, 50% of contributions could be deducted, and the contribution cap was eliminated, and in 1986 100% of contributions could be deducted with no contribution cap. In addition to these caps, the amounts that could be deducted were also subject to the AGI limits applicable to the itemized deduction for charitable giving. This temporary provision was opposed by the Treasury Department and some economists at the time. For example, Donald Lubick, Assistant Secretary for Tax Policy at the Treasury Department, argued that the main beneficiaries of the above-the-line deduction lower- and moderate-income taxpayers would be less responsive than higher-income taxpayers in terms of additional giving. Lubick argued that the above-the-line deduction "would go, in very large measure, to those who are already giving with respect to their existing gifts," providing them with a windfall gain. He testified that an above-the-line deduction "would result in a large revenue loss to the Treasury and little increased giving for the charities." But according to JCT, Congress disagreed. The Congress believed that allowing a charitable deduction to nonitemizers stimulates charitable giving, thereby providing more funds for worthwhile nonprofit organizations, many of which provide services that otherwise might have to be provided by the Federal government. In addition, supporters of this provision believed that "[p]eople ought not be taxed on money they contribute to charitable causes. This should be true whether or not their other economic actions make it advantageous for them to itemize their deductions." This tax benefit expired as scheduled at the end of 1986, and was not extended as part of the Tax Reform Act of 1986. According to one commentator, "The big idea of the '86 Act was to pare away deductions and credits to broaden the base so you could bring the top rates down. And that was a pretty powerful tide and the nonitemizer [deduction] just wasn't strong enough to swim against that current." <3.7. The Deficit Reduction Act of 1984> As part of the Deficit Reduction Act of 1984 ( P.L. 98-369 ), Congress increased the contribution limits on donations of cash or ordinary income property to private nonoperating foundations from 20% of AGI to 30% of AGI. (Donations of long-term capital gain property to private nonoperating foundations remained limited to 20% of AGI.) In explaining this increase, JCT noted the following: Because as a general rule public charities and operating foundations directly carry out charitable function and programs, expend charitable donations more promptly and have public involvement, support, and supervision, the Congress concluded that a tax preference for contributions to public charities and operating foundations [50% AGI limitation] continues to be appropriate. However, acknowledging the substantial role of many grant making foundations in private philanthropy, the Congress believed that the extent of this tax preference should be narrowed by increasing to 30 percent the deduction limitation for gifts by individuals of cash and ordinary-income property to nonoperating foundations. <3.8. The Tax Cuts and Jobs Act of 2017> At the end of 2017, President Trump signed into law P.L. 115-97 , often referred to as the Tax Cuts and Jobs Act (TCJA), which made numerous changes to the federal income tax for individuals and businesses. Among the many changes, the law temporarily increased the AGI limit for cash donations made to public charities from 50% to 60%. This change went into effect in 2018, and is scheduled to expire on December 31, 2025. According to the House Ways and Means Committee report that accompanied H.R. 1 (the House-passed version of P.L. 115-9 ): The Committee believes that a robust charitable sector is vital to our economy, and that charitable giving is critical to ensuring that the sector thrives. For this reason, the Committee believes that it is desirable to provide additional incentives for taxpayers to provide monetary and volunteer support to charities. Increasing the charitable percentage limit for cash contributions to public charities will encourage taxpayers to provide essential monetary support to front-line charities. While this change to the charitable deduction may increase the amount that some taxpayers can deduct and hence may encourage more charitable giving, other changes made by the law are expected to result in an overall reduction in charitable giving. TPC estimates that even after including the increased 60% limitation, the changes TCJA made to the tax code could result in charitable donations falling by 5%. Appendix A. Definitions of Commonly Used Terms Appendix B. Valuation of Noncash Donations for the Charitable Deduction For noncash donations, there are certain rules on how to value the property. Depending on the type of property and the recipient organizations, the property is generally valued either at its basis (i.e., what the taxpayer originally paid for the property) or its fair market value (how much the taxpayer would receive in an open market for the property at the time it is donated), as summarized in Table B-1 . For an overview of these and other terms often used in the context of the charitable deduction, see Appendix A . If a property increases or appreciates in value, its fair market value when sold will be greater than its basis. If property decreases or depreciates in value, its fair market value when sold will be less than its basis. Hence, deducting the fair market value of an appreciated (depreciated) property results in a larger (smaller) deduction for the taxpayer than the basis value of that same property.

This report provides a brief history of the major legislative changes to the charitable deduction that have occurred over the past 100 years, focusing on changes to the amount that taxpayers could deduct. Over the past 100 years, Congress has generally increased the amount that eligible taxpayers can deduct for their charitable donations. These changes are summarized in the below table. As Congress has expanded the amount that can be deducted by those who claim the deduction, policymakers have debated the deduction's effectiveness at increasing charitable giving and the broader role of government subsidies for the philanthropic sector—a discussion that continues to this day.

crs_R45811

crs_R45811_0

<1. Introduction> The United States has actively pursued the development of hypersonic weapons as a part of its conventional prompt global strike (CPGS) program since the early 2000s. In recent years, it has focused such efforts on hypersonic glide vehicles and hypersonic cruise missiles with shorter and intermediate ranges for use in regional conflicts. Although funding for these programs has been relatively restrained in the past, both the Pentagon and Congress have shown a growing interest in pursuing the development and near-term deployment of hypersonic systems. This is due, in part, to the growing interest in these technologies in Russia and China, leading to a heightened focus in the United States on the strategic threat posed by hypersonic flight. Open-source reporting indicates that both China and Russia have conducted numerous successful tests of hypersonic glide vehicles, and both are expected to field an operational capability as early as 2020 . Experts disagree on the potential impact of competitor hypersonic weapons on both strategic stability and the U.S. military's competitive advantage. Nevertheless, current Under Secretary of Defense for Research and Engineering (USD R&E) Michael Griffin has testified to Congress that the United States does not "have systems which can hold [China and Russia] at risk in a corresponding manner, and we don't have defenses against [their] systems." Although the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (FY2019 NDAA, P.L. 115-232 ) accelerated the development of hypersonic weapons, which USD R&E identifies as a priority research and development area, the United States is unlikely to field an operational system before 2023. However, the United States, in contrast to Russia and China, is not currently considering or developing hypersonic weapons for use with a nuclear warhead. As a result, U.S. hypersonic weapons will likely require greater accuracy and will be more technically challenging to develop than nuclear-armed Chinese and Russian systems. In addition to accelerating development of hypersonic weapons, Section 247 of the FY2019 NDAA required that the Secretary of Defense, in coordination with the Director of the Defense Intelligence Agency, produce a classified assessment of U.S. and adversary hypersonic weapons programs, to include the following elements: (1) An evaluation of spending by the United States and adversaries on such technology. (2) An evaluation of the quantity and quality of research on such technology. (3) An evaluation of the test infrastructure and workforce supporting such technology. (4) An assessment of the technological progress of the United States and adversaries on such technology. (5) Descriptions of timelines for operational deployment of such technology. (6) An assessment of the intent or willingness of adversaries to use such technology. This report was delivered to Congress in July 2019. Similarly, Section 1689 of the FY2019 NDAA requires the Director of the Missile Defense Agency to produce a report on "how hypersonic missile defense can be accelerated to meet emerging hypersonic threats." The findings of these reports could hold implications for congressional authorizations, appropriations, and oversight. The following report reviews the hypersonic weapons programs in the United States, Russia, and China, providing information on the programs and infrastructure in each nation, based on unclassified sources. It also provides a brief summary of the state of global hypersonic weapons research development. It concludes with a discussion of the issues that Congress might address as it considers DOD's funding requests for U.S. hypersonic technology programs. <2. Background> Several countries are developing hypersonic weapons, which fly at speeds of at least Mach 5 (five times the speed of sound), but none have yet introduced them into their operational military forces. There are two primary categories of hypersonic weapons Hypersonic glide vehicles (HGV) are launched from a rocket before gliding to a target. Hypersonic cruise missiles are powered by high-speed, air-breathing engines, or "scramjets," after acquiring their target. Unlike ballistic missiles, hypersonic weapons do not follow a ballistic trajectory and can maneuver en route to their destination. As Vice Chairman of the Joint Chiefs of Staff and former Commander of U.S. Strategic Command General John Hyten has stated, hypersonic weapons could enable "responsive, long-range, strike options against distant, defended, and/or time-critical threats [such as road-mobile missiles] when other forces are unavailable, denied access, or not preferred." Conventional hypersonic weapons use only kinetic energy energy derived from motion to destroy unhardened targets or, potentially, underground facilities. Hypersonic weapons could challenge detection and defense due to their speed, maneuverability, and low altitude of flight. For example, terrestrial-based radar cannot detect hypersonic weapons until late in the weapon's flight. Figure 1 depicts the differences in terrestrial-based radar detection timelines for ballistic missiles versus hypersonic glide vehicles. This delayed detection compresses the timeline for decision-makers assessing their response options and for a defensive system to intercept the attacking weapon potentially permitting only a single intercept attempt. Furthermore, U.S. defense officials have stated that both terrestrial- and current space-based sensor architectures are insufficient to detect and track hypersonic weapons, with USD R&E Griffin noting that "hypersonic targets are 10 to 20 times dimmer than what the U.S. normally tracks by satellites in geostationary orbit." Some analysts have suggested that space-based sensor layers integrated with tracking and fire-control systems to direct high-performance interceptors or directed energy weapons could theoretically present viable options for defending against hypersonic weapons in the future. Indeed, the 2019 Missile Defense Review notes that "such sensors take advantage of the large area viewable from space for improved tracking and potentially targeting of advanced threats, including HGVs and hypersonic cruise missiles." Other analysts have questioned the affordability, technological feasibility, and/or utility of wide-area hypersonic weapons defense. As physicist and nuclear expert James Acton explains, "point-defense systems, and particularly [Terminal High-Altitude Area Defense (THAAD)], could very plausibly be adapted to deal with hypersonic missiles. The disadvantage of those systems is that they can only defend small areas. To defend the whole of the continental United States, you would need an unaffordable number of THAAD batteries." In addition, some analysts have argued that the United States' current command and control architecture would be incapable of "processing data quickly enough to respond to and neutralize an incoming hypersonic threat." (A broader discussion of hypersonic weapons defense is outside the scope of this report.) <2.1. United States> The Department of Defense (DOD) is currently developing hypersonic weapons under the Navy's Conventional Prompt Strike program, which is intended to provide the U.S. military with the ability to strike hardened or time-sensitive targets with conventional warheads, as well as through several Air Force, Army, and DARPA programs. Those who support these development efforts argue that hypersonic weapons could enhance deterrence, as well as provide the U.S. military with an ability to defeat capabilities such as advanced air and missile defense systems that form the foundation of U.S. competitors' anti-access/area denial strategies. In recognition of this, the 2018 National Defense Strategy identifies hypersonic weapons as one of the key technologies "[ensuring the United States] will be able to fight and win the wars of the future." <2.1.1. Programs> Unlike China and Russia, the United States is not currently developing hypersonic weapons for use with a nuclear warhead. As a result, U.S. hypersonic weapons will likely require greater accuracy and will be more technically challenging to develop than nuclear-armed Chinese and Russian systems. Indeed, according to one expert, "a nuclear-armed glider would be effective if it were 10 or even 100 times less accurate [than a conventionally-armed glider]" due to nuclear blast effects. According to open-source reporting, the United States has a number of major offensive hypersonic weapons and hypersonic technology programs in development, including the following (see Table 1 ): U.S. Navy Conventional Prompt Strike (CPS); U.S. Army Long-Range Hypersonic Weapon (LRHW); U.S. Air Force AGM-183 Air-Launched Rapid Response Weapon (ARRW, pronounced "arrow"); DARPA Tactical Boost Glide (TBG); DARPA Operational Fires (OpFires); and DARPA Hypersonic Air-breathing Weapon Concept (HAWC, pronounced "hawk"). These programs are intended to produce operational prototypes, as there are currently no programs of record for hypersonic weapons. Accordingly, funding for U.S. hypersonic weapons programs is found in the Research, Development, Test, and Evaluation accounts, rather than in Procurement. <2.1.1.1. U.S. Navy> In a June 2018 memorandum, DOD announced that the Navy would lead the development of a common glide vehicle for use across the services. The common glide vehicle is being adapted from a Mach 6 Army prototype warhead, the Alternate Re-Entry System, which was successfully tested in 2011 and 2017. Once development is complete, "Sandia National Laboratories, the designer of the original concept, then will build the common glide vehicles . Booster systems are being developed separately." The Navy's Conventional Prompt Strike (CPS) is expected to pair the common glide vehicle with a submarine-launched booster system, achieving initial operational capability (IOC) on a Virginia-class submarine with Virginia Payload Module in FY2028. The Navy is requesting $1 billion for CPS in FY2021 an increase of $415 million over the FY2020 request and $496 million over the FY2020 appropriation and $5.3 billion across the five-year Future Years Defense Program (FYDP). <2.1.1.2. U.S. Army> The Army's Long-Range Hypersonic Weapon program is expected to pair the common glide vehicle with the Navy's booster system. The system is intended to have a range of 1,400 miles and "provide the Army with a prototype strategic attack weapon system to defeat A2/AD capabilities, suppress adversary Long Range Fires, and engage other high payoff/time sensitive targets." The Army is requesting $801 million for the program in FY2021 $573 million over the FY2020 request and $397 million over the FY2020 appropriation and $3.3 billion across the FYDP. It plans to conduct flight tests for LRHW from FY2021 to FY2023, field combat rounds in FY2023, and transition to a program of record in the fourth quarter of FY2024. <2.1.1.3. U.S. Air Force> T he AGM-183 Air- L aunched Rapid Response Weapon is expected to leverage DARPA's Tactical Boost Glide technology to develop an air-launched hypersonic glide vehicle prototype capable of travelling at speeds up to Mach 20 at a range of approximately 575 miles. Despite testing delays due to technical challenges, ARRW completed a successful flight test in June 2019 and is expected to complete flight tests in FY2022. The Air Force has requested $382 million for ARRW in FY2021 up from $286 million in the FY2020 request and appropriation and $581 million across the FYDP, with no funds requested beyond FY2022. ARRW is a project under the Air Force's Hypersonics Prototyping Program Element, which is intended to demonstrate concepts "to [enable] leadership to make informed strategy and resource decisions for future programs." In February 2020, the Air Force announced that it had cancelled its second hypersonic weapon program, the Hypersonic Conventional Strike Weapon (HCSW), which had been expected to use the common glide vehicle, due to budget pressures that forced it to choose between ARRW and HCSW. Air Force acquisition chief Will Roper explained that ARRW was selected because it was more advanced and gave the Air Force additional options. "[ARRW] is smaller; we can carry twice as many on the B-52, and it's possible it could be on the F-15," he explained. The Air Force will continue its technical review of HCSW through March 2020. <2.1.1.4. DARPA> DARPA, in partnership with the Air Force, continues to test Tactical Boost Glide, a wedge-shaped hypersonic glide vehicle capable of Mach 7+ flight that "aims to develop and demonstrate technologies to enable future air-launched, tactical-range hypersonic boost glide systems." TBG will "also consider traceability, compatibility, and integration with the Navy Vertical Launch System" and is planned to transition to both the Air Force and the Navy. DARPA has requested $117 million down from the $162 million FY2020 request and the $152 million FY2020 appropriation for TBG in FY2021. DARPA's Operational Fires reportedly seeks to leverage TBG technologies to develop a ground-launched system that will enable "advanced tactical weapons to penetrate modern enemy air defenses and rapidly and precisely engage critical time sensitive targets." DARPA has requested $40 million for OpFires in FY2021 down from the $50 million FY2020 request and appropriation and intends to transition the program to the Army. In the longer term, DARPA, with Air Force support, is continuing work on the Hypersonic Air-breathing Weapon Concept, which "seeks to develop and demonstrate critical technologies to enable an effective and affordable air-launched hypersonic cruise missile." Assistance Director for Hypersonics Mike White has stated that such a missile would be smaller than DOD's hypersonic glide vehicles and could therefore launch from a wider range of platforms. Director White has additionally noted that HAWC and other hypersonic cruise missiles could integrate seekers more easily than hypersonic glide vehicles. DARPA requested $7 million to develop HAWC in FY2021 down from the $10 million FY2020 request and $20 million FY2020 appropriation. <2.1.1.5. Hypersonic Missile Defenses> DOD is also investing in counter-hypersonic weapons capabilities, although USD R&E Michael Griffin has stated that the United States will not have a defensive capability against hypersonic weapons until the mid-2020s, at the earliest. In September 2018, the Missile Defense Agency (MDA) which in 2017 established a Hypersonic Defense Program pursuant to Section 1687 of the FY2017 NDAA ( P.L. 114-840 ) commissioned 21 white papers to explore hypersonic missile defense options, including interceptor missiles, hypervelocity projectiles, laser guns, and electronic attack systems. In January 2020, MDA issued a draft request for prototype proposals for a Hypersonic Defense Regional Glide Phase Weapons System interceptor. This effort is intended to "reduce interceptor key technology and integration risks, anchor modeling and simulation in areas of large uncertainty, and to increase the interceptor technology readiness levels (TRL) to level 5." MDA has also awarded four companies Northrop Grumman, Raytheon, Leidos, and L3Harris with $20 million contracts to design prototype space-based (low-Earth orbit) sensors by October 31, 2020. Such sensors could theoretically extend the range at which incoming missiles could be detected and tracked a critical requirement for hypersonic missile defense, according to USD Griffin. MDA requested $206.8 million for hypersonic defense in FY2021 up from its $157.4 million FY2020 request and $659 million across the FYDP. In addition, DARPA is working on a program called Glide Breaker, which "will develop critical component technology to support a lightweight vehicle designed for precise engagement of hypersonic threats at very long range." DARPA requested $3 million for Glide Breaker in FY2021 down from $10 million in FY2020. <2.1.2. Infrastructure> According to a study mandated by the FY2013 National Defense Authorization Act ( P.L. 112-239 ) and conducted by the Institute for Defense Analyses (IDA) , the United States had 48 critical hypersonic test facilities and mobile assets in 2014 needed for the maturation of hypersonic technologies for defense systems development through 2030 . These specialized facilities, which simulate the unique conditions experienced in hypersonic flight (e.g., speed, pressure, heating), included 10 DOD hypersonic ground test facilities, 11 DOD open-air ranges, 11 DOD mobile assets, 9 NASA facilities, 2 Department of Energy facilities, and 5 industry or academic facilities. In its 2014 evaluation of U.S. hypersonic test and evaluation infrastructure, IDA noted that " no current U.S. facility can provide full-scale, time-dependent, coupled aerodynamic and thermal-loading environments for flight durations necessary to evaluate these characteristics above Mach 8. " Since the 2014 study report was published, the University of Notre Dame has opened a Mach 6 hypersonic wind t unnel and at least one hypersonic testing facility has been inactivated. D evelopment of Mach 8 and Mach 10 wind tunnels at Purdue University and the University of Notre Dame , respectively, is ongoing. In addition, t he University of Arizona plans to modify one of its wind tunnels to enable Mach 5 testing by early 2021 , while Texas A&M University in partnership with Army Futures Command plans to complete construction of a kilometer-long Mach 10 wind tunnel by 2021 . ( For a list of U.S. hypersonic test assets and their capabilities, see the Appendix .) The United States also uses the Royal Australian Air Force Woomera Test Range in Australia and the And ya Rocket Range in Norway for flight testing. In January 2019, the Navy announced plans to reactivate its Launch Test Complex at China Lake, CA, to improve air launch and underwater testing capabilities for the conventional prompt strike program. In addition, in March 2020, DOD announced that it had established a "hypersonic war room" to assess the U.S. industrial base for hypersonic weapons and identify "critical nodes" in the supply chain. Initial findings are to be released in mid-2020. <2.2. Russia> Although Russia has conducted research on hypersonic weapons technology since the 1980s, it accelerated its efforts in response to U.S. missile defense deployments in both the United States and Europe, and in response to the U.S. withdrawal from the Anti-Ballistic Missile Treaty in 2001. Detailing Russia's concerns, President Putin stated that "the US is permitting constant, uncontrolled growth of the number of anti-ballistic missiles, improving their quality, and creating new missile launching areas. If we do not do something, eventually this will result in the complete devaluation of Russia's nuclear potential. Meaning that all of our missiles could simply be intercepted." Russia thus seeks hypersonic weapons, which can maneuver as they approach their targets, as an assured means of penetrating U.S. missile defenses and restoring its sense of strategic stability. <2.2.1. Programs> Russia is pursuing two hypersonic weapons programs the Avangard and the 3M22 Tsirkon (or Zircon) and has reportedly fielded the Kinzhal ("Dagger"), a maneuvering air-launched ballistic missile. Avangard ( Figure 2 ) is a hypersonic glide vehicle launched from an intercontinental ballistic missile (ICBM), giving it "effectively 'unlimited' range." Reports indicate that Avangard is currently deployed on the SS-19 Stiletto ICBM, though Russia plans to eventually launch the vehicle from the Sarmat ICBM. Sarmat is still in development, although it may be deployed by 2021. Avangard features onboard countermeasures and will reportedly carry a nuclear warhead. It was successfully tested twice in 2016 and once in December 2018, reportedly reaching speeds of Mach 20; however, an October 2017 test resulted in failure. Russian news sources claim that Avangard entered into combat duty in December 2019. In addition to Avangard, Russia is developing Tsirkon, a ship-launched hypersonic cruise missile capable of traveling at speeds of between Mach 6 and Mach 8. Tsirkon is reportedly capable of striking both ground and naval targets. According to Russian news sources, Tsirkon has a range of between approximately 250 and 600 miles and can be fired from the vertical launch systems mounted on cruisers Admiral Nakhimov and Pyotr Veliky , Project 20380 corvettes, Project 22350 frigates, and Project 885 Yasen-class submarines, among other platforms. These sources assert that Tsirkon was successfully launched from a Project 22350 frigate in January 2020. U.S. intelligence reports indicate that the missile will become operational in 2023. In addition, Russia has reportedly fielded Kinzhal, a maneuvering air-launched ballistic missile modified from the Iskander missile. According to U.S. intelligence reports, Kinzhal was successfully test fired from a modified MiG-31 fighter (NATO code name: Foxhound) as recently as July 2018 striking a target at a distance of approximately 500 miles and is expected by U.S. intelligence sources to become ready for combat by 2020. Russia plans to deploy the missile on both the MiG-31 and the Su-34 long-range strike fighter. Russia is working to mount the missile on the Tu-22M3 strategic bomber (NATO code name: Backfire), although the slower-moving bomber may face challenges in "accelerating the weapon into the correct launch parameters." Russian media has reported Kinzhal's top speed as Mach 10, with a range of up to 1,200 miles when launched from the MiG-31. The Kinzhal is reportedly capable of maneuverable flight, as well as of striking both ground and naval targets, and could eventually be fitted with a nuclear warhead. However, such claims regarding Kinzhal's performance characteristics have not been publicly verified by U.S. intelligence agencies, and have been met with skepticism by a number of analysts. <2.2.2. Infrastructure> Russia reportedly conducts hypersonic wind tunnel testing at the Central Aero-Hydrodynamic Institute in Zhukovsky and the Khristianovich Institute of Theoretical and Applied Mechanics in Novosibirsk, and has tested hypersonic weapons at Dombarovskiy Air Base, the Baykonur Cosmodrome, and the Kura Range. <2.3. China> According to Tong Zhao, a fellow at the Carnegie-Tsinghua Center for Global Policy, "most experts argue that the most important reason to prioritize hypersonic technology development [in China] is the necessity to counter specific security threats from increasingly sophisticated U.S. military technology, including [hypersonic weapons]." In particular, China's pursuit of hypersonic weapons, like Russia's, reflects a concern that U.S. hypersonic weapons could enable the United States to conduct a preemptive, decapitating strike on China's nuclear arsenal and supporting infrastructure. U.S. missile defense deployments could then limit China's ability to conduct a retaliatory strike against the United States. China has demonstrated a growing interest in Russian advances in hypersonic weapons technology, conducting flight tests of a hypersonic-glide vehicle (HGV) only days after Russia tested its own system. Furthermore, a January 2017 report found that over half of open-source Chinese papers on hypersonic weapons include references to Russian weapons programs. This could indicate that China is increasingly considering hypersonic weapons within a regional context. Indeed, some analysts believe that China may be planning to mate conventionally armed HGVs with the DF-21 and DF-26 ballistic missiles in support of an anti-access/area denial strategy. China has reportedly not made a final determination as to whether its hypersonic weapons will be nuclear- or conventionally-armed or dual-capable. <2.3.1. Programs> China has conducted a number of successful tests of the DF-17, a medium-range ballistic missile specifically designed to launch HGVs. U.S. intelligence analysts assess that the missile has a range of approximately 1,000 to 1,500 miles and could be deployed in 2020. China has also tested the DF-41 intercontinental ballistic missile, which could be modified to carry a conventional or nuclear HGV, according to a report by a U.S. Congressional commission. The development of the DF-41 thus "significantly increases the [Chinese] rocket force's nuclear threat to the U.S. mainland," the report states. China has tested the DF-ZF HGV (previously referred to as the WU-14) at least nine times since 2014. U.S. defense officials have reportedly identified the range of the DF-ZF as approximately 1,200 miles and have stated that the missile may be capable of performing "extreme maneuvers" during flight. Although unconfirmed by intelligence agencies, some analysts believe the DF-ZF will be operational as early as 2020. According to U.S. defense officials, China also successfully tested Starry Sky-2 (or Xing Kong-2), a nuclear-capable hypersonic vehicle prototype, in August 2018. China claims the vehicle reached top speeds of Mach 6 and executed a series of in-flight maneuvers before landing. Unlike the DF-ZF, Starry Sky-2 is a "waverider" that uses powered flight after launch and derives lift from its own shockwaves. Some reports indicate that the Starry Sky-2 could be operational by 2025. U.S. officials have declined to comment on the program. <2.3.2. Infrastructure> China has a robust research and development infrastructure devoted to hypersonic weapons. USD (R&E) Michael Griffin stated in March 2018 that China has conducted 20 times as many hypersonic tests as the United States. China tested three hypersonic vehicle models (D18-1S, D18-2S, and D18-3S) each with different aerodynamic properties in September 2018. Analysts believe that these tests could be designed to help China develop weapons that fly at variable speeds, including hypersonic speeds. Similarly, China has used the Lingyun Mach 6+ high-speed engine, or "scramjet," test bed ( Figure 3 ) to research thermal resistant components and hypersonic cruise missile technologies. According to Jane's Defence Weekly , "China is also investing heavily in hypersonic ground testing facilities." CAAA operates the FD-02, FD-03, and FD-07 hypersonic wind tunnels, which are capable of reaching speeds of Mach 8, Mach 10, and Mach 12, respectively. China also operates the JF-12 hypersonic wind tunnel, which reaches speeds of between Mach 5 and Mach 9, and the FD-21 hypersonic wind tunnel, which reaches speeds of between Mach 10 and Mach 15. China is expected to have an operational wind tunnel capable of reaching speeds of Mach 25 by 2020. China is known to have tested hypersonic weapons at the Jiuquan Satellite Launch Center and the Taiyuan Satellite Launch Center. <3. Issues for Congress> As Congress reviews the Pentagon's plans for U.S. hypersonic weapons programs during the annual authorization and appropriations process, it might consider a number of questions about the rationale for hypersonic weapons, their expected costs, and their implications for strategic stability and arms control. This section provides an overview of some of these questions. <3.1. Mission Requirements> Although the Department of Defense is funding a number of hypersonic weapons programs, it has not established any programs of record, suggesting that it may not have approved requirements for hypersonic weapons or long-term funding plans. Indeed, as Assistant Director for Hypersonics (USD R&E) Mike White has stated, DOD has not yet made a decision to acquire hypersonic weapons and is instead developing prototypes to "[identify] the most viable overarching weapon system concepts to choose from and then make a decision based on success and challenges." As Congress conducts oversight of U.S. hypersonic weapons programs, it may seek to obtain information about DOD's evaluation of potential mission sets for hypersonic weapons, a cost analysis of alternative means of executing these mission sets, and an assessment of the enabling technologies such as space-based sensors or autonomous command and control systems that may be required to employ or defend against hypersonic weapons. <3.2. Funding Considerations> Assistant Director for Hypersonics (USD R&E) Mike White has noted that DOD is prioritizing offensive programs while it determines "the path forward to get a robust defensive strategy." This approach is reflected in DOD's FY2021 request, which allocates $206.8 million for hypersonic defense programs of a total $3.2 billion request for all hypersonic-related research. Similarly, in FY2020, DOD requested $157.4 million for hypersonic defense programs of a total $2.6 billion for all hypersonic-related research. Although the Defense Subcommittees of the Appropriations Committees increased FY2020 appropriations for both hypersonic offense and defense above the FY2020 request, they expressed concerns, noting in their joint explanatory statement of H.R. 1158 "that the rapid growth in hypersonic research has the potential to result in stove-piped, proprietary systems that duplicate capabilities and increase costs." To mitigate this concern, they appropriated $100 million for DOD to establish a Joint Hypersonic Transition Office to "develop and implement an integrated science and technology roadmap for hypersonics" and "establish a university consortium for hypersonic research and workforce development" in support of DOD efforts. Given the lack of defined mission requirements for hypersonic weapons, it may be challenging for Congress to evaluate the balance of funding for hypersonic weapons programs, enabling technologies, supporting test infrastructure, and hypersonic missile defense. <3.3. Strategic Stability> Analysts disagree about the strategic implications of hypersonic weapons. Some have identified two factors that could hold significant implications for strategic stability: the weapon's short time-of-flight which, in turn, compresses the timeline for response and its unpredictable flight path which could generate uncertainty about the weapon's intended target and therefore heighten the risk of miscalculation or unintended escalation in the event of a conflict. This risk could be further compounded in countries that co-locate nuclear and conventional capabilities or facilities . Some analysts argue that unintended escalation could occur as a result of warhead ambiguity, or from the inability to distinguish between a conventionally armed hypersonic weapon and a nuclear-armed one. However, as a United Nations report notes, "even if a State did know that an HGV launched toward it was conventionally armed, it may still view such a weapon as strategic in nature, regardless of how it was perceived by the State firing the weapon, and decide that a strategic response was warranted." Differences in threat perception and escalation ladders could thus result in unintended escalation. Such concerns have previously led Congress to restrict funding for conventional prompt strike programs. Other analysts have argued that the strategic implications of hypersonic weapons are minimal. Pavel Podvig, a senior research fellow at the United Nations Institute for Disarmament Research, has noted that the weapons "don't change much in terms of strategic balance and military capability." This, some analysts argue, is because U.S. competitors such as China and Russia already possess the ability to strike the United States with intercontinental ballistic missiles, which, when launched in salvos, could overwhelm U.S. missile defenses. Furthermore, these analysts note that in the case of hypersonic weapons, traditional principles of deterrence hold: "it is really a stretch to try to imagine any regime in the world that would be so suicidal that it would even think threating to use not to mention to actually use hypersonic weapons against the United States ... would end well." <3.4. Arms Control> Some analysts who believe that hypersonic weapons could present a threat to strategic stability or inspire an arms race have argued that the United States should take measures to mitigate risks or limit the weapons' proliferation. Proposed measures include expanding New START, negotiating new multilateral arms control agreements, and undertaking transparency and confidence-building measures. The New START Treaty, a strategic offensive arms treaty between the United States and Russia, does not currently cover weapons that fly on a ballistic trajectory for less than 50% of their flight, as do hypersonic glide vehicles and hypersonic cruise missiles. However, Article V of the treaty states that "when a Party believes that a new kind of strategic offensive arm is emerging, that Party shall have the right to raise the question of such a strategic offensive arm for consideration in the Bilateral Consultative Commission (BCC)." Accordingly, some legal experts hold that the United States could raise the issue in the BCC of negotiating to include hypersonic weapons in the New START limits. However, because New START is due to expire in 2021, unless extended through 2026, this solution is likely to be temporary. As an alternative, some analysts have proposed negotiating a new international arms control agreement that would institute a moratorium or ban on hypersonic weapon testing. These analysts argue that a test ban would be a "highly verifiable" and "highly effective" means of preventing a potential arms race and preserving strategic stability. Other analysts have countered that a test ban would be infeasible, as "no clear technical distinction can be made between hypersonic missiles and other conventional capabilities that are less prompt, have shorter ranges, and also have the potential to undermine nuclear deterrence." These analysts have instead proposed international transparency and confidence-building measures, such as exchanging weapons data; conducting joint technical studies; "providing advance notices of tests; choosing separate, distinctive launch locations for tests of hypersonic missiles; and placing restraints on sea-based tests." <3.4.1. Appendix. U.S. Hypersonic Testing Infrastructure114>

The United States has actively pursued the development of hypersonic weapons—maneuvering weapons that fly at speeds of at least Mach 5—as a part of its conventional prompt global strike program since the early 2000s. In recent years, the United States has focused such efforts on developing hypersonic glide vehicles, which are launched from a rocket before gliding to a target, and hypersonic cruise missiles, which are powered by high-speed, air-breathing engines during flight. As Vice Chairman of the Joint Chiefs of Staff and former Commander of U.S. Strategic Command General John Hyten has stated, these weapons could enable "responsive, long-range, strike options against distant, defended, and/or time-critical threats [such as road-mobile missiles] when other forces are unavailable, denied access, or not preferred." Critics, on the other hand, contend that hypersonic weapons lack defined mission requirements, contribute little to U.S. military capability, and are unnecessary for deterrence. Funding for hypersonic weapons has been relatively restrained in the past; however, both the Pentagon and Congress have shown a growing interest in pursuing the development and near-term deployment of hypersonic systems. This is due, in part, to the growing interest in these technologies in Russia and China, both of which have a number of hypersonic weapons programs and are expected to field an operational hypersonic glide vehicle—potentially armed with nuclear warheads—as early as 2020. The United States, in contrast to Russia and China, is not currently considering or developing hypersonic weapons for use with a nuclear warhead. As a result, U.S. hypersonic weapons will likely require greater accuracy and will be more technically challenging to develop than nuclear-armed Chinese and Russian systems. The Pentagon's FY2021 budget request for all hypersonic-related research is $3.2 billion—up from $2.6 billion in the FY2020 request—including $206.8 million for hypersonic defense programs. At present, the Department of Defense (DOD) has not established any programs of record for hypersonic weapons, suggesting that it may not have approved either requirements for the systems or long-term funding plans. Indeed, as Assistant Director for Hypersonics (Office of the Under Secretary of Defense for Research and Engineering) Mike White has stated, DOD has not yet made a decision to acquire hypersonic weapons and is instead developing prototypes to assist in the evaluation of potential weapon system concepts and mission sets. As Congress reviews the Pentagon's plans for U.S. hypersonic weapons programs, it might consider questions about the rationale for hypersonic weapons, their expected costs, and their implications for strategic stability and arms control. Potential questions include the following: What mission(s) will hypersonic weapons be used for? Are hypersonic weapons the most cost-effective means of executing these potential missions? How will they be incorporated into joint operational doctrine and concepts? Given the lack of defined mission requirements for hypersonic weapons, how should Congress evaluate funding requests for hypersonic weapons programs or the balance of funding requests for hypersonic weapons programs, enabling technologies, and supporting test infrastructure? Is an acceleration of research on hypersonic weapons, enabling technologies, or hypersonic missile defense options both necessary and technologically feasible? How, if at all, will the fielding of hypersonic weapons affect strategic stability? Is there a need for risk-mitigation measures, such as expanding New START, negotiating new multilateral arms control agreements, or undertaking transparency and confidence-building activities?

crs_R46238

crs_R46238_0

The Freedom of Information Act (FOIA) confers on the public a right to access federal agency information. Before FOIA's enactment, the Administrative Procedure Act (APA) had required agencies to make certain government information available to the public. But the exceptions to disclosure in the APA's public information section had, in the estimation of FOIA's drafters, "become the major statutory excuse for withholding Government records from public view." The exceptions were broad, authorizing agencies, for example, to withhold information if doing so was "in the public interest" or for "matters of official record" when information was "held co nfidential for good cause found." In addition, the APA's public information section lacked a provision authorizing a person to seek judicial review of an agency's decision to withhold information. To rectify the APA's perceived failure to provide the public with adequate access to government information, Congress enacted FOIA in 1966 as an amendment to the APA. In FOIA, Congress sought to establish a statutory scheme that embodied "a broad philosophy of 'freedom of information'" and ensured "the availability of Government information necessary to an informed electorate." To effectuate Congress's desire for robust public access to agency information, FOIA establishes a three-part system of disclosure by which agencies must disclose a large swath of records and information. First, FOIA directs agencies to publish "substantive rules of general applicability," procedural rules, and specified other important government materials in the Federal Register. Second, on a proactive basis, agencies must electronically disclose a separate set of agency information including, among other things, final adjudicative opinions and certain "frequently requested" records. And third, FOIA's request-driven system of disclosure requires that, "[e]xcept with respect to the records made available under" the statute's proactive disclosure provisions, agencies disclose covered records to individuals, corporations, and others upon request. FOIA's tripartite system of disclosure aims to open up a vast array of federal agency information and records to private individuals, researchers, journalists, corporations, and other parties. In addition, disclosure under FOIA may bring information to Congress's attention that may inform its oversight of FOIA-covered agencies. As one court has remarked, "FOIA is the legislative embodiment of Justice Brandeis's famous adage" that "[s]unlight is . . . the best of disinfectants." While FOIA's main purpose is to inform the public of the operations of the federal government, the act's drafters sought to protect certain private and governmental interests from the new law's disclosure obligations. FOIA thus contains nine exemptions from disclosure that authorize, but do not require, agencies to withhold information or records that are otherwise subject to release or availability under the statute. Most of FOIA's nine enumerated exemptions are designed to protect against fairly general harms that may arise from disclosure, while others concern very specific types of information, and one incorporates numerous exemptions contained in other federal statutes. And along with its nine exemptions, FOIA contains three records "exclusions" that cover certain "especially sensitive law enforcement records." If records protected by an exclusion are subject to a FOIA request, an agency may "treat the records as not subject to the requirements of" FOIA. Lastly, the statute authorizes requesters to challenge in federal court an agency's decision to withhold requested records. Federal district courts may "enjoin [an] agency from withholding agency records" and "order the production of any agency records improperly withheld." This report provides an overview of FOIA. First, the report examines key terms that dictate the scope of agencies' disclosure obligations under FOIA. The report then provides an overview of FOIA's three disclosure requirements. Following that discussion, the report reviews each of FOIA's nine exemptions and, in a later section, its three records exclusions. After an overview of selected issues concerning judicial review of agency decisions to withhold information under FOIA, this report discusses two topics of potential interest to Congress: FOIA's "special access" provision which provides that FOIA does not authorize agencies "to withhold information from Congress" and the status of congressional records under FOIA. Lastly, this report discusses three other laws that, like FOIA, govern the availability of specific types of government information and constitute significant elements of the federal government's open government and information legal regimes: the Federal Advisory Committee Act (FACA); Government in the Sunshine Act (Sunshine Act); and Privacy Act. <1. Key Terms> FOIA generally requires each federal "agency" to make "agency records" available to the public and specifically to "any person" who requests them. FOIA does not, however, require every federal entity to disclose government information to the public, nor must an agency disclose every piece of information that may be located within a covered entity. And not all persons have a right to receive records under the act. Three key statutory terms inform FOIA's general scope: (1) "agency"; (2) "agency records"; and (3) "any person." The meaning of each of these terms determines which entities must comply with FOIA, what materials must be disclosed under the act, and to whom FOIA grants the right to request and receive records. <1.1. "Agency"> FOIA requires "agencies" to disclose a broad array of information to the public. The APA's general definition section in 5 U.S.C. 551 defines "agency" as "each authority of the Government of the United States, whether or not it is within or subject to review by another agency." FOIA embraces this general definition and provides that, for the act's purposes, the term "includes any executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the Government (including the Executive Office of the President), or any independent regulatory agency." While this definition includes a large swath of the federal government, it does not encompass the entire federal establishment. For example, FOIA does not apply to Congress, the federal courts, or territorial governments. Although FOIA's definition of "agency" includes the Executive Office of the President (EOP), courts have determined that several entities within the EOP are nevertheless not subject to the act. In Kissinger v. Reporters Committee for Freedom of the Press , the Supreme Court held that transcripts of Henry Kissinger's telephone conversations from his time as Assistant to the President for National Security Affairs were not subject to disclosure under FOIA. The Court explained that the term "agency" as used in FOIA does not apply to "the President's immediate personal staff or units in the Executive Office whose sole function is to advise and assist the President ." Courts have determined that several EOP entities are not FOIA "agencies" by virtue of their solely advisory or operational functions, including the Council of Economic Advisers, Office of Administration, and National Security Council. On the other hand, courts have held that entities within the EOP that "wield[] substantial authority independently of the President," such as the Office of Management and Budget, are agencies under FOIA. <1.2. "Agency Records"> Just as only "agencies" are subject to FOIA's disclosure requirements, only "agency records" need be disclosed under the act. FOIA, however, does not define "agency records." Without a statutory definition, the Supreme Court, in Department of Justice (DOJ) v. Tax Analysts , held that materials qualify as agency records if an agency (1) created or obtained the materials and (2) was "in control of the requested materials at the time the FOIA request [was] made." An agency comes in control of materials if, per Tax Analysts , "the materials have come into the agency's possession in the legitimate conduct of its official duties." As the two-part test makes clear, a record may be subject to disclosure even when an agency did not create the record, as long as the agency obtained and controlled the record when it was requested. To determine whether an agency exercises "control" of a record, the D.C. Circuit developed the " Burka test," which considers 1. the intent of the document's creator to retain or relinquish control over the records; 2. the ability of the agency to use and dispose of the record as it sees fit; 3. the extent to which agency personnel have read or relied upon the document; and 4. the degree to which the document was integrated into the agency's record system or files. That said, an agency's mere ability to obtain materials, if not exercised, does not establish that such materials are agency records. And FOIA does not require an agency to create agency records in response to a FOIA request, only to disclose records it has already received or created and that are already under its control. Because FOIA only applies to "agency records," it does not obligate agencies to disclose publicly the "personal records" of agency employees. As the Supreme Court in Tax Analysts explained, "the term 'agency records' is not so broad as to include personal materials in an employee's possession, even though the materials may be physically located at the agency." The U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) has employed "a totality of the circumstances test" to assess whether material constitutes an "agency record" subject to FOIA or a "personal record" excluded from the statute's coverage. This "test focuses on a variety of factors surrounding the creation, possession, control, and use of the document by an agency." In applying the totality of the circumstances test in Consumer Federation of America v. Department of Agriculture (USDA) , the D.C. Circuit held that electronic calendars of several USDA officials qualified as "agency records" under FOIA. The calendars "were created by agency employees and were located within the [officials'] agency," updated and accessed daily, and maintained on the agency's computer system. The court determined, however, that the "creation, possession, and control" factors were "not dispositive in determining whether the calendars [were] 'agency records'" in the case. Instead, the court held that the officials' use of the calendars was the "decisive factor." Specifically, the court found it significant that the calendars were used to schedule agency operations and were distributed to other agency staff and top officials. But the court determined that the electronic calendar of a separate USDA official was not an agency record subject to disclosure under FOIA because the official only shared the calendar with his secretaries and, therefore, no one else within the agency depended on his calendar to conduct agency business. Although FOIA does not require the disclosure of personal materials, issues may arise when agency personnel use nonofficial electronic accounts to communicate. In Competitive Enterprise Institute v. Office of Science & Technology Policy (OSTP) , the requester sought "all policy/OSTP-related email[s]" contained within the private email account of the director of OSTP. A private entity maintained an account that the director used for work-related purposes. OSTP denied the request, asserting that the private entity (the director's former employer) controlled the account and that the agency, therefore, could not search it. The district court dismissed the suit in favor of the agency. However, the D.C. Circuit reversed, explaining that "records do not lose their agency character just because the official who possesses them takes them out the door or because he is the head of the agency." Instead, the court wrote, "[i]f the agency head controls what would otherwise be an agency record, then it is still an agency record and still must be searched or produced." The D.C. Circuit's decision in Competitive Enterprise Institute , therefore, stands for the proposition that agency records are subject to FOIA even if contained in nongovernmental electronic accounts. <1.3. "Any Person"> Lastly, FOIA directs agencies to disclose nonexempt agency records to "any person" upon request. A "person" is defined as "an individual, partnership, corporation, association, or public or private organization other than an agency." Courts have therefore held that, along with individuals, organizational entities such as corporations, as well as state and foreign governments, have access rights under FOIA. That said, federal agencies have no right to records under FOIA. Access to records under FOIA does not hinge on whether an individual is an American citizen; noncitizens are also entitled to records under the act. Further, the Supreme Court has explained that the requester's identity generally does not factor into whether records are subject to disclosure, nor is a requester generally required to supply a reason to an agency for his or her request. <2. Access to Government Information under FOIA> FOIA sets forth a three-part system for disclosing government information. The first two disclosure schemes require agencies to affirmatively disclose specific categories of information to the public, either through publication in the Federal Register or electronic disclosure. The third disclosure provision requires that, "[e]xcept with respect to the records made available" pursuant to FOIA's affirmative disclosure requirements, agencies disclose covered records after receiving a request from "any person." <2.1. Affirmative Disclosure> While FOIA may be known predominately for its request-driven system of disclosure, the statute also contains affirmative disclosure provisions that require federal agencies to proactively disseminate to the public certain agency records. FOIA imposes two affirmative (also known as mandatory or proactive ) disclosure obligations. Under the first requirement codified in subsection (a)(1) of 552 agencies must publish certain important government materials including "substantive rules of general applicability" and "rules of procedure" in the Federal Register. The second affirmative disclosure requirement codified in subsection (a)(2) of 552 requires agencies to provide electronic access to a separate set of agency materials that consists of, among other things, final agency adjudicative opinions and certain "frequently requested" records. <2.1.1. Publication in the Federal Register> Under 552(a)(1), agencies must publish certain information "in the Federal Register for the guidance of the public." The provision seeks "to enable the public 'readily to gain access to the information necessary to deal effectively and upon equal footing with the Federal agencies.'" It instructs agencies to publish the following: 1. descriptions of agency organization and information regarding how, where, and from whom "the public may obtain information, make submittals or requests, or obtain decisions"; 2. information on how agency "functions are channeled and determined, including the nature and requirements of all formal and informal procedures available"; 3. (3) procedural rules, descriptions of available agency forms "or the places at which forms may be obtained, and instructions as to the scope and contents of all papers, reports, or examinations"; 4. (4) "substantive rules of general applicability adopted as authorized by law," as well as agency "statements of general policy or interpretations of general applicability"; and 5. (5) every "amendment, revision, or repeal of the foregoing." FOIA imposes a penalty for an agency's failure to publish the above information, providing that no person shall "in any manner be required to resort to, or be adversely affected by, a matter required to be published in the Federal Register and not so published." In other words, an agency may not enforce any material against an affected party that the agency did not publish in the Federal Register as required under subsection (a)(1), unless the affected party received "actual and timely notice of the terms thereof." Courts have held that FOIA authorizes judicial review of an agency's withholding of (a)(1) materials. However, available remedies in such cases may be limited. In Kennecott Utah Copper Corporation v. Department of the Interior (DOI) , the D.C. Circuit held that FOIA does not authorize reviewing courts, as a remedy, to order an agency to publish materials in the Federal Register. The court explained that FOIA's judicial review provision "allows district courts to order 'the production of any agency records improperly withheld from the complainant ,' not agency records withheld from the public ." Whereas, as explained by the court, "[p]roviding documents to the individual fully relieves whatever informational injury may have been suffered by that particular complainant," requiring "publication goes well beyond that need." The court explained that the penalty in subsection (a)(1), which provides that materials required to be published in the Federal Register that an agency has not so published generally are unenforceable, is "an alternative means for encouraging agencies to fulfill their obligation to publish materials in the Federal Register" and "gives agencies a powerful incentive to publish any [(a)(1) materials] they expect to enforce." <2.1.2. Electronic Disclosure> FOIA's second affirmative disclosure provision does not require disclosure in a particular publication, as does subsection (a)(1). Instead, subsection (a)(2) of 552 (often referred to as the "reading-room provision") directs agencies to "make available for public inspection in an electronic format" certain information, unless the information is "promptly published and copies [are] offered for sale." The following information must be electronically disclosed under FOIA's second affirmative disclosure provision: 1. (1) "final opinions . . ., as well as orders, made in the adjudication of cases"; 2. (2) policy statements and interpretations not appearing in the Federal Register; 3. (3) "administrative staff manuals and instructions to staff that affect a member of the public"; 4. (4) copies of records that had been released in response to a FOIA request and that (a) "the agency determines have become or are likely to become the subject of subsequent requests for substantially the same records" due to the nature of the records' subject or (b) "have been requested 3 or more times"; and 5. (5) indexes of such previously released records. The 1966 House report underlying FOIA explained that this provision was intended to open up to the public the "thousands of orders, opinions, statements, and instructions issued by hundreds of agencies," information that the report described as constituting "the bureaucracy['s] . . . own form of case law." In that vein, the Supreme Court has explained that FOIA's second affirmative disclosure provision "represents a strong congressional aversion to 'secret [agency] law.'" Materials subject to subsection (a)(2) are now generally made accessible on agency websites. In addition to public dissemination of the above materials, subsection (a)(2) requires that agencies "maintain and make available for public inspection in an electronic format" indexes of (a)(2) material. And an agency may not rely on, use, or cite as precedent a "final order, opinion, statement of policy, interpretation, or staff manual or instruction that affects a member of the public" unless the agency has (1) indexed the material and published or made it available, or (2) given the affected party "actual and timely notice of the terms" of such material. As with (a)(1) materials, FOIA authorizes judicial review of challenges to the availability of materials subject to disclosure under subsection (a)(2). Courts do not appear to agree, however, whether they have authority under FOIA to order agencies to make (a)(2) records available in agency reading rooms, or whether their authority under the statute is limited to ordering the production of records to individual complainants. <2.2. Request-Driven Disclosure> Under the two affirmative disclosure provisions discussed above, agencies must proactively disclose specific types of information. By contrast, under FOIA's third system of disclosure, agencies disclose covered records not "made available under" the affirmative disclosure provisions on a case-by-case basis after receiving a request. As discussed below, FOIA imposes certain procedural requirements on requesters and agencies in making and responding to requests for records. And, also as discussed below, the act allows requesters to internally appeal agency decisions to withhold records, a process requesters generally must take advantage of prior to seeking review in federal court. Section 552(a)(3)(A) of title 5 of the U.S. Code governs the production of records requested under FOIA. Under that section, "each agency . . . shall make . . . records promptly available to any person" after receiving a FOIA request. An agency must respond to a request that satisfies two requirements. First, a request must "reasonably describe[]" the records sought. The House committee report underlying the 1974 amendments to FOIA states that a "'description' of a requested document would be sufficient if it enabled a professional employee of the agency who was familiar with the subject area of the request to locate the record with a reasonable amount of effort." Second, a FOIA request must comply with the agency's "published rules stating the time, place, fees (if any), and procedures to be followed." If a requester submits a valid request, an agency must execute an "adequate" or "reasonable" search. This standard requires that an agency conduct a search that is "reasonably calculated to uncover all relevant documents." The D.C. Circuit has explained that "[t]he issue is not whether any further documents might conceivably exist but rather whether the government's search for responsive documents was adequate." FOIA also states that agencies must "make reasonable efforts to search for . . . records in electronic form or format," unless doing so "would significantly interfere with the operation of the agency's automated information system." DOJ guidance provides that this latter requirement "promotes electronic database searches and encourages agencies to expend new efforts in order to comply with the electronic search requirements of particular FOIA requests." To facilitate its disclosure mandate, FOIA requires agencies to respond within certain timeframes and authorizes administrative review of unfavorable agency decisions. Once it receives a valid FOIA request, an agency has twenty business days to "determine . . . whether to comply with [the] request" and "shall immediately notify the" requester of its "determination and the reasons therefor," as well as of the requester's right to appeal an "adverse determination" within the agency. In "unusual circumstances" as defined by the statute an agency may extend the twenty-day period by ten additional days. In Citizens for Responsibility & Ethics in Washington v. Federal Election Commission , the D.C. Circuit, in an opinion authored by then-Judge Brett Kavanaugh, held that to make a proper "determination," an "agency must at least indicate within the relevant time period the scope of the documents it will produce and the exemptions it will claim with respect to any withheld documents." The court explained that an agency need not produce requested records when it makes its initial determination, determining that it may fulfill its responsibility under 552(a)(3)(A) to "make . . . records promptly available" after it indicates the scope of the records it will disclose and the exemptions it will invoke. A requester who receives an adverse determination may appeal the determination within the agency. Upon receiving an administrative appeal, an agency has twenty business days to make a determination, although, as in the context of initial determinations, it may extend this timeline by ten days for unusual circumstances. If the agency in whole or in part upholds its adverse determination, it must inform the requester of FOIA's provisions governing judicial review of agency withholding decisions. Judicial review can proceed if the requester remains dissatisfied. Before challenging an agency's nondisclosure decision in federal court, a requester typically must exhaust any remedies that an agency affords the requester. Plaintiffs will fail to exhaust administrative remedies if they did not submit a valid FOIA request to the agency or did not internally appeal the agency's adverse decision. However, if the agency does not adhere to the response timeframes FOIA imposes on agencies, a requester "shall be deemed to have exhausted his administrative remedies." If this occurs, the requester is viewed as having constructively exhausted administrative remedies and may seek review in federal court. However, if an agency belatedly responds to a request before the requester files suit, the requester must still internally appeal the agency's adverse determination before seeking recourse in the federal courts. <3. Exemptions> As explained above, FOIA establishes a statutory right of public access to a wide array of government information. However, FOIA's drafters also desired to protect certain private and governmental interests from the law's broad disclosure mandate. FOIA reflects this desire by exempting a variety of records and information from mandatory disclosure pursuant to nine enumerated exemptions. Information protected by FOIA's exemptions ranges from certain classified national security information to geological information pertaining to wells. Together, the statute's policy of otherwise maximum disclosure and its exemptions seek to strike a "balance between the right of the public to know and the need of the Government to keep information in confidence to the extent necessary without permitting indiscriminate secrecy." FOIA's exemptions are codified at 5 U.S.C. 552(b). Table 1 lists each exemption. All nine exemptions are explained more fully below. Despite the scope afforded to agencies to withhold certain records by FOIA's exemptions, the statute is fundamentally a disclosure statute. In that vein, the Supreme Court has directed that FOIA's exemptions should "be narrowly construed." The statute reflects FOIA's presumption in favor of disclosure by explicitly requiring that agencies "take reasonable steps necessary to segregate and release nonexempt information" and disclose "[a]ny reasonably segregable portion of a record" that has been requested "after deletion of the portions which are exempt." More fundamentally, FOIA's exemptions do not impose mandatory withholding obligations on agencies, and pursuant to the 2016 amendments to FOIA, an agency may not withhold government information protected by an exemption unless it "reasonably foresees that disclosure would harm an interest protected by an exemption," or if disclosing the information is legally prohibited. Such limitations on the potential breadth of FOIA's exemptions may aid in the implementation of the statute's prodisclosure mandate. The Supreme Court has instructed that, due to the "exclusivity" of FOIA's exemptions, the act does not authorize an agency to withhold a covered record or information that is not protected by an applicable exemption. And in American Immigration Lawyers Association v. Executive Office for Immigration Review , the D.C. Circuit held that, when disclosing a record under FOIA, an agency may not redact information from that record on the basis that the information is "non-responsive," but instead is limited by FOIA's nine exemptions in the types of information it may redact. The court explained that, although an agency may apply a FOIA exemption to withhold matter from a record, "once an agency identifies a record it deems responsive to a FOIA request, the statute compels disclosure of the responsive record . . . as a unit." Thus, per the court, although "the focus of the FOIA is information, not documents" when the agency is deciding whether to exempt matter from a record, "outside of that context, FOIA calls for disclosure of a responsive record, not disclosure of responsive information within a record." An agency may be prohibited by another source of law from disclosing material that is exempt under FOIA. For example, under FOIA's Exemption 3, certain statutes that prohibit or place limits on agencies' disclosure of information may serve as bases under FOIA for withholding covered information. An agency's disclosure of information protected by an Exemption 3 withholding statute, therefore, could, depending on the statute's terms, violate that particular statute. As another example, although FOIA's Exemption 4 authorizes an agency to withhold certain confidential "commercial or financial information" and trade secrets, the Trade Secrets Act (TSA) imposes criminal penalties for disclosing certain confidential materials if disclosure is not "authorized by law." Thus, while Exemption 4 grants agencies discretion to withhold information covered by both the exemption and the TSA, the TSA would prohibit the unauthorized disclosure of the information. Ultimately, however, if records within FOIA's coverage are not exempt under FOIA or prohibited from being disclosed by another law, an agency must disclose such records upon request. Under certain circumstances, an agency may be held to have waived its ability to apply an exemption to a requested record due to its prior disclosure of information. For example, the D.C. Circuit has "held . . . that the government cannot rely on an otherwise valid exemption claim to justify withholding information that has been 'officially acknowledged' or is in the 'public domain.'" Courts often have held that an agency's prior disclosure of information to Congress has not foreclosed application of an exemption in response to a subsequent FOIA request. However, whether an agency has waived an exemption is necessarily dependent on "the specific nature and circumstances of the prior disclosure." <3.1. Exemption 1: National Defense or Foreign Policy> The first FOIA exemption authorizes agencies to withhold certain matters that pertain to "national defense or foreign policy." Specifically, Exemption 1 allows an agency to withhold information that is "(A) specifically authorized under criteria established by an Executive order to be kept secret in the interest of national defense or foreign policy and (B) [which is] in fact properly classified pursuant to such Executive order." This exemption reflects Congress's interest in maintaining the confidentiality of information implicating national defense and security. However, as the text makes clear, not all national-security-related information may be withheld under Exemption 1. Instead, only those national defense or foreign policy matters that have been properly classified through an applicable executive order are covered. At present, Executive Order 13526 primarily governs the classification of national security information by the executive branch. The executive order prescribes the procedures for classifying national security information and lists the categories of information to which the order applies, which include "military plans, weapons systems, or operations"; "scientific, technological, or economic matters relating to the national security"; and "United States Government programs for safeguarding nuclear materials or facilities." Information that an agency seeks to withhold from disclosure under Exemption 1 must satisfy the substantive and procedural requirements contained in Executive Order 13526. <3.2. Exemption 2: Internal Personnel Rules and Practices> FOIA's second exemption applies to records that are comparatively more "routine" and generally prone to less public interest than the national-security-related matters agencies may withhold under Exemption 1. Exemption 2 authorizes agencies to exempt from disclosure information that is "related solely to the internal personnel rules and practices of an agency." The Supreme Court has held that "personnel rules and practices" under Exemption 2 are those that address "employee relations or human resources." This exemption covers rules and practices pertaining to "hiring and firing, work rules and discipline, [and] compensation and benefits." To fall under Exemption 2, information must pertain "exclusively or only" to personnel rules and practices, and, as the Supreme Court has explained, an "agency must typically keep [such] records to itself for its own use." For years, many courts interpreted this provision to cover not only the employee relations and humans resources information described above, but also records that were predominantly internal and whose release would "significantly risk[] circumvention of agency regulations or statutes." But in Milner v. Department of the Navy , the Supreme Court held that this broad view of Exemption 2 contravened the ordinary meaning of "personnel rules and practices" which the Court read as applying only to employee relations and human resources records and impermissibly incorporated an extrastatutory "circumvention requirement" into the exemption. After Milner , agencies wishing to withhold information that would have previously qualified as High 2 information must locate possible alternatives to Exemption 2 in other FOIA exemptions. <3.3. Exemption 3: Matters Exempted by Other Statutes> With the exceptions of Exemptions 8 and 9, exemptions for information on a particularly specific subject or issue tend to be governed by FOIA's third exemption. Exemption 3 generally allows agencies to withhold information if it is "specifically exempted from disclosure by" a non-FOIA statute. In other words, disclosure under Exemption 3 is determined not by the category of information at issue, but rather by the information's protection by another statute. Congress has enacted a variety of statutes that prohibit or place limitations on the disclosure of information by the government. These statutory confidentiality requirements cover a wide range of information, including such diverse categories as information pertaining to visa determinations, drug pricing data, patent applications, and tax returns, to name but a few. Congress, however, did not intend for Exemption 3 to apply to every statute that authorizes or requires the withholding of information. Congress limited the exemption's coverage to two particular categories of statutes "to assure," as the D.C. Circuit has written, "that basic policy decisions on governmental secrecy be made by the Legislative rather than the Executive branch." The first category of laws that Exemption 3 covers are statutes that direct agencies to withhold information "from the public in such a manner as to leave no discretion on the issue." The second embraces statutes that "establish[] particular criteria for withholding or refer[] to particular types of matters to be withheld." In American Jewish Congress v. Kreps , the D.C. Circuit explained that the first category "embraces only those statutes incorporating a congressional mandate of confidentiality that, however general, is absolute and without exception." The second category, however, "does leave room for administrative discretion"; statutes embraced by that category cabin or direct an agency's discretion by specific standards or criteria. A record must fall within the terms of a statute embraced by either category to fall under Exemption 3. Exemption 3 limits the universe of statutes subject to its coverage in one additional way. Any statute enacted after the date of the OPEN FOIA Act of 2009 must "specifically cite[] to" the exemption to qualify as an Exemption 3 withholding statute. Courts, accordingly, have held that statutes enacted after October 28, 2009, that fail to cite to Exemption 3 do not qualify as an exemption statute under FOIA, even if they would otherwise fall within the first two categories described above. <3.4. Exemption 4: Trade Secrets and Commercial or Financial Information> Third parties regularly submit an enormous amount of sensitive proprietary information to the federal government, including in such varied situations as military and other government contracts; settlement negotiations with agencies; and applications for drug approvals by the Food and Drug Administration. FOIA's Exemption 4 authorizes agencies to exempt from disclosure many types of sensitive information that individuals and entities from outside the federal government transmit to the government. Specifically, the exemption protects (1) "trade secrets" and (2) "commercial or financial information obtained from a person . . . [that is] privileged or confidential." The D.C. Circuit defines a "trade secret" for purposes of Exemption 4 as any secret, commercially valuable plan, formula, process, or device that is used for the making, preparing, compounding, or processing of trade commodities and that can be said to be the end product of either innovation or substantial effort. Courts have interpreted the exemption to embrace a broad range of information, allowing, for example, agencies to exempt as trade secrets "documents contain[ing] information consisting of drug product manufacturing information, including manufacturing processes or drug chemical composition and specifications," as well as "information regarding the quantities of menthol contained in cigarettes by brand and by quantity in each brand and subbrand." Most Exemption 4 litigation, however, does not concern trade secrets, but rather information potentially exempt under the "commercial or financial information" prong of Exemption 4. Under that prong, materials may be withheld under FOIA if they (1) constitute "commercial or financial information," (2) have been supplied to an agency by a "person," and (3) are "privileged or confidential." While each element of the prong must be satisfied for information other than a trade secret to qualify as exempt, a particularly significant question courts face in Exemption 4 litigation is whether commercial or financial information is "confidential" within the meaning of Exemption 4. Prior to 2019, the leading test for determining the meaning of "confidential" under the exemption was developed by the D.C. Circuit in National Parks & Conservation Association v. Morton . Under the National Parks test, commercial or financial information was deemed confidential "if disclosure of the information [was] likely . . . (1) to impair the Government's ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained." Under National Parks , therefore, the courts looked to the effect of disclosing commercial or financial information on the federal government or submitter of information. But in Food Marketing Institute (FMI) v. Argus Leader Media , the Supreme Court rejected the D.C. Circuit's test and instead held that "[a]t least where commercial or financial information is both [1] customarily and actually treated as private by its owner and [2] provided to the government under an assurance of privacy, the information is 'confidential' within the meaning of Exemption 4." This definition is broader than the National Parks test and permits agencies to withhold a larger category of information from FOIA's disclosure mandate. But the Supreme Court did not define the precise boundaries of its new test in FMI ; although the Court determined that "[a]t least the first condition" must be present for information to qualify as confidential, it did not decide whether the government must always provide assurances that information will be kept private in order for information to fall within Exemption 4's coverage. <3.5. Exemption 5: Inter- or Intra-Agency Memoranda or Letters> Exemption 5 applies to "inter-agency or intra-agency memorandums or letters that would not be available by law to a party other than an agency in litigation with the agency." The 1966 House report accompanying the FOIA legislation indicates that the exemption was drafted with the intention of ensuring the "full and frank exchange of opinions" within the executive branch and based on the proposition that requiring an agency to release information prior to finalizing an action or decision will hinder its ability to effectively function. To fall within Exemption 5's coverage, a document must both (1) qualify as an "inter-agency or intra-agency" document and (2) "fall within the ambit of a privilege against discovery under judicial standards that would govern litigation against the agency that holds it." Material is "inter-agency or intra agency" if it originates from an "agency," as that term is defined by FOIA. Some courts have also recognized what is known as the "consultant corollary," under which Exemption 5 protects certain materials that have been supplied to an agency by external consultants. Nonetheless, Exemption 5 does not protect all such communications. In DOI v. Klamath Water Users Protective Association , for example, the Supreme Court held that information submitted to DOI by certain American Indian tribes concerning the allocation of water rights did not constitute "intra-agency" records because the tribes had "communicate[d] with the [agency] with their own, albeit entirely legitimate, interests in mind" and sought "a Government benefit at the expense of other applicants." An inter- or -intra-agency document will only qualify as exempt if, in the context of pretrial discovery, it would not "be routinely or normally disclosed upon a showing of relevance" in litigation against the agency. Accordingly, agency materials that would be routinely or normally disclosed in such contexts are not covered by the exemption. That a record must be disclosed in discovery upon a sufficient showing of need does not remove the record from Exemption 5's protection, as records subject to disclosure in such circumstances "are . . . not 'routinely' or 'normally' available to parties in litigation." The Court has explained that Exemption 5 "incorporates the privileges which the Government enjoys under the relevant statutory and case law in the pretrial discovery context." The exemption has been construed to embrace privileges mentioned in FOIA's legislative history, but privileges not mentioned may also be incorporated. However, a privilege not expressly listed in the legislative history and considered "novel" or having "less than universal acceptance" would be less likely to fall within Exemption 5's scope. Both the Supreme Court and lower federal courts have identified several privileges that Exemption 5 embraces and that may, therefore, serve as bases for withholding agency documents, including the privileges discussed below. D eliberative P rocess P rivilege . The deliberative process privilege is recognized as a component of the more general "executive privilege." The Supreme Court has explained that the deliberative process privilege applies to agency "advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated." The privilege protects agency records that are "predecisional" (i.e., they predate an agency decision) and "deliberative" (i.e., they reflect "the give-and-take of the consultative process"). Factual material is generally not protected by the exemption. Notably, the FOIA Improvement Act of 2016 amended Exemption 5 to exclude application of the privilege to documents that were "created 25 years or more before the date on which [they] were requested." P residential C ommunications P rivilege . The presidential communications privilege is also a component of executive privilege and has been recognized as applicable in the Exemption 5 context. The Supreme Court has held that the privilege protects from mandatory disclosure "communications in performance of [a President's] responsibilities, of his office, and made in the process of shaping policies and making decisions." The D.C. Circuit has held that the privilege also protects "communications authored or received in response to . . . solicitation[s] by" senior White House advisers "in the course of gathering information and preparing recommendations on official matters for presentation to the President," as well as records "authored or solicited and received by . . . members of an immediate White House adviser's staff who have broad and significant responsibility for investigating and formulating the advice to be given to the President on a particular matter." Unlike the deliberative process privilege, the presidential communications privilege "applies to documents in their entirety, and covers final and post-decisional materials as well as pre-deliberative ones." A ttorney- C lient P rivilege . Exemption 5 also incorporates the attorney-client privilege. The attorney-client privilege generally protects "communication[s] made between privileged persons in confidence for the purpose of obtaining or providing legal assistance for the client." Exemption 5 incorporates the privilege as it exists for government attorneys, where, as explained by the D.C. Circuit, "the 'client' may be the agency and the attorney may be an agency lawyer." The privilege does not cover information "adopted as, or incorporated by reference into, an agency's policy." A ttorney W ork - P roduct P rivilege . In the context of Exemption 5, the attorney work-product privilege embraces "materials prepared in anticipation of litigation" by an agency. The privilege serves to protect and maintain an effective adversarial litigation system. While records must have been prepared in anticipation of litigation to be protected by the exemption, in Federal Trade Commission v. Grolier , the Supreme Court held that materials may be withheld under Exemption 5 even if the litigation for which the materials were prepared has since ended. The Court's decision was based on its interpretation of Rule 26 of the Federal Rules of Civil Procedure, which is the source of the work-product doctrine for pretrial discovery in federal civil litigation. It was also based on the fact that, generally, federal judicial decisions regarding "Rule 26[] had determined that work-product materials retained their immunity from discovery after termination of the litigation for which the documents were prepared, without regard to whether other related litigation is pending or is contemplated." The court explained that, because "Exemption 5 incorporates the privileges which the Government enjoys under the relevant statutory and case law in the pretrial discovery context," materials protected by the work-product privilege were not "'routinely' available in subsequent litigation." Other Privilege s . The Supreme Court and lower courts have determined that other privileges are embraced by Exemption 5. For example, in United States v. Weber Aircraft Corp. , the Supreme Court held that the privilege protecting "[c]onfidential statements made to air crash safety inspectors," known as the Machin privilege, was incorporated by the exemption. The Court has also held that Exemption 5 applies to "confidential commercial information, at least to the extent that this information is generated by the Government itself in the process leading up to awarding a contract." <3.6. Exemption 6: Personnel, Medical, and Similar Files> Exemption 6 exempts from disclosure "personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy." Federal agencies maintain a large amount of information about individuals, such as health and medical records, criminal records, home addresses, social security numbers, and a variety of other types of personal information. Exemption 6 helps shield "individuals from the injury and embarrassment" that may stem from the disclosure of personal information maintained by the government. The exemption applies to citizens and noncitizens alike, but courts have not extended its protections to corporations. As an initial manner, an agency may only withhold information for impermissibly invading an individual's privacy if it is a personnel, medical, or "similar" file. FOIA does not contain a definition of these terms, but, as some courts have explained, personnel and medical files "generally contain a variety of information about a person, such as place of birth, date of birth, date of marriage, employment history, and comparable data." And the Supreme Court has held that the term "similar files" broadly embraces any "information which applies to a particular individual." Courts have identified a variety of information types that qualify as "files" under Exemption 6, including, for example, the names and addresses of federal annuitants; individuals' citizenship information; information associated with asylum requests; and "information regarding marital status, legitimacy of children, identity of fathers of children, medical condition, welfare payments, alcoholic consumption, family fights, [and] reputation." Information is not exempt from disclosure under FOIA, however, merely because it qualifies as a personnel, medical, or similar file. Such files must still be disclosed upon request unless release "would constitute a clearly unwarranted invasion of personal privacy." To determine whether disclosure would rise to such a level, agencies and courts balance the privacy interest associated with the requested information against "the public interest in disclosure." Courts typically require that an agency assert a privacy interest that is "substantial" (or more than " de minimis ") to justify withholding the information. And the Supreme Court has held that "the only relevant public interest in disclosure . . . is the extent to which disclosure would serve the core purpose of FOIA, which is contributing significantly to public understanding of the operations or activities of the government." If the asserted privacy interest outweighs the public interest in disclosure, the information is exempt. <3.7. Exemption 7: Law Enforcement Records or Information> FOIA's seventh exemption applies to "records or information compiled for law enforcement purposes," but only where disclosure of such agency records "would" or "could reasonably be expected to" result in certain harms specified by the exemption (and discussed below). As the Supreme Court has explained, Exemption 7 stemmed from Congress's belief "that law enforcement agencies had legitimate needs to keep certain records confidential, lest the agencies be hindered in their investigations or placed at a disadvantage when it came time to present their cases." To qualify as exempt under Exemption 7, a record must have been "compiled" for law enforcement purposes. This criterion may be satisfied even if the record was not originally compiled for law enforcement purposes, as the Supreme Court has held that this exemption also applies if material was subsequently gathered for law enforcement purposes, prior to the agency's response to the FOIA request. Further, the Court has held that material that was originally compiled "for law enforcement purposes continues to meet the threshold requirements of Exemption 7 where [it] is reproduced or summarized in a new document prepared for a non-law-enforcement purpose." As explained by the D.C. Circuit, "the term 'compiled' in Exemption 7 requires that a document be created, gathered, or used by an agency for law enforcement purposes at some time before the agency invokes the exemption." Courts have applied Exemption 7 to records compiled for criminal, civil, and administrative enforcement, as well as to materials associated with agencies' national and homeland security functions. Further, the exemption not only applies to agencies that primarily engage in law enforcement, but also to agencies that possess both administrative and law enforcement responsibilities ("mixed-function agencies"). Although, on judicial review, an agency must establish that materials withheld under Exemption 7 are compiled for purposes of law enforcement to properly invoke the exemption, agencies whose primary function is criminal law enforcement are often subject to comparatively relaxed standards of proof on this question than are mixed-function agencies. Exemption 7 only applies to certain statutorily specified types of law enforcement records. Therefore, establishing that material has been compiled for law enforcement purposes is insufficient to exempt it from disclosure under FOIA; even if a withheld record was compiled for such purposes, it may only be exempted from disclosure if disclosure may or will lead to one of the harms identified in subexemptions (A) through (F). Exemption 7(A) authorizes the withholding of law enforcement records where disclosure "could reasonably be expected to interfere with enforcement proceedings." Courts have held that Exemption 7(A) applies in the context of a "pending or prospective" enforcement proceeding and where disclosure "could reasonably be expected to cause some articulable harm" to those proceedings, such as by obstructing an agency's investigation or placing an agency "at a disadvantage when it came time to present [its] case[]." However, courts have established limits to Exemption 7(A)'s application. For example, many courts have held that agencies must satisfy a high burden in proving that harm will occur from "the release of information that the targets of the investigation already possess . " Exemption 7(B) applies where disclosure "would deprive a person of a right to a fair trial or an impartial adjudication." The D.C. Circuit has explained "that a trial or adjudication [must be] pending or truly imminent" in order to trigger Exemption 7(B), and "that it [must be] more probable than not that disclosure . . . would seriously interfere with the fairness of those proceedings." And the D.C. Circuit has held that, as to disclosure's effect on the fairness of proceedings, courts must examine "the significance of any alleged unfairness in light of its effect . . . on the proceedings as a whole," and not simply whether disclosure would bestow "a slight advantage . . . on a party in a single phase of a case." Exemption 7(C) authorizes the withholding of records where disclosure "could reasonably be expected to constitute an unwarranted invasion of personal privacy." Like Exemption 6, Exemption 7(C) was designed to protect personal privacy interests. However, as the Supreme Court has explained, the latter exemption provides more protection for materials under its coverage than does the former. Exemption 6 only applies to disclosures that " would constitute a clearly unwarranted invasion of personal privacy." Exemption 7(C), however, is more encompassing: it does not include the word "clearly," and it protects against disclosures that merely "could reasonably be expected to" effect an unwarranted intrusion into personal privacy. Despite these differences, however, both exemptions are guided by many of the same privacy principles discussed above in relation to Exemption 6. For example, courts determining the availability of Exemption 7(C) often engage in the same type of case-by-case balancing of the private interests at stake and the public interest in disclosure as they do in the Exemption 6 context. Exemption 7(D) applies to disclosures which "could reasonably be expected to disclose the identity of a confidential source," as well as to "information furnished by a confidential source" where "records or information [were] compiled by criminal law enforcement authority in the course of a criminal investigation or by an agency conducting a lawful national security intelligence investigation." A source is "confidential" if the government expressly pledges to keep information supplied by the source in confidence or if "such an assurance could be reasonably inferred" from the circumstances. According to the Supreme Court's decision in DOJ v. Landano , "[a] source should be deemed confidential if the source furnished information with the understanding that the [agency] would not divulge the communication except to the extent [it] thought necessary for law enforcement purposes." While the Court in Landano rejected the government's argument that confidentiality is generally presumed simply because a source has worked with the FBI during a criminal investigation, it did hold that such a presumption may exist where "circumstances such as the nature of the crime investigated and the witness' relation to it support an inference of confidentiality." Exemption 7(E) provides that records may be withheld where disclosure "would disclose techniques and procedures for law enforcement investigations or prosecutions, or would disclose guidelines for law enforcement investigations or prosecutions if such disclosure could reasonably be expected to risk circumvention of the law." As can be seen from the text, this subexemption applies to two different types of investigation and prosecution materials: "techniques and procedures" and "guidelines." Courts are split as to whether the exemption applies to the disclosure of both types of materials or only to the "guidelines" described in the subexemption's second clause. Exemption 7(F) authorizes withholding where disclosure "could reasonably be expected to endanger the life or physical safety of any individual." Prior to 1986, this subexemption only protected against disclosures that could endanger law enforcement personnel. However, the 1986 amendments to FOIA expanded Exemption 7(F)'s coverage by substituting "any individual" for "law enforcement personnel." <3.8. Exemption 8: Financial Institution Reports> Exemption 8 protects matters "contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions." The Senate report underlying the original law explains that, by limiting the availability of the covered financial reports to the agencies tasked with overseeing financial institutions, the exemption was intended to protect such institutions' security. Courts have also opined that Exemption 8 was intended "to safeguard the relationship between the banks and their supervising agencies." <3.9. Exemption 9: Geological and Geophysical Information and Data Concerning Wells> Exemption 9 exempts from disclosure "geological and geophysical information and data, including maps, concerning wells." Courts have not had many opportunities to interpret this exemption, as agencies do not often invoke it. <4. Exclusions> In addition to its nine exemptions, FOIA also contains three records exclusions. FOIA's exclusions allow an agency, in response to a request for certain law enforcement records, to "treat the records as not subject to the requirements of" FOIA. As the Attorney General ' s Memorandum on the 1 9 86 Amendments to the Freedom of Information Act explains, when an agency receives a request for records that fall within the coverage of an exclusion, the agency is authorized to withhold the records and "respond to the request as if the excluded records d[o] not exist." FOIA's exclusions, in other words, allow agencies to "withhold documents without comment." Conversely, when an agency invokes a FOIA exemption in response to a request for records, it is required to "reveal the fact of and grounds for any withholdings" to the requester. FOIA's exclusions, therefore, are designed to allow agencies to better avoid disclosure of the narrow categories of records to which they apply. Each of FOIA's three exclusions is codified at 5 U.S.C. 552(c). Exclusion (c)(1). The first exclusion covers records protected by Exemption 7(A) (i.e., records whose disclosure "could reasonably be expected to interfere with enforcement proceedings"), but only if the relevant law enforcement proceeding or investigation concerns a "possible" criminal violation; and the agency has "reason to believe" both that the pendency of the proceeding or investigation is unknown to the subject of the proceeding or investigation, and revealing the records' existence "could reasonably be expected to interfere with enforcement proceedings." The exclusion was intended to prevent an agency from "tipping off" an individual about the existence of an investigation of which he or she is a subject by stating, in response to a FOIA request, that requested records are exempt from disclosure under Exemption 7(A). While agencies can rely on this exclusion to prevent such an outcome, by its terms, Exclusion (c)(1) is only available to an agency while the conditions described in its text continue. Accordingly, once the investigation becomes public, this exclusion no longer applies. Exclusion (c)(2). The second exclusion applies to records that are "maintained by a criminal law enforcement agency under an informant's name or personal identifier." When a third party requests such records "according to the informant's name or personal identifier," Exclusion (c)(2) authorizes the agency to "treat the records as not subject to the requirements of" FOIA. The Attorney General's memorandum on the 1986 amendments to FOIA describes FOIA's second exclusion as contemplating "the situation in which a sophisticated requester could try to ferret out an informant in his organization by forcing a law enforcement agency" to invoke FOIA's exemption for records relating to a confidential source (Exemption 7(D)), an action that would likely corroborate the requester's suspicion that the individual subject to the request is a confidential informant. The memorandum cites as an example the situation in which a criminal organization that suspects one of its members is a criminal informant either requires that the suspected informant request law enforcement records about himself or herself, or else compels the individual to submit a privacy waiver to allow a member of the organization to make such a request. Exclusion (c)(2) authorizes law enforcement agencies to protect against the disclosure of the identities of their confidential informants in such situations. However, like Exclusion (c)(1), an agency's ability to use the second exclusion is subject to an important limitation: an agency may not use the second exclusion if "the informant's status as an informant has been officially confirmed." Exclusion (c)(3). FOIA's third exclusion protects a subset of FBI records concerning "foreign intelligence," "counterintelligence," or "international terrorism." The FBI may treat such records as excluded from FOIA if "the existence of the records is classified information as provided in" Exemption 1. Exclusion (c)(3) seeks to prevent the harm that may occur from an agency's publicly claiming the protection of Exemption 1 in response to a request and, therefore, admitting that such sensitive records do indeed exist. Like the other exclusions, however, the third exclusion's protective ambit is limited an agency may only use Exclusion (c)(3) for such time "as the existence of [such] records remains classified information." <5. FOIA-Related Litigation: Selected Issues> FOIA not only established a statutory right of access to agency records, but also provided a means for requesters to enforce that right through judicial review of agency decisions to withhold records. Conversely, parties may initiate legal actions to prevent agencies from disclosing information requested under FOIA in certain situations. These aspects of FOIA and FOIA-related litigation judicial review of agencies' withholding decisions and so-called reverse-FOIA litigation are discussed below. <5.1. Judicial Review of Agency Withholding Decisions> Under 5 U.S.C. 552(a)(4)(B), federal district courts have "jurisdiction to enjoin [an] agency from withholding agency records and to order the production of any agency records improperly withheld from the complainant." The Supreme Court, accordingly, has explained that a court has jurisdiction under 552(a)(4)(B) if it can be shown "that an agency has (1) improperly; (2) withheld; (3) agency records." In DOJ v. Tax Analysts , the Court held that, because FOIA's exemptions are "exclusive," agency records are "improperly" withheld when an agency refuses to disclose requested records that are not protected by an applicable exemption. Yet the Court has also held that an agency's decision to withhold a record is not "improper" if a court order prohibits the agency from disclosing the record. Further, in Kissinger v. Reporters Committee for Freedom of the Press , the Court held that records are not "withheld" under 552(a)(4)(B) if, before a request was filed, the records were "removed from the possession of the agency." The Court did not answer whether an agency "withholds" a record when it "purposefully route[s] a document out of agency possession in order to circumvent a FOIA request." However, as one court has explained, "an agency's FOIA obligations might extend to documents that are not in the agency's immediate custody or control . . . when there is evidence to suggest that the requested records are outside of the agency's control precisely because the agency has attempted to shield its records from search or disclosure under the FOIA." An improper withholding is not limited to those situations in which an agency explicitly rejects a FOIA request or fails to respond to a request. For example, an inadequate search for responsive records is also an improper withholding. (The requirement that an agency conduct an adequate search is discussed above. ) FOIA instructs courts to review appeals from agency withholding decisions "de novo." Under this standard of review, a court accords no deference to the agency's decision below. That said, courts will sometimes defer to an agency's judgment in some aspects of FOIA litigation. For example, courts in FOIA disputes generally accord "some measure of deference to the executive in cases implicating national security." The scope and standard of review in FOIA cases may differ in other instances, as well. For instance, while judicial review of an agency's decision regarding fee waivers is de novo, FOIA states that review "shall be limited to the record before the agency." The agency has the burden of proving that it properly withheld information under a FOIA exemption. Agencies defending withholding decisions in federal court often supply what is known as a " Vaughn Index" to aid in justifying their decisions. In FOIA lawsuits, the plaintiff generally does not know with any specificity the contents of the requested records, which the D.C. Circuit has declared can "seriously distort[] the traditional adversary nature of our legal system's form of dispute resolution." A Vaughn Index, which is akin to a privilege log, is a response to this informational asymmetry. The D.C. Circuit has held that a proper Vaughn Index "provide[s] a relatively detailed justification [for withholdings], specifically identifying the reasons why a particular exemption is relevant and correlating those claims with the particular part of a withheld document to which they apply." Agencies can also justify nondisclosure decisions through the submission of affidavits of agency officials that, per the D.C. Circuit, "describe the justifications for nondisclosure with reasonably specific detail, demonstrate that the information withheld logically falls within the claimed exemption, and are not controverted by either contrary evidence in the record nor by evidence of agency bad faith." FOIA also authorizes courts to review records in camera (i.e., privately and outside of the plaintiffs' view) to determine whether the records have been appropriately withheld. Courts often conduct in camera inspection of withheld information when an agency has not "provide[d] a sufficiently detailed explanation to enable the . . . court to make a de novo determination of the agency's claims of exemption." Courts retain discretion whether to conduct in camera review, but generally only do so in "exceptional" cases. In certain situations, courts may authorize agencies to submit in camera agency affidavits; however, as opposed to in camera inspection of withheld records, "use of in camera affidavits has generally been disfavored." <5.2. Reverse-FOIA Litigation> While requesters may seek judicial review of an agency's decision to withhold information under FOIA, in some circumstances parties may pursue judicial action to prevent an agency's disclosure of information in response to a FOIA request. These actions are often called reverse-FOIA lawsuits. An entity ordinarily institutes a reverse-FOIA action to prevent an agency from disclosing sensitive information, often concerning commercial or financial matters, that the entity had previously submitted to the agency. In Chrysler Corporation v. Brown , the Supreme Court held that neither the FOIA statute nor the TSA authorizes a private right of action to enjoin an agency from disclosing information in violation of the TSA. However, the Court held that judicial review of such actions is available under the APA. In reverse-FOIA suits, courts generally review an agency's decision to disclose information under 706(2)(A) of the APA, which provides that courts are to "hold unlawful and set aside agency action, findings, and conclusions" that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." The burden of proof in a reverse-FOIA action is on the plaintiff. Under Executive Order 12600, an agency is required, in certain circumstances, to provide notice to those who submitted "records containing confidential commercial information" if the agency has concluded that the records may need to be disclosed in response to a FOIA request. Agency procedures generally must allow applicable submitters to object to disclosure and provide that the agency, in the event it disagrees with the submitter's objection, supply the submitter with the reasons for its disagreement. The executive order defines "confidential commercial information" as information submitted to an agency "that arguably contain[s] material exempt from release under Exemption 4 . . . because disclosure could reasonably be expected to cause substantial competitive harm." Notably, the Supreme Court abrogated the "substantial competitive harm" test for Exemption 4 in FMI v. Argus Leader Media . In response, DOJ has advised agencies to use the broader definition of "confidential" declared in FMI in their predisclosure notification procedures. <6. Selected Issues of Potential Interest for Congress> While Congress is not subject to FOIA, the act raises questions of particular relevance to the legislative branch. For example, per the act, an agency may not "withhold information from Congress" on the basis that such information is exempt under FOIA. There are different views, however, about what "Congress" means in this instance in particular, whether this withholding prohibition applies to requests from individual Members of Congress, or whether the provision is limited to access requests from each house of Congress or congressional committees. In addition, although Congress is under no obligation to disclose its own materials under FOIA, whether a congressional document possessed by an agency is subject to FOIA depends on whether or not Congress clearly expressed its determination to retain control over the document. Although this section only discusses the two topics just mentioned, FOIA implicates congressional interests in many other ways. For example, Congress has often expressed its interest in the frequency with which agencies use exemptions to withhold information from requesters, as well as the general backlog of FOIA requests. Further, FOIA evidences Congress's general interest in executive branch transparency, and Congress has amended FOIA several times since its 1965 enactment, often due or in response to judicial interpretations of the act or agencies' administration thereof. <6.1. Congressional Access to Agency Information: FOIA's "Special Access" Provision> FOIA's "special access" provision codified at 5 U.S.C. 552(d) states that FOIA "is not authority to withhold information from Congress." The Senate report underlying the original act explained that this provision is intended to clarify "that, because [FOIA] only refers to the public's right to know, it cannot . . . be backhandedly construed as authorizing the withholding of information from the Congress, the collective representative of the public." While this provision undoubtedly prohibits agencies from withholding information from Congress based on a FOIA exemption, there is some dispute over whether subsection (d) affords individual Members of Congress access to otherwise exempt records under FOIA, or, on the other hand, whether the provision is limited to access requests from the broader arms of Congress (i.e., either house of Congress and congressional committees). The Department of Justice has long maintained that the special access provision does not generally apply to records requests from individual Members of Congress, meaning that agencies generally can invoke relevant exemptions to withhold materials in response to individual Member requests. DOJ distinguishes between requests for information from (1) "a House of Congress as a whole (including through its committee structure)" and (2) individual Members. In DOJ's view, requests from the former benefit from subsection (d)'s withholding prohibition; however, requests from the latter generally do not, no matter as DOJ has explained if the individual Member is "clearly acting in a completely official capacity" in making the request. Under DOJ's interpretation, a request by an individual Member in his or her official capacity is only covered by the special access provision if the request is from the chair of a committee or subcommittee or authorized by a committee or subcommittee. That said, individual Members of Congress can submit FOIA requests to the same extent as other persons. But DOJ's interpretation of the special access provision has been criticized by some as too narrow. This criticism finds support in language from the D.C. Circuit's decision in Murphy v. Department of the Army , which interpreted the special access provision as applying to individual Members acting in their official capacities . The court held that the Army had not waived Exemption 5 protection for an internal agency memorandum by sharing it with an individual Member of Congress. The court based its holding on an interpretation of the special access provision, concluding that agencies will not waive the exemption in such circumstances "to the extent that Congress has reserved to itself in section 552([d]) the right to receive information not available to the general public." In responding to the requester's argument that the special access provision was limited to Congress as a whole (and not its component parts including individual Members), the court wrote All Members have a constitutionally recognized status entitling them to share in general congressional powers and responsibilities, many of them requiring access to executive information. It would be an inappropriate intrusion into the legislative sphere for the courts to decide without congressional direction that, for example, only the chairman of a committee shall be regarded as the official voice of the Congress for purposes of receiving such information, as distinguished from its ranking minority member, other committee members, or other members of the Congress. Each of them participates in the law-making process; each has a voice and a vote in that process; and each is entitled to request such information from the executive agencies as will enable him to carry out the responsibilities of a legislator. Instead, the court opined that the special access rule applies when a Member's request is made in his or her official as opposed to "purely private or personal" capacity. Members of Congress from both major political parties have cited Murphy in support of individual Members' right to access information from the executive branch. DOJ's more narrow interpretation, discussed above, was a reaction to Murphy 's reading of FOIA's application to Members, which it views as being inconsistent with the act's text and legislative history. DOJ has argued, for example, that interpreting "Congress" to include individual Members conflicts with Article I, 1 of the Constitution, which provides that Congress "consist[s] of a Senate and a House of Representatives," but does not mention the individuals who serve in those chambers. DOJ also asserts its position finds support in the 1966 House report for FOIA. In discussing the special access provision, the report states that "Members of Congress have all of the rights of access guaranteed to ' any person ' by [FOIA], and the Congress has additional rights of access to all Government information which it deems necessary to carry out its functions." DOJ has also maintained that the D.C. Circuit's discussion of FOIA's application to individual Members "was not indispensable to the [ Murphy ] decision" and therefore does not constitute a binding rule. But while the D.C. Circuit has not had opportunity to revisit Murphy on the question of FOIA's application to agency communications with individual Members, later appellate panel and lower court decisions within the circuit have appeared to treat Murphy 's interpretation as controlling. <6.2. Congressional Records> As discussed above, FOIA requires federal agencies to disclose "agency records" after receiving a valid request. But Congress is not an "agency" under FOIA. Congress, accordingly, is not obligated to respond to FOIA requests for documents in its possession. But Congress's exemption from FOIA extends beyond requests directed specifically at it. Crucially, the D.C. Circuit has held that a document that an agency obtains from Congress or creates in response to a congressional request qualifies as a congressional record exempt from FOIA if "Congress manifested a clear intent to control the document." Congress is not required to provide "contemporaneous instructions when forwarding" documents to agencies to manifest its intent to control a document. In American Civil Liberties Union v. Central Intelligence Agency (CIA) , the D.C. Circuit determined that a confidential report authored by the Senate Select Committee on Intelligence was a congressional record and, therefore, not subject to FOIA. The case concerned the committee's evaluation of a CIA program on detention and interrogation. In 2014, the committee completed a final report based on its review. Although the committee did not publicly release the final report, it distributed copies to the President and other executive branch officials. In 2009, before beginning its review, the committee's chair and vice chair sent a letter to the CIA memorializing an agreement concerning the committee's examination of CIA documents at a secure electronic CIA reading room. The letter provided the following conditions: Any documents generated on the network drive referenced in paragraph 5, as well as any other notes, documents, draft and final recommendations, reports or other materials generated by Committee staff or Members, are the property of the Committee and will be kept at the Reading Room solely for secure safekeeping and ease of reference. These documents remain congressional records in their entirety and disposition and control over these records, even after the completion of the Committee's review, lies exclusively with the Committee. As such, these records are not CIA records under [FOIA] or any other law . . . . If the CIA receives any request or demand for access to these records from outside the CIA under [FOIA] or any other authority, the CIA will immediately notify the Committee and will respond to the request or demand based upon the understanding that these are congressional, not CIA, records. The D.C. Circuit reasoned that these conditions made "it plain that the Senate Committee intended to control any and all of its work product, including the [resulting 2014 final report], emanating from its oversight investigation of the CIA." The committee's subsequent transmission of the report to executive branch officials, with the instruction to the CIA and other agencies to use the report "as broadly as appropriate" both to ensure that the practices the report criticized were never repeated and to help in the development of CIA programs and executive branch guidelines, did not erase "the Senate Committee's clear intent to maintain control of the" final report. Whether Congress's manifestation of intent to control extends to a particular record depends on the language used in Congress's directive to the agency. In United We Stand America v. Internal Revenue Service (IRS) , the D.C. Circuit held that a letter sent from the chief of staff of the Joint Committee on Taxation to the IRS requesting information in connection with a committee investigation did not fully protect the IRS's response. The request stated This document is a Congressional record and is entrusted to the [IRS] for your use only. This document may not be disclosed without the prior approval of the Joint Committee. The IRS transmitted documents in response to the committee's request (of which the agency retained a copy). In litigation arising from a FOIA request for the committee's request and the agency's response thereto, the court held that, although the language from the committee's request quoted above which referred to "[t]his document" conveyed a sufficient manifestation of intent to control the committee's request, that manifestation of intent did not extend to the IRS's response, save for "those portions of the IRS response that would effectively disclose th[e] [committee's] request." As the court explained, "[if] the Joint Committee intended to keep confidential not just 'this document' but also the IRS response, it could have done so by referring to 'this document and all IRS documents created in response to it.'" Accordingly, the court of appeals remanded the case to the district court to conclude whether information in the response that would reveal the committee's request could be redacted and to direct the agency to "release any segregable portions that are not otherwise protected by one of FOIA's nine exemptions." The D.C. Circuit has articulated other principles helpful for determining whether Congress has manifested sufficient intent to control a particular record. For example, courts have found that "post-hoc objections" to disclosure raised by Congress "long after the . . . record[s'] creation" and "in response to the FOIA litigation" do not convey sufficient manifestations of intent to control. Nor are proper manifestations of intent contained in expressions that are "too general and sweeping." In Paisley v. CIA , for example, the court acknowledged that letters sent by the Senate Select Committee on Intelligence to the CIA "indicate[d] the Committee's desire to prevent release without its approval of any documents generated by the Committee or by an intelligence agency in response to a Committee inquiry." However, the court held that the letters did not alone manifest sufficient congressional intent to control the documents at issue because "there [was] no discussion of any particular documents or of any particular criteria by which to evaluate and limit the breadth of [the Committee's] interdiction." Whether Congress has sufficiently manifested intent to control a document ultimately depends on the circumstances underlying each case. For example, in United We Stand (discussed above), the D.C. Circuit specifically underscored that the manifestation of intent to control at issue in that case was contained "in a letter written by the Joint Committee's chief of staff as part of an investigation authorized by the chairman, vice-chairman, and ranking members of the Joint Committee," as well as that an IRS document that the committee relied on "expressly recognize[d] the confidentiality of Joint Committee requests." On the other hand, in American Oversight, Inc. v. Department of Health & Human Services , the U.S. District Court for the District of Columbia did not explicitly emphasize the level of formality of the congressional manifestation of assent in reaching its decision that the materials at issue were not agency records subject to disclosure under FOIA. Instead, the court relied on its reading of language contained in email messages between staff of the House Committee on Ways and Means and executive branch personnel addressing "health care reform" to find that Congress had manifested its intent to retain control over the messages. <7. Related Open Government and Information Laws: FACA, the Sunshine Act, and the Privacy Act> FOIA is the primary statutory mechanism by which the public may gain access to federal government records and information. But other laws specifically FACA, the Sunshine Act, and the Privacy Act also set forth rights and limitations on the public's access to government information or activities. FACA governs the establishment and operation of certain advisory committees created to supply advice and recommendations to federal agencies or the President. Among other things, the statute generally mandates the public availability of an advisory committee's "records, reports, transcripts, minutes, appendixes, working papers, drafts, studies, agenda, or other documents," and members of the public are authorized under FACA to attend and participate in advisory committee meetings. The availability of an advisory committee's papers is subject to FOIA's exemptions. Another general open government statute, the Sunshine Act, imposes transparency obligations on the meetings of certain multimember boards and commissions. The statute requires that covered agencies allow the public to attend their meetings and have access to relevant information. Meetings and information required to be disclosed under the act are subject to ten exemptions that resemble FOIA's. Lastly, the Privacy Act governs the "collection, maintenance, use and dissemination" of agency records that contain individually identifiable information about U.S. citizens and lawful permanent residents. The act forbids the disclosure of covered records without the written consent or request of the individual identified by the record, subject to twelve exceptions. One Privacy Act exception covers records for which disclosure is "required" by FOIA. Under this exception, an agency record subject to the Privacy Act that is not protected by any of FOIA's exemptions and which therefore must be disclosed under FOIA upon request is not prohibited from being disclosed by the Privacy Act. The Privacy Act also permits individuals to request access to records that pertain to them and to seek the amendment of such records, subject to exemptions.

Originally enacted in 1966, the Freedom of Information Act (FOIA) establishes a three-part system that requires federal agencies to disclose a large swath of government information to the public. First, FOIA directs agencies to publish substantive and procedural rules, along with certain other important government materials, in the Federal Register. Second, on a proactive basis, agencies must electronically disclose a separate set of information that consists of, among other things, final adjudicative opinions and certain "frequently requested" records. And lastly, FOIA requires agencies to disclose all covered records not made available pursuant to the aforementioned affirmative disclosure provisions to individuals, corporations, and others upon request. While FOIA's main purpose is to inform the public of the operations of the federal government, the act's drafters also sought to protect certain private and governmental interests from the law's disclosure obligations. FOIA, therefore, contains nine enumerated exemptions from disclosure that permit—but they do not require—agencies to withhold a range of information, including certain classified national security matters, confidential financial information, law enforcement records, and a variety of materials and types of information exempted by other statutes. And FOIA contains three "exclusions" that authorize agencies to treat certain law enforcement records as if they do not fall within FOIA's coverage. FOIA also authorizes requesters to seek judicial review of an agency's decision to withhold records. Federal district courts may "enjoin [an] agency from withholding agency records" and "order the production of any agency records improperly withheld." Judicial decisions—including Supreme Court decisions—have often informed or provided the impetus for congressional amendments to FOIA. Although Congress is not subject to FOIA, the act may inform communications between the legislative branch and FOIA-covered entities. Under 5 U.S.C. § 552(d), an agency may not "withhold information from Congress" on the basis that such information is covered by a FOIA exemption (although the provision does not dictate whether another source of law, such as executive privilege, may shield information from disclosure). The executive branch has interpreted this provision to apply to each house of Congress and congressional committees, but generally not to individual Members, whose requests for information are generally treated as subject to the same FOIA rules as requests from the public. This interpretation is not uniformly shared, with at least one federal appellate court interpreting § 552(d) as applying to individual Members acting in their official capacities. In addition, although Congress is under no obligation to disclose its materials pursuant to FOIA, whether a congressional document possessed by an agency is subject to FOIA depends on whether Congress clearly expressed its intention to retain control over the specific document. Lastly, although FOIA is the primary statutory mechanism by which the public may gain access to federal government records and information, other laws—specifically the Federal Advisory Committee Act, Government in the Sunshine Act, and Privacy Act—also set forth rights and limitations on the public's access to government information or activities.

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<1. Introduction> Electric vehicle (EV) technology has emerged as a potential alternative to the internal combustion engine with an increasing variety and volume of electric vehicles sold since the 1990s. Numerous policies and incentives are in place or have been proposed to encourage the production, purchase, and use of alternative fuel vehicles (including EVs). These proposals have been at times alongside efforts to reduce fuel consumption and subsequent emissions, support U.S. vehicle manufacturing, and address the growing shortfall in the Highway Trust Fund. Since 2010, some incentives and grant programs have expired, and other legislative options have been proposed. Underlying these policies are congressional interests such as reducing reliance on foreign sources of petroleum, encouraging rural development, promoting domestic manufacturing, and addressing environmental concerns. The electric car was first created in the early 1800s as a simple electrified buggy. It was considered to be quiet, easy to drive, and did not emit exhaust like its gasoline- and steam-powered counterparts. According to the U.S. Department of Energy (DOE), by the early 1900s, electric cars had enjoyed a brief popularity, accounting for one-third of cars on the road. Within a few decades, however, electric cars were practically obsolete. Electric starters and increasing availability of gasoline fueling stations made gasoline-powered cars as easy to start and drive as electric cars. Neither type of car required the use of a cumbersome hand-crank system, but gasoline-powered cars gained the edge since electricity availability was slow to expand relative to gasoline fueling stations. The Model T, first produced in 1908, came to dominate the market due to its affordability and driving range. Growing concerns in the late 20 th century over the environmental impact of fossil fuels and greenhouse gas and other emissions sparked renewed interest in electric vehicles. EVs may support ongoing efforts to address environmental concerns through reducing petroleum consumption in transportation. Support for EV deployment stems from, among other things, federal and state policies establishing manufacturing rebates, tax credits for purchase, funding for research and development, and standards for fuel economy and emissions standards. National standards include Corporate Average Fuel Economy (CAFE) standards promulgated by the U.S. Department of Transportation (DOT) National Highway Traffic Safety Administration (NHTSA) under the authority of the Energy Policy and Conservation Act (EPCA; P.L. 94-163 ; as amended by the Energy Independence and Security Act of 2007 (EISA; P.L. 110-140 )), and the Environmental Protection Agency (EPA) standards for greenhouse gas emissions from motor vehicles as air pollutants under authority of the Clean Air Act (CAA; P.L. 88-206). In 2012, NHTSA and EPA coordinated these standards under a joint rule establishing the National Program; standards applicable to model years 2021-2026 are currently under reconsideration under the proposed Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule. In the 1990s, the first contemporary hybrid-electric vehicle (HEV) debuted on the global market, the Toyota Prius, while General Motors released (and terminated) the first contemporary all-electric vehicle (AEV), the EV-1. From 2000 to 2010, a few more electric vehicles emerged, including the first commercially available plug-in hybrid-electric (PHEV), the Chevrolet Volt, the all-electric Nissan Leaf, and Tesla's line of dedicated all-electric vehicles. Many of these EVs were made possible by DOE support for research and development of EV technology, in particular battery technology, as well as DOE-sponsored loans made available to EV automakers and investments in nationwide charging infrastructure. More manufacturers followed, contributing models to a growing electric vehicle market. From 2010 to 2018, EV sales increased from 275,000 to 705,000, making up 4.2% of all new light-duty vehicles sales in 2018 in the United States ( Figure 1 ). Charging infrastructure has also grown in response to rising electric vehicle ownership, increasing from 3,394 non-residential chargers in 2011 to 78,301 in 2019. However, many locations have sparse or no public charging infrastructure. This report provides a primer on the expansion of the market for electric passenger, or light-duty, vehicles. This discussion will address some of the factors influencing EV adoption, the broad categories of EVs and related technology, and the current federal policy landscape. <2. Shift Toward Vehicle Electrification> Most of the more than 92 million new light-duty vehicles sold worldwide in 2018 are conventional vehicles , or those powered by internal combustion engines. Worldwide sales of new plug-in electric vehicles totaled 2.0 million in 2018. In the same year, 16.9 million new light-duty vehicles were sold in the United States, with sales of new plug-in electric vehicles totaling 362,000 2.1% of all new vehicle sales. When sales of new hybrid-electric vehicles are included, EV sales totaled 705,000, making up 4.2% of all new light-duty vehicle sales in 2018. One factor shaping interest in vehicle electrification is its potential to reduce the transportation sector's overall emissions from greenhouse gases, particulate matter, and other air pollutants by reducing the use of petroleum products; the extent of any such reduction would depend on a number of factors, including the mix of regional electricity generation sources. At 1,866 million metric tons of carbon dioxide equivalent in 2017, transportation sector emissions have increased more than any other sector since 1990 ( Figure 2 ), along with increasing demand for travel. Light-duty vehicles contributed 59% of total transportation emissions, with the remainder coming from trucks and other highway vehicles, aircraft, trains, and ships and boats. Light-duty vehicles also consumed 53% of petroleum-based fuels in the transportation sector in 2017. Other sectors exhibited reductions in carbon dioxide emissions while making improvements in energy efficiency and reducing consumption of coal and petroleum products. In the electricity generation sector, electric power generated is observed to be relatively flat from 2013 to 2017, while emissions decreased and natural gas and renewable energy consumption replaced coal consumption. <3. What Are Electric Passenger Vehicles?> An electric vehicle (EV) is characterized by its electric motor and traction battery pack, comprising numerous battery cells, most commonly lithium-ion. EV batteries provide power that drives the vehicle and are distinct from the lead-acid batteries that are used in the ignition process of most internal combustion engine vehicles (ICEVs). At times, the motor acts as a generator, sending electricity to the battery, which is later used to power the motor. The broad categories of EVs can be identified by whether they have an internal combustion engine (i.e., hybrids) and whether the battery can be charged by external electricity (i.e., plug-ins). Figure 3 demonstrates the differentiations between the three broad categories of EVs: hybrid-electric vehicles (HEVs), plug-in hybrid-electric vehicles (PHEVs), and all-electric vehicles (AEVs). Internal combustion engine vehicles are the most common passenger vehicles on the road. They rely primarily on petroleum-based fuel (typically gasoline), which is injected into a small chamber in the internal combustion engine where a spark ignites the fuel to produce the power that propels the vehicle ( Figure 4 ). The ICEV powertrain can have more than 100 moving parts between the engine, the transmission, and other components. Fuel efficiency in new ICEVs has increased, with some vehicle models achieving a rating of up to 39 miles per gallon (mpg) for model year 2019. Table 1 summarizes various aspects of ICEVs and the different electric vehicle types. Of the electric vehicle alternatives, HEVs are most similar to ICEVs, but with higher fuel economy due to a traction battery pack, electric motor, and regenerative braking system. Like ICEVs, HEVs require gasoline to initiate the engine that powers the car, but once running, HEVs supplement that initial power through the electric motor using electricity stored in the battery ( Figure 5 ). The battery is continuously recharged while the car is in use, either by the internal combustion engine or regenerative braking (see shaded box on Features of Electric Vehicles). HEVs cannot run without a petroleum product, but they are generally more fuel efficient than ICEVs, achieving up to a 58 mpg rating. PHEVs combine the technology of HEVs with the ability to charge the traction battery pack via an external source of electricity ( Figure 6 ). As a result, PHEVs can be operated without external charging over a driving range similar to HEVs or in electric-only operation over a certain driving range, especially with regular access to charging facilities. To accommodate this electric driving range, PHEVs require more electricity and batteries with greater electricity storage capacity than HEVs up to 42 kilowatt hours (kWh) for PHEVs versus up to 1.6 kWh for HEVs. In a PHEV, the internal combustion engine and the electric motor may both be enabled to power the wheels directly in a parallel configuration. The internal combustion engine may also be used in a series configuration only to generate electricity to store in the battery, which is then used by the motor to power the wheels (other configurations are also possible). PHEVs offer higher fuel economy than both HEVs and ICEVs, up to 133 miles per gallon of gasoline equivalent (mpge). AEVs (also called battery-electric vehicles or BEVs), run entirely on electricity stored in a large traction battery pack ( Figure 7 ) the largest among EVs with a capacity of up to 100 kWh. The battery must be charged via an external source of electricity. Regenerative braking alone is insufficient to generate the quantity of electricity needed to power the motor and all other functionality of a car. AEVs offer the highest fuel economy ratings, up to 136 mpge. AEVs do not use gasoline and have no internal combustion engine. The result is fewer moving and wearing parts in the powertrain and more electronic components. Consequently, a manufacturing shift toward AEVs may disrupt parts manufacturing and maintenance in the automotive industry due to changing demands for parts and differing required skillsets for laborers in the production and maintenance of AEV parts. <4. How to Charge Plug-In Electric Vehicles> Batteries in plug-in electric vehicles PHEVs and AEVs can be charged using a standard residential outlet. Providing a full charge in this manner takes hours due to the low voltage available from a home electrical service. The slow pace of charging is one factor currently affecting consumer acceptance of EVs; most motorists are used to filling up a tank with gas in a matter of minutes. Current technology ( Table 2 ) offers three rates of charging, differentiated by the voltage of the electrical current: Level 1 at 120 volts alternating current (AC; see shaded box on Alternating Current Versus Direct Current); Level 2 at 240 volts AC; and Level 3 (also called DC fast charging) at 500 volts direct current (DC). Level 1 and Level 2 are the most widely accessible, with both voltages often available in a standard home. Connectors and charge ports for AC charging use the SAE J1772 standard, a result of the SAE International standards process documenting common engineering practices. Most plug-in electric vehicles come with a Level 1 cordset with a standard three-prong plug on one end and a J1772 connector on the other that plugs into a vehicle's corresponding charge port. Some vehicles come with a Level 2 cordset, which has a plug for a 240-volt outlet, such as that used for a clothes dryer. For drivers charging at home, no additional cost is required if the selected outlet is served by a dedicated circuit. Lower voltages mean longer charging times. Level 3 offers the highest voltages and faster charging rates than Level 1 and Level 2. The Level 3 charging unit has a charger that converts AC from the electric grid to DC, enabling direct charging of the battery pack. Ordinarily, EVs use an on-board charger to perform this conversion. As an emergent technology, Level 3 connectors and charge ports are not currently standardized and include CHAdeMO (used by Kia, Mitsubishi, and Nissan); SAE combined charging system (CCS; used by BMW and Chevrolet); and Tesla Supercharger (proprietary to Tesla vehicles). Due to the high voltage, Level 3 is not available for residential installation and is only accessible at charging stations. <4.1. Fast Charging and Battery Performance> Level 3 charging introduces potential challenges to the longevity of batteries in plug-in electric vehicles PHEVs and AEVs. While the lithium-ion batteries used in PHEVs and AEVs are known to lose charging capacity over time, some studies suggest that fast charging contributes to elevated rates of capacity loss and decreased charging cycles. In 2019, many EVs with fast-charging capabilities are equipped with a variety of systems to address capacity loss, including cooling systems, as well as battery management systems that monitor battery health, track frequency of fast charging, and adjust the charge rate to prevent damage to the battery, potentially addressing some of these concerns. Meanwhile, researchers have continued to probe ways to improve fast charging while mitigating its potential impacts. <5. Considerations> Since the first modern EVs were introduced in the 1990s, use of EV technology and supporting infrastructure has grown. As an emergent technology area, a number of factors remain under consideration. <5.1. Emissions and Electric Vehicle Charging> On average, a fleet of EVs could reduce air emissions compared to a fleet of ICEVs, but the extent of the reduction and any associated benefits depend on a variety of factors, in particular when, where, and how plug-in EVs are driven and charged. These emissions include greenhouse gases and other pollutants that contribute to smog and other air quality problems. Transportation emissions can be divided into upstream emissions and downstream emissions. Upstream emissions are associated with the processes of fuel extraction and production, including the production of gasoline and diesel for combustion in ICEVs, and the generation of electricity for charging plug-in EVs. Downstream emissions are emitted while the car is in use, including those emitted from the tailpipe or from evaporation during fueling. PHEVs operating on electricity and AEVs produce few downstream emissions, but they are not emissions free. Determining the emissions from charging a plug-in EV relative to an ICEV depends largely on the sources of the electricity used to charge the vehicle. Research has also shown that emissions are further impacted by charging and usage patterns as well as the efficiency of an individual vehicle. Electricity generation in the United States produced more greenhouse gases and other pollutants than any other sector between 1990 and 2017. Nationally, as fuel sources have changed decreased use of coal and increased use of natural gas and other lower-emission or renewable sources and energy efficiency has increased, greenhouse gas emissions from electricity generation have declined by 4.8% since 1990, even as demand for electricity has increased over the same period. However, national averages obscure regional variation in potential emissions from the mix of fuel sources used for electricity generation ( Figure 8 ). For plug-in EVs, per-mile emissions attributed to upstream sources vary geographically. An AEV would be expected to produce fewer emissions on average if charged in the state of Washington where 70% of electricity is produced with hydropower than if charged in Hawaii where 69% of electricity is produced with oil. Additionally, sources for electricity may change over time, resulting in changing emissions for PHEVs and AEVs new and otherwise. Emissions attributed to upstream sources also depend on the time of day and year when charging takes place. Typically, electrical power systems leverage different electricity generation units to meet electricity demand, shifting electricity generation sources throughout the day or year as demand changes. An increase in electricity demand from charging EVs may require additional generation which may use sources with greater or fewer emissions. <5.2. Battery Materials Management> Batteries are a crucial component of EVs and introduce novel supply chain considerations to the overall vehicle market. As electric vehicles increase in market share, the overall material requirements of the vehicle market shift from fuels for combustion to minerals and other materials for battery production. Using a comparison of the material compositions of an AEV (Chevrolet Bolt) and an ICEV (Volkswagen Golf), UBS estimated increases in global demand for battery materials such as lithium, cobalt, and graphite, for a fleet entirely made up of AEVs with existing battery technology. On the other hand, the lightweight body typically preferred by EV manufacturers is estimated to result in decreased global demand for materials such as iron and steel in favor of aluminum. Potential considerations for electric vehicle batteries include supply of minerals and other raw materials and subsequent refining capabilities; ability to manufacture battery cells and assemble into battery packs; and end-of-life management by recycling and disposal of batteries composed of chemicals that may be hazardous to humans and the environment. Like any other type of battery, EV batteries' performance will decline through repeated use, but such batteries may be eligible for second and third uses. EV batteries are expected to last at least eight years in a motor vehicle, with most manufacturers offering eight-year or 100,000-mile warranties. When batteries are no longer suitable for use in EVs, they are expected to have approximately 70% capacity. Strategies to extend the useable life of EV batteries include reconditioning for continued use in EVs by replacing specific modules experiencing uneven decline in performance; and repurposing for use in stationary energy storage systems. Lastly, materials within batteries may be recycled for other uses (including making new batteries). Less than 5% of lithium-ion batteries the most common type of EV battery are currently being recycled, due in part to the complex technology of the batteries and cost of such recycling. Growing interest in improving lithium-ion battery recycling, such as DOE's 2019 announcement of the Battery Recycling Prize and investment in the Lithium Battery R&D Recycling Center, may elevate recycling rates. <6. Existing Authorities and Incentives> A range of federal policies affect the purchase and use of EVs. Vehicle manufacturers have used EV sales to help meet the coordinated standards for Corporate Average Fuel Economy (CAFE) set by the National Highway Traffic Safety Administration (NHTSA) and greenhouse gas emissions under the Clean Air Act (CAA) set by the EPA. Future regulatory action under the Safe Affordable Fuel-Efficient (SAFE) Vehicles Rule may result in changes to these standards for automakers to take into account. A number of other programs, such as the Clean Cities Program, have promoted research and development of batteries and energy storage, charging infrastructure, and other vehicle technologies, exemptions, and deployment. For a fuller list of these programs see CRS Report R42566, Alternative Fuel and Advanced Vehicle Technology Incentives: A Summary of Federal Programs , by Lynn J. Cunningham et al. <6.1. Selected Incentive Programs> Certain federal programs active during the 116 th Congress aim to promote the production and purchase of EVs through service and tax credit incentives. Corporate Average Fuel Economy (CAFE) Program Alternative Fuel Vehicle Credits. Establishes a credit system for automakers for selling alternative fuel vehicles. The program promotes the production and sale of alternative fuel vehicles and provides flexibility for automakers to comply with fuel economy standards. Credits are unlimited for dedicated vehicles (e.g., AEVs) and were phased out after model year 2019 for dual-fueled vehicles (e.g., PHEVs). Proposed regulatory action in 2018 may result in changes to this program for model years 2021 and beyond. High Occupancy Vehicle (HOV) Lane Exemption. The statute governing HOV lanes allows states to establish programs to exempt certain alternative fuel vehicles (including PHEVs and AEVs) from HOV lane requirements. The exemption expires September 30, 2025. States were also able establish programs to allow other low-emissions and energy-efficient vehicles to pay a toll to access HOV lanes, but this authority expired September 30, 2019. National Alternative Fuels Corridor. Directs the Department of Transportation to designate strategic locations along major highways for developing plug-in electric vehicle charging and hydrogen, propane, and natural gas fueling. Infrastructure is to be deployed by the end of 2020. Plug-In Electric Vehicle Tax Credit. Provides a federal income tax credit of up to $7,500 per vehicle for buyers of qualifying plug-in electric vehicles including PHEVs and AEVs. The credit begins to phase out after an automaker has sold 200,000 qualifying vehicles; currently, Tesla and General Motors have reached this threshold. The tax credit helps offset the cost of electric vehicles, which are on average more expensive than ICEVs. <7. Selected Proposed Federal Legislation> Several bills pending in the 116 th Congress would affect existing policy and incentives, and some bills would establish new programs or policies. The following bills were selected to demonstrate a few facets of the current discussion over the future of federal policy on the deployment of vehicle electrification. Other bills have been introduced in the 116 th Congress that would establish rebate programs for electric charging infrastructure, expand the Plug-In Electric Vehicle Tax Credit to include previously-owned vehicles, and reinstate the tax credit for the cost of alternative fuel refueling property. <7.1. Renew or Repeal the Plug-In Electric Vehicle Tax Credit> Driving America Forward Act ( H.R. 2256 / S. 1094 ) . Would expand the tax credit for plug-in electric vehicles, which would allow the buyers of 600,000 total vehicles per automaker (currently capped at 200,000) to be eligible for a credit of up to $7,000 (currently $7,500) before the credit is phased out. This bill was referred to committee in both chambers. Electric Credit Access Ready at Sale (Electric CARS) Act of 2019 ( H.R. 2042 / S. 993 ) . Would extend the tax credit for plug-in electric vehicles through December 31, 2029, and repeal the cap for automakers (currently set at 200,000). This bill was referred to committee in both chambers. Fairness for Every Driver Act ( H.R. 1027 / S. 343 ). Would repeal the tax credit for plug-in electric vehicles (currently capped at 200,000 per automaker for up to $7,500 per vehicle) and impose an annual fee on alternative fuel vehicles (i.e., vehicles with electric motors that draw significant power from a source not subject to certain fuel taxes) to be transferred to the Highway Trust Fund. This bill was referred to committee in both chambers. <7.2. Establish New Programs or Policies> American Cars, American Jobs Act of 2019 ( H.R. 2510 / S. 683 ). Would establish a voluntary program at NHTSA to encourage the purchase or lease of new automobiles made in the United States. The program would provide $3,500 vouchers to purchasers of new passenger vehicles (of any type) produced domestically and $4,500 vouchers to purchasers or lessees of new qualified plug-in electric drive vehicles. The vehicles must be assembled in the United States and contain at least 45% U.S. or Canadian parts. This bill was referred to committee in both chambers. Clean Corridors Act of 2019 ( H.R. 2616 / S. 674 ). Would establish a grant program for state, tribal, or local government authorities to install electric vehicle charging and hydrogen fueling infrastructure along the National Highway System. This bill was referred to committee in both chambers. Leading Infrastructure for Tomorrow's America Act ( H.R. 2741 ). Would direct the Department of Energy to develop model building codes for integrating electric vehicle charging infrastructure and direct states to authorize utilities to recover from ratepayers expenditures from the deployment of electric vehicle charging equipment, in addition to other policies promoting the deployment of electric vehicle charging infrastructure. This bill was referred to committee in the House. Vehicle Innovation Act of 2019 ( H.R. 2170 / S. 1085 ). Would authorize appropriations through FY2024 to the Department of Energy for research, development, engineering, demonstration, and commercial application of vehicles and related technologies, including vehicle electrification. This bill was referred to committee in the House, and placed on the Senate Legislative Calendar under General Orders (Calendar No. 186). Zero-Emissions Vehicles Act of 2019 ( H.R. 2764 / S. 1487 ). Would amend CAA to create a national zero-emissions vehicle standard for automakers whereby zero-emissions vehicles (e.g., all-electric vehicles, hydrogen fuel cell vehicles) are required to comprise 50% of new car sales by 2030 and 100% by 2040. Referred to committee in both chambers.

The market for electrified light-duty vehicles (also called passenger vehicles; including passenger cars, pickup trucks, SUVs, and minivans) has grown since the 1990s. During this decade, the first contemporary hybrid-electric vehicle debuted on the global market, followed by the introduction of other types of electric vehicles (EVs). By 2018, electric vehicles made up 4.2% of the 16.9 million new light-duty vehicles sold in the United States that year. Meanwhile, charging infrastructure grew in response to rising electric vehicle ownership, increasing from 3,394 charging stations in 2011 to 78,301 in 2019. However, many locations have sparse or no public charging infrastructure. Electric motors and traction battery packs—most commonly made up of lithium-ion battery cells—set EVs apart from internal combustion engine vehicles (ICEVs). The battery pack provides power to the motor that drives the vehicle. At times, the motor acts as a generator, sending electricity back to the battery. The broad categories of EVs can be identified by whether they have an internal combustion engine (i.e., hybrid vehicles) and whether the battery pack can be charged by external electricity (i.e., plug-in electric vehicles). The numerous vehicle technologies further determine characteristics such as fuel economy rating, driving range, and greenhouse gas emissions. EVs can be separated into three broad categories: Hybrid-electric vehicles (HEVs): The internal combustion engine primarily powers the wheels. The battery pack and electric motor provide supplemental power. Plug-in hybrid-electric vehicles (PHEVs): The battery pack can be charged by an external source of electricity. Depending on the model, primary power to the wheels may be supplied by the battery pack and electric motor, the internal combustion engine, or a combination. All-electric vehicles (AEVs; also called battery-electric vehicles or BEVs): The battery pack must be charged via an external source of electricity. The battery pack and electric motor power the wheels. Current technology offers three levels of charging for plug-in EVs. Level 1 and Level 2 are currently the most widely accessible with standardized vehicle connectors and charge ports that can be set up for at-home charging. Level 3 (also called DC fast charging) offers the fastest charging rates on the market but is not available for at-home installation due to high voltage. Vehicle connectors and corresponding charge ports for Level 3 are also not standardized, with three different systems currently in use by different vehicle manufacturers. Some research has raised concerns regarding the potential impact of fast charging on battery performance, resulting in technology development aimed at addressing potential capacity loss and decreased charging cycles. As an emergent technology area, EVs present a number of issues for consideration. The fuel sources used to generate the electricity to charge PHEVs and AEVs are a major factor in determining EV greenhouse gas emissions relative to ICEVs. Per-mile EV emissions vary geographically and with the time of day and year that charging takes place. Growing demand for lithium-ion batteries also shifts the material requirements of the vehicle market from fuels for combustion to minerals and other materials for battery production. A growing EV market may encourage new strategies around the supply and refining of raw materials, ability to manufacture batteries, and end-of-life management for batteries that are no longer suitable for use in vehicles. Support for EV deployment stems from, among other things, federal and state policies establishing manufacturing rebates, tax credits for purchases, funding for research and development, and standards for fuel economy and emissions. These policies include the Plug-In Electric Vehicle Tax Credit, and the coordinated Corporate Average Fuel Economy (CAFE) standards and emissions standards for vehicles. Over time, some federal incentives and grant programs have expired. Several bills pending in the 116 th Congress would extend or repeal tax credits for EVs, establish highway usage fees on alternative fuel vehicles, fund grants for charging infrastructure, or establish a national zero-emissions vehicle standard.

crs_R46198

crs_R46198_0

<1. Introduction> National internet regimes, as defined by individual countries' domestic policies and rules, are growing more divergent, a trend that has significant implications for international trade and the future growth of U.S. and global digital economies. The evolving digital economy increases productivity and drives growth in the overall economy, but may be threatened by differences in national rules and potential fracturing of the global internet. Congress has an interest in ensuring the U.S. digital economy thrives and shapes the global rules and norms for digital trade. As internet technology expanded from its origins in the military and defense sector into the commercial arena in the 1990s, consumers and firms began to conduct transactions in an online environment that lacked clear rules and guidelines. Some U.S. firms took advantage of the open global commons and thrived, quickly expanding their offerings and entering foreign markets. In many foreign markets, U.S.-based Google dominates search and e-mail, Facebook is the number one social network, and Amazon is the first stop for online shopping. However, in certain other markets, some of which are important for the United States, trade barriers limit or block those same websites. While national rules-setting may focus on domestic priorities, policies that affect digitization in any one country's economy can have consequences beyond its borders. The internet is a global "network of networks," and the state of a country's digital economy can have global ramifications, such as affecting the security and efficacy of connected networks. Differences in the internet governance and data policies of the United States and some major trading partners, such as People's Republic of China (PRC or China) and the European Union (EU), are creating a growing set of trade barriers for U.S. firms seeking to do business abroad. Trade barriers include, for example, rules and regulations governing foreign investment, market and network access, e-commerce, and data collection and usage. The United States generally advocates a free and open internet, using standard-setting forums and other means of international cooperation to ensure non-discriminatory market access, advance common emerging technology standards, promote collaborative open-source architecture, and influence the internet regimes of trading partners balanced with other public policy objectives, including national security. Trade agreement negotiations present an opportunity to remove trade barriers and establish common trade rules and disciplines to achieve U.S. negotiating objectives. Across the globe, U.S. and other bilateral and plurilateral agreements have created a plethora of overlapping and often inconsistent rules between various trading partners. The lack of multilateral rules on digital trade is a key focus of U.S. trade policy. Ongoing e-commerce negotiations at the World Trade Organization (WTO) provide a significant opportunity to establish enforceable multilateral rules that align with U.S. policy priorities and help bridge growing differences in national rules and trade treatments. However, such negotiations face inherent challenges, including possibly divergent, and even conflicting, positions. Congress has a strong interest in the rise of the varying internet regimes and their current and potential impact on U.S. digital trade and the economy. Through legislation and oversight, Congress can directly and indirectly shape U.S. internet policy and official positions in trade negotiations and international standard-setting forums. Congress pro-actively established U.S. digital trade negotiating objectives for trade agreements and has supported provisions in free trade agreements (FTAs) to address the lack of multilateral digital trade rules and market opening commitments, most recently in the U.S.-Japan trade agreement and the U.S.-Mexico-Canada Agreement (USMCA). Congress can also influence U.S. positions in the ongoing WTO negotiations. This report will compare some aspects of various national internet regimes and then examine the ongoing WTO e-commerce negotiations and certain international forums that present an opportunity to establish global rules and technology standards and to minimize or prevent potential problems created by diverging systems. <1.1. Digital Trade and Digital Economy> While no single definition or measure of the digital economy exists, according to the Bureau of Economic Analysis, the "digital economy" accounted for 6.9% of U.S. GDP in 2017, including (1) information and communications technologies (ICT) sector and underlying infrastructure; (2) digital transactions or e commerce; and (3) digital content or media. According to the ITC definition, laptop sales are included in digital trade as is the transmission of an email or online purchase, but the t-shirt a consumer may order online is not. From agriculture and manufacturing to healthcare, the collection, exchange, and processing of data is transforming and increasing productivity across the economy. Data is traded as end products (e.g., music file, marketing tools), inputs for producing digital and physical goods and services (e.g., 3D printing file, Uber), or sources of information leading to further action (e.g., real-time supply chain analytics). New data is created every day by individuals sending text messages, sharing photos, or searching online, by automated machine-to-machine transmissions in manufacturing, or by vehicles in connected transportation systems. According to one calculation, 2.5 quintillion bytes (or 2.5 x 10 18 ) of data are produced daily. To put that number into context, 2.5 quintillion bytes of data would fill 10 million blu-ray discs, the height of which stacked would measure the height of four Eiffel Towers on top of one another. At the other extreme, a single short text message could represent 21 bytes and a single high-definition movie could require 4 million bytes. The digital economy depends on data flows to send data between individuals, organizations or devices, often crossing national boundaries. For example, in 2017, approximately 12% of international trade of physical goods was facilitated by e-commerce and almost 20% of China's imports and exports was enabled by digital platforms. A separate study showed that digital products accounted for 70% of the U.S. services trade surplus in 2017. Cross-border data flows grew by a factor of 45 between 2005 and 2016 and continue to expand. The volume of global data flows is growing faster than global trade or financial flows, and its positive GDP contribution offsets the lower growth rates of trade and foreign direct investment (FDI). The global "datasphere" is expected to grow from 33 Zettabytes (ZB) in 2018 to 175 ZB by 2025. One study predicts there will be more than 150 billion connected devices across the globe by 2025. Today, China has the fastest-growing regional datasphere, while the U.S. datasphere is relatively mature, with an already high penetration of people online. As China and other regions' dataspheres expand, the United States' and EU's relative shares of the global datasphere will decline (see Figure 1 ). As the volume and importance of data grows, policymakers are increasingly interested in how data is gathered, stored, and used, and how to best balance policy goals and objectives, such as supporting international trade flows and protecting personal privacy. The future growth of the global digital economy and digital trade specifically will be shaped by the policies that govern global data flows and other internet-related rules set at national, regional, and multilateral levels. China's expected digital growth, in particular, may increase its ability to shape the rules of the global datasphere, which may not align with U.S. interests and could create additional trade barriers (see " The People's Republic of China (PRC) "). <1.2. Technology Convergence and International Rules-Setting> The ICT sector is experiencing a convergence between technical spheres that had previously been separate and independent technologies: telecommunications, media and consumer electronics, and information technology (computers) (see Figure 2 ). The ability to stream videos on multiple devices (e.g., television, tablets, mobile phones) demonstrates the convergence of technologies and previously separate services. Separate policies, technical standards and protocols traditionally governed each sub-sector, but today companies that provide services across all sectors and the governments that traditionally regulated these services separately must wrestle with how best to govern the converged spheres. Although there are common technical protocols governing the flow of traffic, interconnections, and data transfers across networks, there is no single set of international rules or disciplines that govern key digital trade issues such as electronic contracts or cross-border data flows, and the topic is treated inconsistently, if at all, in trade agreements. The lack of multilateral rules governing the digital economy has led, on the one hand, to countries creating diverging national policies and, on the other hand, to efforts to establish common global rules. Countries may seek common rules on some digital issues, such as technical standards, but set different national rules on others (e.g., privacy, data protection) to reflect domestic priorities or cultural norms. Governments may also try to shape international standards and norms to benefit their domestic industries. The emergence of national internet regimes that govern and divide the global datasphere raises a number of issues. First, national regimes allow a government to create rules and policies that advance domestic priorities and reflect local norms. Without shared rules or interoperability between national regimes, differing requirements for internet and data governance can lead to increased trade and investment barriers, which can restrict the willingness and ability of businesses and consumers to enter some markets. U.S. firms offering services that can be traded remotely using the internet or another digital network (so-called "potential" ICT-enabled [PICTE] services) can be blocked from markets with discriminatory restrictions in place. For example, many U.S. firms' inability to access the Chinese online market raises growing concerns about discrimination and protectionism, as other countries may emulate China and its internet regime. Second, the existence of globalized supply chains that dominate international trade may be threatened if rules governing national or regional dataspheres do not provide for reciprocity or limit companies' ability to share data with global subsidiaries, partners, or customers. Disrupted trade and global supply chains could not only result in limited growth of individual companies, but could also impede a country's economic competitiveness if participation is limited to those entities within what amounts to a virtual trading bloc. For example, Qualcomm might not be able to sell its chips to some countries if the technical requirements vary nationally, or John Deere might not be able to service customers in certain markets if data flows with its U.S. headquarters are blocked. Similarly, the diffusion of knowledge and potential gains from emerging technologies that depend on global economies of scale could be impeded by diverging standards or regulations that create artificial borders and constrain data aggregation thereby, for example, diminishing effective development of artificial intelligence and machine learning which depends on collecting and processing vast volumes of data. Third, as in other areas of international trade, the party(ies) that ultimately set the global internet rules and technical standards for data and emerging technologies will gain first-mover advantage. Past industry experience suggests that companies who are the first to market new technologies often capture the bulk of the revenues. To that end, some governments have actively promoted their domestic policies in an effort to convince other countries to adopt similar regimes that may not align with U.S. policies and priorities. For example, China promotes its national standards and technologies through international sales of its domestic technologies based on domestic technical standards, particularly in Africa and Latin America. Furthermore, some countries in these regions have begun to import China's internet-sovereignty policies, a form of what some consider to be digital authoritarianism (see discussion below). The EU also aims to set global standards on competition and privacy through its rules and enforcement actions that compel multinational technology firms to change behavior and adjust business models. For example, the EU actively promotes its data privacy regime by requiring that trading partners have "adequate" domestic data privacy regimes (as judged by EU authorities) to allow for the bilateral free flow of personal data that many companies depend on to operate. Individual EU countries may impose further requirements for security purposes that could further constrain a business's operations. Varying policy approaches and the lack of global rules and consensus have resulted in a diversity of digital trade rules that will grow in complexity as the digital economy expands. Some analysts predict that the inconsistencies and diversity in rules and regulations may create hard splits between different dataspheres leading to digital trading blocs. Ongoing e-commerce negotiations at the WTO aim to set a common foundation of trade rules and disciplines and could lead to interoperability mechanisms to build bridges between differing internet regimes. While internet policies evolve at national levels and WTO e-commerce negotiations are ongoing, multiple international forums are discussing internet governance issues with active participation from the U.S. public and private sector. These forums often may identify best practices, principles, and frameworks but do not necessarily lead to enforceable rules (see text box International Discussions of Internet Norms ). <2. U.S. and Major Trading Partners' Internet Regimes> <2.1. U.S. Approach> Maintaining a global network that is open, interoperable, reliable, and secure is a stated policy priority for the U.S. government. Some Members of Congress have introduced bills supporting an open internet and expanded global internet access (see, for example, H.R. 600 and H.R. 739 ). Congress recognized these priorities with respect to trade in its enhanced digital trade policy objectives for U.S. trade negotiations in the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 ( P.L. 114-26 ), or Trade Promotion Authority (TPA), signed into law in June 2015. The proposed USMCA made progress on these objectives, establishing a legal framework for an open North American digital economy that ensures cross-border data flows and protects consumers and data privacy, among its many provisions. Under the proposed USMCA, the United States, Mexico, and Canada agreed to a common set of digital trade rules, which may serve as a template for future U.S. FTAs. According to USTR, the new U.S.-Japan digital trade agreement, signed in October 2019, "meets the gold standard on digital trade rules set by the USMCA." The provisions in the USMCA and U.S.-Japan agreement build on the digital trade rules agreed under the proposed Trans-Pacific Partnership (TPP), now in force under the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP or TPP-11) among 11 countries, not including the United States. Mexico, Canada, and Japan are all members of the TPP-11. The TPP-11 rules have some clear differences from those in EU or Chinese FTAs. For example, the TPP-11 agreement provisions ensure open cross-border data flows while EU and Chinese FTAs exclude similar provisions. No single federal entity has primacy on all aspects of the digital economy, and the United States has not taken a holistic domestic approach to regulating the digital economy or governing the internet. As noted for a congressional hearing on internet architecture and the multiple federal agencies involved in safeguarding it domestically, unlike some other countries, "the [U.S.] government does not manage the internet, nor direct its use, but rather sets the laws, policies, and procedures for the private sector, academia, and individuals to follow in their use of the internet." The United States and China are the lead economies setting and attempting to export their rules and are often seen as the two ends of the policy spectrum. Other countries are forming national approaches that reflect their own domestic priorities. <2.2. The People's Republic of China (PRC)> China presents a number of significant opportunities and challenges for the United States in digital trade. China aims to be a "cyber superpower," and its trade and internet policies reflect state direction and industrial policy, limiting the free flow of information and individual privacy and discriminating against foreign companies. The Chinese government has sought to advance its views on how the internet should be expanded to promote trade, but also to set guidelines and standards over the rights of governments to regulate and control the internet, a concept it has termed "Internet Sovereignty." The Chinese government appears to have first advanced a policy of "Internet Sovereignty" around June 2010, when it issued a white paper titled "the Internet of China," which stated the following: Within Chinese territory the Internet is under the jurisdiction of Chinese sovereignty. The Internet sovereignty of China should be respected and protected. Citizens of the People's Republic of China and foreign citizens, legal persons and other organizations within Chinese territory have the right and freedom to use the Internet; at the same time, they must obey the laws and regulations of China and conscientiously protect Internet security. Analysts characterize "cyber sovereignty" or "internet sovereignty" as an organizing principle of internet governance that contrasts with the U.S. support for a global, open internet. As one analyst stated, "the Chinese internet governance model is the first real challenge to a free and open internet." China is clear in its position that: the principle of sovereignty also includes cyberspace. Countries should respect each other's right to choose their own path of cyber development, model of cyber regulation and Internet public policies, and participate in international cyberspace governance on an equal footing. A multitude of Chinese rules and initiatives illustrates the government's efforts to achieve cyber sovereignty. China benefits from a tightly controlled domestic system that not only allows the government to maintain strict controls on information dissemination, but also protects its market to the advantage of Chinese domestic economic players. When compared with the United States, China does not clearly separate the state from the economy. In 2016, citing national security justifications, China released its National Cybersecurity Strategy Report, which stated that its authorities would "firmly defend the cyber sovereignty of China using all means including economic, administrative, scientific, legal, diplomatic and military ways." China's state control over the internet and its use of digital technologies to control its domestic population, including through extensive digital surveillance and harvesting of big data for its social credit system, has been termed "digital authoritarianism" (see text box U.S. Policy and Chinese Digital Authoritarianism ). The PRC social credit system includes two connected but distinct systems: a system for monitoring individual behavior, still in the pilot stages, and a more robust system for monitoring corporate behavior. Each firm's social credit profile is the aggregate of potentially hundreds of data points compiled into a central database developed by China's National Development and Reform Commission. Data disclosure requirements under the new social credit system may obligate firms to provide the Chinese government with sensitive data, such as personnel information or technological know-how. Multinational firms in China are already subject to the system's data reporting requirements; they have raised concerns that certain provisions and rating criteria could be used to discriminate against multinational firms (including for political purposes) lead to a more opaque market access regime, and increase compliance costs. China's so-called "Great Firewall" censors or blocks many foreign websites or mobile apps, as well as content the government considers subversive. According to Freedom House, a U.S.-based non-governmental organization, China was the worst abuser of internet freedom in 2018. Differences between what U.S. and Chinese users can access on the same online platforms furthers the split of the Chinese internet regime from the rest of the world and raises concerns about access to information and freedom of speech. China's national internet governance regime is underscored by its recently-passed Cybersecurity Law, as well as other regulations that raise a variety of concerns for U.S. firms doing business in China. For example, companies are obliged to provide the government with full access to their proprietary data, if requested. The law's rules include requirements for: storing data locally and limiting cross-border data flows; cybersecurity testing and reviews of "critical network equipment" and "critical information infrastructure" operators by government authorities; and the use of "secure and controllable" technology in certain sectors mandating suppliers purchase Chinese products among other limitations. Fearing they could potentially lose control of their intellectual property and proprietary data, many U.S. firms have opted not to enter or faced constraints to remain in the Chinese market. Some foreign firms with customers in China try to address concerns about potential government access to their proprietary data by segregating data transiting to or through China from the rest of their business. This may require U.S. firms to partner with local Chinese firms such as through joint ventures. For example, Apple is unable to offer many of its newer services within China and its iCloud service is available only through a local government-backed provider. China's policies also raise concerns among some U.S., EU, and other government officials and company executives about Chinese companies operating overseas or on a cross-border basis using business models that give Chinese firms access to sensitive data. If Chinese companies need to follow domestic Chinese laws and Chinese government directives, U.S. and other officials fear that sensitive data involving their citizens and corporate entities could be exposed to the Chinese government. China also exports domestically-produced technologies, including security cameras, telecommunications hardware, and internet filtering software, to other countries where governments may seek not only to increase security but also to exert greater control over populations and contain internal dissent. Analysts disagree as to whether China is aggressively exporting digital authoritarianism as an overarching internet governance system, including sales of the enabling technologies and underlying infrastructure to potentially provide Chinese authorities access to data. The alternative is that China is simply promoting domestic industry exports. Regardless of intent, the results in countries that import Chinese goods, services, and policies show how China's technology exports are expanding the country's influence in ICT markets and international standards forums in ways that advance Chinese goals and norms. China also uses its domestic technical standards to separate itself from the broader international community. China, for example, exports its ICT products and services, as well as its technology standards, through projects under its Belt and Road Initiative and, in particular, its Digital Silk Road. China promotes indigenous innovation of technology and investment in domestic research and development projects (R&D) in emerging technologies like artificial intelligence and fifth-generation telecommunications (5G), the future backbone of the internet of things (IoT). Procurement contracts in China require or prefer domestic standards to international ones and/or require domestic production of ICT equipment. In recent years, China has increased its participation in international standards-setting bodies such as the International Organization for Standardization (ISO); its assumption of leadership positions in these organizations illustrates China's efforts to balance its isolationist tendencies and cyber-sovereignty policies with the potential economic gain that comes from international engagement and shaping global standards (see " Standards Development "). <2.3. European Union (EU)> The EU approach to internet governance, including digital trade, is less state-controlled than China's internet regime, but more regulatory and prescriptive than the current U.S. approach. The EU seeks to establish itself as a technology leader and set its own mark on global internet norms. EU Commission president Ursula von der Leyen outlined her priorities for her new executive vice-president for a digital age and stated, "[w]e have to work hard on technological sovereignty." The EU Council's June 2019 strategic agenda echoed these sentiments: We need to ensure that Europe is digitally sovereign and obtains its fair share of the benefits of this development. Our policy must be shaped in a way that embodies our societal values, promotes inclusiveness, and remains compatible with our way of life. To this end, the EU must work on all aspects of the digital revolution and artificial intelligence: infrastructure, connectivity, services, data, regulation and investment. This has to be accompanied by the development of the service economy and the mainstreaming of digital services. The same document refers to the need for a level playing field in trade and highlights the importance of "ensuring fair competition, reciprocity and mutual benefits" in trade policy. The EU will need to balance its goals of achieving technological sovereignty without isolating the region to achieve gains from expanded international trade that require interoperability and open access and data flows. An EU Commission document frames Europe's technological sovereignty, itself an emerging and undefined term, as an initiative within a broader EU industrial strategy. The document specifically tasks the new executive vice president with "striving for digital leadership" while preserving the "European way." EU officials characterize the region's internet regime as a third way between those of the United States and China. Some in the EU support a policy of cyber sovereignty and an independent European internet architecture. As one commentator stated, "If there is an American internet and a Chinese internet, there should also be a European one a framework in which Europeans can make their own decisions about data and privacy, free expression and state security, and taxation and competition." Critics see the EU's desire for internet sovereignty as driven by protectionist and anti-competitive motives to incubate and grow European champions in the digital sphere that can effectively compete against large U.S. and Chinese internet firms. Others view the EU effort less antagonistically, noting German chancellor Angela Merkel's statement that "we need to commit ourselves to protecting the core of the internet as a global, public good." Merkel clarified her vision of European cyber sovereignty stating, "on the one hand, we want to preserve our digital sovereignty while on the other hand, we don't want to isolate ourselves but act multilaterally In my understanding, digital sovereignty does not mean protectionism or state authorities deciding what kind of information can be disseminated which is censorship but it rather describes the capability to shape the digital transformation, both as an individual and as a society." In defining the "European way," the EU has set precedents in some areas of the digital economy. Examples of major EU digital initiatives with global implications that may impact U.S. firms doing business in the EU include the following: EU General Data Protection Regulation (GDPR) . The GDPR, which took effect on May 25, 2018, establishes a set of binding and enforceable rules for the protection of personal data throughout the EU. The GDPR seeks to strengthen individual fundamental rights and facilitate business by ensuring more consistent implementation of data protection rules EU-wide. With no multilateral rules on cross-border data flows, some experts contend that the GDPR may effectively set new global data privacy standards, since many U.S. and foreign companies and organizations are striving for GDPR compliance to avoid being shut out of the EU market, fined, or otherwise penalized. In addition, some countries outside of Europe (e.g., Brazil) are imitating all or parts of the GDPR in their own privacy regulatory and legislative efforts whether on their own initiative or at the EU's behest. Cloud-hosting Services . The German Economy Ministry, with support from other EU leaders, is working to develop a cloud-hosting service (Gaia-X) to provide European government agencies and companies a European alternative to U.S. and China-based cloud service providers, such as Amazon Web Services or Microsoft. According to the ministry, the aim is to ensure European users that the data is "sovereign" and not subject to potential (mis)use by foreign law enforcement or intelligence services, or being blocked for political reasons such as a trade dispute. In a similar effort to limit its current dependence on U.S. technology companies, France's Interior Ministry is planning to offer an internal government cloud service known as Nextcloud. Digital Single Market (DSM). EU policymakers are attempting to bring more harmonization across the region and break down barriers among EU countries under the DSM initiative. The DSM is an ongoing effort to unify the EU market, facilitate trade, and drive economic growth through technology and digital trade. The EU has rolled out multiple initiatives and rules under the DSM, with which any firm doing business in the EU must comply. It is not clear how the DSM initiatives will align with U.S. policy and norms. For example, a new Digital Services Act will provide for uniform rules for online platforms and digital services, including rules on intermediary liability, updating various sets of existing rules in the EU. Others stakeholders raise concerns that platform regulation may limit competition and favor EU entities. Digital Services T axes (DSTs) . Several countries in Europe, and the European Commission, have proposed or adopted taxes on revenue earned by multinational corporations (MNCs) in certain "digital economy" sectors from activities linked to the user-based activity of their residents. These proposals have generally been labeled as DSTs. Proponents of DSTs argue that digital firms are "undertaxed." U.S. critics, in particular, see DSTs as an attempt to target U.S. tech companies, especially as minimum thresholds are high enough that only the largest digital MNCs, which tend to be American, would be subject to the tax. Without a multilateral agreement or an EU-wide rule, DST policies vary across European countries. Countries outside the EU, such as Canada, are also considering implementing a DST. Some countries are implementing domestic DSTs while multilateral negotiations on digital service taxes are occurring under the Organization for Economic Co-operation and Development (OECD). These EU initiatives may add to current heightened tension in the U.S.-EU trade and economic relationship. New U.S.-EU trade negotiations could de-escalate tensions and address internet governance issues, but no agreement exists on the scope of potential bilateral trade negotiations although discussions continue. Despite common rules across the EU, the United Kingdom's (UK's) future internet regime after the country's withdrawal from the EU ("Brexit") is unclear. The UK has stated that it will continue to follow GDPR, but would need an adequacy decision by the EU to prevent disruptions to the free flow of personal data between the EU and the UK. Without such a decision, individual organizations would have to use other means specifically approved by the EU to transfer personal data between the UK and EU (e.g., standard contractual clauses). The EU is set to evaluate the UK data protection framework in 2020. UK leaders seek regulatory autonomy from the EU post-Brexit in some areas and alignment with the EU in others, but it is not clear if and how potential UK regulatory changes would affect internet policy or if any changes by the UK would align it more closely with U.S. policy. Differences in U.S. and UK internet policies will likely need to be addressed in any future bilateral trade negotiations. <2.4. Other Approaches> While some countries may use the U.S. or Chinese approach to internet governance as a model, often they seek to balance these influences with their own domestic policies and priorities. Across the spectrum between U.S. and Chinese internet policies lie a variety of national policies neither as open as the former nor as closed as the latter. Other countries often wish to retain trading and investment relationships with both U.S. and Chinese partners. India and Vietnam illustrate two such examples. <2.4.1. India> India is seeking to become a technology leader and has asserted itself on the international stage while protecting its domestic industries. On the one hand, India seeks to aggressively export technology services and prioritizes opening access to foreign markets for specific types of services in trade negotiations so that Indian technology workers can work abroad. On the other hand, India uses protectionist rules and regulations to shield its domestic industry from foreign competition. For example, India's draft e-commerce policy is intended to favor domestic entities through requirements for local data storage and national standards, among other provisions. Additional policies under consideration by the Indian government would restrict international e-commerce platforms operations and would require them to adjust their supply chains. India has cited security as the rationale for its draft Personal Data Protection Bill, which would also establish broad data localization requirements and limit cross-border transfer of some data. At times, India has taken steps to curb internet freedom, such as temporarily shutting down mobile networks or blocking social media apps in certain regions, justifying such as actions as an attempt to halt disinformation. Although India joined the WTO Information Technology Agreement to eliminate tariffs on ICT goods such as multi-component semiconductors, it has since begun imposing tariffs on some ICT imports. The EU filed for consultation with India over the tariffs in 2019, the first step in WTO dispute settlement. The United States and five other WTO members have since joined the request. In addition, India does not support extending the temporary WTO moratorium on tariffs on electronic transmissions that will expire in mid-2020. India's ability to block a consensus decision to continue the moratorium may increase the pressure to address the topic in the ongoing WTO e-commerce negotiations. To date, India has elected not to participate in the plurilateral negotiations (see below). Due to concerns about Indian market access restrictions on U.S. exports, in 2019, President Trump terminated India's eligibility for the U.S. Generalized System of Preferences (GSP), which gives duty-free tariff treatment to certain U.S. imports from eligible developing countries to support their economic development. To address frictions in the trading relationship, the two countries began bilateral trade discussions to address key U.S. concerns regarding access to India's market. Negotiations are ongoing and it is unclear whether they will address nontariff barriers to digital trade, such as data localization requirements and other internet rules. <2.4.2. Vietnam> Vietnam is adopting elements of the Chinese internet approach in some policy areas. For example, in June 2018, Vietnam passed its Law on Cybersecurity with requirements for data localization and access to information by Vietnamese authorities on the grounds of national security, among other provisions. At the same time, Vietnam is liberalizing its economy and seeking to gain from the U.S.-China trade war as U.S. companies relocate their supply chains from China to other nearby Asian destinations. To spur economic growth and integration, Vietnam joined TPP-11, which went into effect in January 2019. However, the country has a two-year grace period before being subject to dispute settlement for parts of the e-commerce chapter, including provisions on cross-border data flows and localization prohibitions. U.S. firms and others will be watching to see how Vietnam reconciles its current restrictive internet with its TPP-11 commitments for open data flows. Vietnam could, for example, create carve-outs or relax the requirements of its cybersecurity regulations, or it could maintain the rules and claim national security as a legitimate public policy objective and exemption under TPP-11. Vietnam also appears to be aligning with the United States in the telecommunications sector. For example, Vietnamese providers are refraining from purchasing 5G equipment from Chinese suppliers, noting concerns voiced by U.S. cybersecurity officials (see text box Standards, 5G, and National Security ). The Vietnamese government has not taken a formal position in favor of western or Chinese telecommunications equipment and standards. <3. WTO Plurilateral E-commerce Negotiations> <3.1. Background: Digital Trade Rules> Trade negotiations are a tool to create binding and enforceable rules and disciplines to promote international trade and bridge differing internet regimes. No comprehensive agreement on digital trade exists in the WTO as the General Agreement on Trade in Services (GATS) entered into force in January 1995, before the explosive growth of global data flows and digital trade. Initially, digital trade was a niche concern, primarily focused on trade in ICT goods and e-commerce. Certain WTO agreements cover some aspects of digital trade, such as the WTO Information Technology Agreement (ITA) on tariffs. As noted, since 1998, WTO members have also agreed to a moratorium on customs duties for electronic transactions. Although the ban is temporary it has been continuously renewed, most recently until the next ministerial conference in June 2020. As the WTO ITA and e-commerce moratorium illustrate, multilateral trade negotiations to date focused mainly on tariffs and non-discrimination, as well as broad statements of cooperation. Non-tariff barriers were broadly left unaddressed and standards development were left to technicians and academia. As internet-connected technologies continue to evolve, many emerging areas still lack common definitions, standards, and metrics. Today, standards conversations attract a wide range of stakeholders and WTO plurilateral negotiations provide an opportunity to set new international rules and disciplines for digital trade. Recent bilateral and plurilateral trade agreements have begun to incorporate commitments on the digital economy, adding to the complex mixture of international trade rules that companies must follow. Although the various FTAs differ in their scope and participants, their provisions can provide ideas and templates for broader WTO negotiations. While not every country participates in an FTA with digital trade rules, all countries are involved in the digital economy and have a stake in shaping its future growth. Over 75 countries, including the United States, are participating in ongoing WTO e-commerce negotiations aiming to establish a global framework and obligations that enable digital trade in a nondiscriminatory and less trade restrictive manner. Participants released the Joint Statement on Electronic Commerce at the 11th WTO Ministerial Conference in December 2017 announcing their intent to "initiate exploratory work together toward future WTO negotiations on trade-related aspects of electronic commerce." Australia, Japan, and Singapore are coordinating the initiative, known as the Joint Statement Initiative or JSI and participants include both developed and developing countries. Negotiations began in January 2019, initially focused on information exchanges, education, and outreach, especially to developing country members who expressed interest but may not yet have developed a clear domestic digital trade agenda or policy. Multiple parties have submitted proposals outlining their positions and desired scope for the negotiations. The proposals reflect the diversity and evolving state of internet regimes globally. Some developing countries have opted not to participate, including India and South Africa, who want to protect their flexibility and policy space. These parties may not want to commit to an agreement that may constrain their efforts to incubate, or protect, domestic industry or to raise potential tariff revenue on digital products. However, it is not clear why some countries, such as Vietnam, that have agreed to digital trade commitments in other FTAs (such as TPP-11) are not taking part, though they may do so later. <3.2. Positions among Major Participants> The United States was one of the first parties to submit an initial discussion paper for the WTO e-commerce talks. The U.S. discussion paper includes "trade provisions that represent the highest standard in safeguarding and promoting digital trade" and reflects the U.S. support for a market-driven, open, interoperable internet under a multi-stakeholder system. The paper builds on and enhances many of the commitments contained in TPP/TPP11 that were further refined in USMCA. Key provisions in the U.S. proposal include trade rules to: protect cross-border data flow and prevent data localization mandates; ensure fair treatment of digital products; protect proprietary information, including protecting source code and prohibit forced technology transfer; collaborate on cybersecurity; and facilitate internet services and trade. For financial services, the proposal includes the same compromise included in the USMCA to prohibit data localization, provided that regulators have adequate access. The U.S. proposal also includes the USMCA provisions requiring that parties adopt or maintain a legal framework to protect personal information and encourages the development of interoperability mechanisms, though it does not specifically reference the APEC work on privacy. In line with recent U.S. FTAs, the U.S. proposal includes protecting internet intermediaries from liability for hosting content, a topic of ongoing congressional debate. China's proposal focuses on facilitating e-commerce and global value chains as a means to help WTO members, especially developing countries, benefit from digital trade. It reflects its state-driven model. In contrast to the U.S. desire for an ambitious, high-standard agreement, China believes negotiations should "set a reasonable level of ambition" given members' varying levels of industry development, as well as historical and cultural traditions. China advocates respect for parties' differing policies on internet sovereignty, data security and privacy protection, and wants to allow for other regulatory measures to achieve "reasonable public policy objectives." In China's view, data flows, data storage, and treatment of digital products should be subjects for exploratory discussions rather than solid commitments. Development needs like bridging the digital divide and capacity building are highlighted throughout the Chinese proposal. Seemingly in response to U.S. restrictions on trade with Chinese firms such as Huawei, a second proposal from China focuses on preventing members from limiting or blocking trade in ICT equipment and products. China's proposal reflects its visions of a world with separate national internets, in which international agreements allow sovereign states to maintain control and impose additional restrictions on firms within their borders. The limited overlap between the U.S. and Chinese proposals illustrates the difficulties negotiators will need to overcome to achieve a meaningful outcome. The EU proposal falls between the U.S. and Chinese proposals. The EU seeks a "comprehensive and ambitious set of WTO disciplines and commitments" including provisions on e-commerce, consumer and personal data protection, and intellectual property protection. The EU advocates revising the outdated WTO Reference Paper on Telecommunications Services to better promote competition, something not mentioned in the U.S. proposal. The proposal also reflects the EU domestic policy emphasis on protecting personal privacy. Though the EU proposes allowing cross-border data flows and prohibiting localization requirements, it also allows members to "adopt and maintain the safeguards they deem appropriate to ensure the protection of personal data and privacy, including through the adoption and application of rules for the cross-border transfer of personal data." Some analysts see the exception as nullifying the commitment to cross-border data flows. Other countries have put forth proposals reflecting their own domestic policies. The majority of proposals seek to extend the moratorium on duties on electronic transmissions and contain provisions on consumer protection and security. In general, the proposals represent an attempt to bridge the limited Chinese and open U.S. proposals. Industry in general supports the ongoing plurilateral negotiations as a means both to attain enforceable rules and provide the certainty needed for business operations and to expand international trade. One international coalition of information technology industry groups, for example, published its priorities for the negotiations including: open cross-border data flows, prohibiting tariffs and taxes on data flows and ICT goods, protection of source code, algorithms, and encryption, among other provisions. The Global Services Coalition similarly endorsed the WTO e-commerce negotiations to promote trade in services and digitally enabled services. In general, the USMCA, U.S.-Japan agreement, and U.S. proposal reflect the provisions sought by industry, with exceptions to achieve legitimate public policy objectives in a least trade-restrictive manner. On the other hand, one coalition of civil society organizations opposes the ongoing WTO negotiations, believing that any agreement would favor large multinational technology companies at the expense of developing country entrepreneurs and workers. Another civil society group stated that negotiations should focus on transparency, consumer protection and consumer rights, promoting competition, ensuring dispute resolution, and securing citizen access to their online data. It also warned, however, that data protection, privacy, net neutrality, artificial intelligence, and cybersecurity should not be part of a trade agreement. Some consumer groups have engaged constructively with WTO representatives to advocate for transparency in the negotiations and multi-stakeholder dialogues. A clear consensus among the consumer groups on how to address the issues of data privacy and data flows has yet to emerge. <3.3. Selected Issues and Challenges> The parties aim to streamline proposals into a common text ahead of the next WTO ministerial conference in Kazakhstan in June 2020. Given the diversity of the parties' positions and national regimes, the negotiations will need to address controversial issues to achieve a meaningful agreement. Some hope that significant progress and some level of political agreement are possible by then, although the parties will likely require more time to reach an agreement with meaningful and enforceable obligations. Clear commonalities, as well as differences, appear among the proposals, foreshadowing likely controversies and challenges as the negotiations move forward. These include: E-signatures, e-contracts, and related measures to facilitate e-commerce and protect consumers will likely attract wide consensus from all parties. The U.S., Chinese, and EU proposals all include an extension of the WTO temporary moratorium on customs duties on electronic transmissions , but their positions, as well as those of other members, vary as to whether it should be made permanent. Digital services taxes , such as those in place in various EU countries and under consideration in some EU and non-European countries, may be addressed directly or could be excluded from the final trade agreement and left for ongoing OECD negotiations that cover broader international tax issues. The United States and some other parties seek broad protections for cross-border data flows and prohibitions on d ata localization requirements . Other parties support open data flows but under a narrower scope (e.g., for certain sectors or types of data) or with broader exceptions. As noted, China does not want to include any commitments related to data flows. Personal data privacy will be among the most difficult issues. While privacy preferences and rules affect trade, privacy policies and concerns are broader than international trade and trade agreements, for example, affecting medical or financial regulation. The agreement could also address interoperability mechanisms (e.g. certification schemes, contracts, or other data-specific agreements) in addition to or instead of identifying specific privacy protections or obligations. Cybersecurity provisions, if included, could include specific commitments to prohibit or allow certain actions or policies, or may focus on cooperation between the parties. As in every negotiation, the parties must balance creating obligations to facilitate trade with respecting parties' sovereignty. Maintaining sufficient flexibility and policy space may be especially important for those members still determining their domestic digital agenda. Analysts expect that the plurilateral negotiators will have to decide between scope and inclusion. A narrow agreement with limited scope and provisions, such as those focused on e-commerce facilitation, would likely retain the greatest number of negotiating participants but could have less impact. On the other hand, a high-standard broad agreement with deeper commitments, such as that between the United States and Japan, may deter participants who are not yet willing or able to accept all the obligations. Possible approaches include the following. A staggered approach or early harvest could allow the parties to reach an early consensus on some less controversial issues, potentially providing a basis for further rounds of negotiations. Such an agreement would provide an early "win" and establish a common framework for future negotiation, but may not have a high level of impact in countering trade barriers or bridging disparate internet regimes. Some experts suggest a tiered agreement that contains provisions that all parties accept with additional voluntary commitments. For example, all parties may be willing to accept binding commitments on the less controversial issues (such as e-signatures). Another tier with more ambitious provisions, such as prohibitions on data localization, could be agreed on a non-most favored nation (MFN) or reciprocity basis so that only the subset of parties that undertake the obligation would receive that benefit. For example, if country A agrees to no data localization requirements, it may still impose such requirements on countries that do not undertake the same commitment. This type of agreement would create a common framework, but would not necessarily prevent the splitting of the internet into different "dataspheres" if major economies do not adopt higher-standard provisions. I nteroperability mechanisms could be created under the auspices of the WTO or existing systems could be expanded to allow for open data flows between different cybersecurity or data privacy regimes. S taged implementation and capacity building provisions have been included in other WTO agreements and may provide another way to provide flexibility and achieve both broad scope and inclusion. Such an agreement could allow certain parties, especially developing countries, more time to make domestic changes and implement commitments. Capacity building could also encourage all parties to commit to the more ambitious level of obligations. For example, the WTO Trade Facilitation Agreement (TFA) requires that "donor members" who do not require implementation assistance, such as the United States, provide the needed capacity building and support to developing and least-developed members. Members determine their own implementation schedules and progress in implementation is explicitly linked to technical and financial capacity. The TFA was the last concluded WTO multilateral agreement and implementation of members' commitments is ongoing. <3.4. Standards Development and Trade> Standards development and international standards, while not part of trade policy, are often referenced in trade agreements given that standards help shape market access. The growth of international trade in ICT goods and emerging technologies relies on interoperability and international standards. Traditionally, technology companies and telecommunication providers saw value in developing international standards that enable technology companies to build to one standard worldwide, bring products to market faster, sell equipment globally, achieve economies of scale, and reduce the cost of equipment. As technologies develop and converge, standards development becomes more complicated and participation and interest in the process grows. According to the WTO Technical Barriers to Trade Committee, WTO members are mandated to use relevant international standards as the basis for regulation, with some exceptions, and not create unnecessary obstacles to international trade. U.S. FTAs refer to this "TBT Committee Decision on International Standards" in defining commitments on international standards. Using international standards encourages transparency, innovation, and flexibility; such standards can evolve as technologies and new best practices develop. Today, SDOs that develop these international standards (e.g., International Organization for Standardization (ISO), 3rd Generation Partnership Project (3GPP)) are drawing attention not only from ICT sector and academic participants, but also from industries that rely on ICT goods and services as well as government organizations. Standards development illustrates the divergence between the U.S. and Chinese approaches to ICT. China has a state-led approach to standardization. Under its Revised Standardization Law, effective in 2018, the Standardization Administration of China sets compulsory standards, but also endorses the adoption of international standards. In an effort to promote its industrial policies, develop domestic standards, and internationalize them, China has increased its participation in international standards development, especially for emerging technologies. While some stakeholders welcome China's participation, others question the benefits and risks of Chinese involvement in some of these forums. Some stakeholders raise concerns that China is pursuing a strategic and nationalist, rather than market-driven and best-of-breed-technology, focus because of the Communist Party of China's interest in protecting and advancing its values on a world stage. Analysts have pointed out that China shows a preference for multilateral institutions such as the U.N. or WTO in which each country has a single vote rather than U.S.-backed multi-stakeholder standards institutions (SDOs) with a wider range of participants and more diverse views that dilute governments' clout. Debate over international versus Chinese standards, for example, has dominated many SDO discussions on emerging 5G networks as competition arises between Chinese and Western technology companies. China directs Chinese industry's participation in global SDOs--including leading technical committees, hosting forums, conducting 5G R&D, contributing to 5G specifications--and in international projects. China's industry and academic participants are state- controlled entities and typically work to institutionalize Chinese national standards at the global level. As a counterweight, some U.S. stakeholders advocate for increased participation by U.S. officials in SDOs and government resources for U.S. business and non-government participants to help maintain U.S. leadership in the development of emerging technologies. The Trump Administration echoed these sentiments in Executive Order (EO) 13859, stressing the importance of U.S. leadership in developing technical standards for AI. In response, the National Institute of Standards and Technology (NIST) issued a plan for federal engagement in AI standards calling for the U.S. government to "commit to deeper, consistent, long-term engagement in AI standards development activities to help the United States to speed the pace of reliable, robust, and trustworthy AI technology development." <4. Issues for Congress> Given the critical and growing role of the internet to the U.S. economy, Congress has a policy and legislative interest in the current divergence in national internet regimes and its impact on digital trade, future trade negotiations, standards-setting, and other major U.S. policy objectives. Key issues for Congress include: Examining the U.S. position in the ongoing WTO plurilateral e-commerce negotiations. Congress may explore the value of digital trade provisions in potential new bilateral trade negotiations. Exploring China's digital authoritarianism and its impact on the digital economy and global rules. This could include the effect on U.S. firms doing business in China, as well as the effect on other countries' internet regimes, including identifying which countries or sectors are emulating China's digital rules or technical standards. Congress previously held hearings on the threat to free speech and security aspects posed by PRC internet sovereignty. Examining efforts by the United States to counter China's digital policies. For example, investments by the new U.S. International Development Finance Corporation (DFC) could focus on telecommunications and internet infrastructure and policy. Some analysts have suggested that Congress establish a digital development fund dedicated to shaping global norms and developing countries' internet regimes. A bipartisan bill ( H.R. 1359 ) directs executive branch agencies to partner with domestic and foreign partners to "encourage the efforts of developing countries to improve and secure mobile and fixed access to the Internet in order to catalyze innovation, spur economic growth and job creation, promote free speech, democracy, and good governance and the multi-stakeholder approach to Internet governance." Understanding the potential long-term impact of the splintering internet on the U.S. economy. Without agreement on the underlying rules or convergence on international norms, the risk of a fractured global internet increases. Congressional oversight could examine the value, both economic and political, of U.S. leadership and U.S. norms governing the global internet. Congress could consider asking the U.S. ITC to investigate the economic impact of this fracturing on U.S. businesses and consumers. Congress could analyze the different approaches and commitments related to internet governance contained in EU or Chinese FTAs, and how they differ from U.S. agreements and objectives. More immediately, Congress could examine the economic impact of the recent technology trade restrictions in China and other countries on U.S. companies. Overseeing ongoing efforts to establish global standards and rules through U.S. participation in SDOs, international forums, and recent and ongoing trade negotiations. For example, Congress could hold hearings on U.S. government and private sector involvement in standard-setting and China's increasing role in international standards discussions. Congress could probe executive branch agencies about specific U.S. objectives and engagement in ongoing negotiations related to internet governance and examine if the United States needs a clear strategy for outreach to international partners to build consensus on issues in advance of formal meetings and conferences. Similarly, Congress may consider promoting hosting of some standards meetings and international discussions so that more U.S. stakeholders could participate and provide direct feedback.

From retail to agriculture or healthcare, digitization has affected all sectors and allowed more industries to engage with customers and partners around the globe. Many U.S. companies thrived in the initial online environment, which lacked clear rules and guidelines, quickly expanding their offerings and entering foreign markets. As the internet has evolved, however, governments have begun to impose national laws and regulations to pursue data protection, data security, privacy, and other policy objectives. The lack of global rules and norms for data and digital trade is leading to differences in these domestic internet regimes. Competing internet regimes and conflicting data governance rules increase trade barriers and limit investment flows and international commerce, restricting the ability of U.S. businesses and consumers to enter and compete in some markets. For example, foreign internet regimes may use national security regulations to block cross-border data flows, disrupting global supply chains and limiting the potential use of and gains from emerging technologies. The creation of national technology standards can also limit market access by foreign firms. As the digital economy expands, the diversity in digital rules is poised to grow in complexity and create new trade restrictions. The resulting patchwork of technical standards and national systems creates challenges for international trade, and may signal an impending fracturing of the global internet. Without agreement on global norms or common trade rules, some analysts foresee a splitting of the internet into distinct nation-led "dataspheres" and virtual trading blocs. The internet is global, governed by common technical protocols; it may also be regulated at the national level, although there is no international consensus on the proper role for governments. The lack of multilateral trade rules governing the digital economy has led to efforts to establish common global rules and norms. Over 75 countries, including the United States, are participating in World Trade Organization e-commerce negotiations, which aim to establish a global framework and obligations to enable nondiscriminatory digital trade. Proposals by the United States, the European Union (EU), and China illustrate the variation in member objectives, highlight potentially controversial issues, and raise questions about the likelihood of meaningful consensus. In general, the United States adopts a market-driven approach that supports an open, interoperable, secure, and reliable internet that facilitates the free flow of online information and supports other policy objectives such as privacy and national security. The EU, while supporting the role of the market and free flow of information also emphasizes the need for data protection, internal regional integration, and "technological sovereignty," a recent and evolving concept in the EU. In contrast to the U.S. and EU approaches, which both emphasize the open global internet, China pursues a state-led approach that maintains a firewall between the Chinese internet and the rest of the world. China's government strictly controls the flow of information on its networks and restricts the companies who can participate in its digital economy. Many aspects of internet service and content in China are prohibited to U.S. firms. China is exporting its system through its direct export of goods and services, including surveillance technologies, and is trying to influence international standards and norms to allow space for China's model of strict state controls. Other countries, such as India and Vietnam, are building their own internet regimes, borrowing from the Chinese, European, and U.S. approaches. Congress has an interest in addressing growing protectionist policies and trade barriers, and in developing U.S. rules and standards for internet governance that promote digital trade and economic growth, balanced among other policy objectives. The divergence in national internet regimes and its impact on digital trade raises numerous complex issues of potential concern to Congress. These include whether to support initiating new bilateral trade negotiations specific to digital trade; how the United States can conclude a successful plurilateral WTO e-commerce negotiation that achieves greater reciprocity and market access for U.S. exporters and removes barriers to trade; how such an outcome can be balanced with other policy objectives; and whether federal engagement in and support for international standards-setting bodies is sufficient.

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<1. Introduction> Technological convergence, in general, refers to the trend or phenomenon where two or more independent technologies integrate and form a new outcome. One example is the smartphone. A smartphone integrates several independent technologies such as telephone, computer, camera, music player, television (TV), and geolocating and navigation tool into a single device. The smartphone has become its own, identifiable category of technology. Currently, over 35% of the global population are smartphone users and over 3 billion active devices are in circulation. In the United States, about 80% of the U.S. population are smartphone users, and over 280 million active devices are in circulation. The technological convergence has resulted in establishing a new and prominent smartphone industry sector, worth over $350 billion globally, according to some estimates. Technological convergence may present a range of issues where Congress may take legislative and/or oversight actions. Three selected issue areas associated with technological convergence are regulatory jurisdiction, digital privacy, and data security. First, merging and integrating multiple technologies from distinct functional categories into one converged technology may pose challenges to defining regulatory policies, roles, and responsibilities. Determining oversight jurisdictions and regulatory authorities for converged technologies may become complicated as the boundaries that once separated single-function technologies are blended together. In other words, delineating which policy authorizes which government agency to apply which standards to regulate which industry is no longer simple and straightforward. How Congress chooses to oversee certain industries and government agencies may also become complicated due to converging technologies that blur and blend existing categorical boundaries. Second, digital privacy concerns stem from converged technologies' collection and usage of personal and machine data. Technological convergence facilitates increasing consumption and collection of data, which poses potential digital privacy concerns for consumers. Data collection and usage are tied to digital privacy issues because a piece or aggregation of information could identify an individual or reveal patterns in their activities. Converged technologies leverage large volumes of data to try to improve the user experience by generating more tailored and anticipatory results. This data can also potentially be used to identify, locate, track, and monitor an individual without the person's knowledge. The same data can potentially be sold to third-party entities without an individual's awareness. As the use of converged technologies continues to propagate, digital privacy issues will likely remain central to the policy debate. Third, data security concerns are often associated with smart devices. As devices are able to interconnect, the convenient ubiquitous features may create vulnerabilities that could be exploited by malicious actors. Data security, a component of cybersecurity, protects data from unauthorized access and use. Along with digital privacy, data security is a pertinent issue for converged technologies, which generate and consume large volumes of data. Technological convergence poses three potential data security concerns: increased number of access points susceptible to cyberattacks, linkage to physical security, and theft of data. The first section of this report describes technological convergence along with closely associated media convergence and network convergence. The report uses the Internet of Things (IoT) and smart home devices as primary examples. Of these three convergences, consumers most often directly engage with converged technologies. In contrast, general consumers may not have the same level of engagement or understanding of media and network convergences, as they often occur in the background. The second section of this report presents regulatory, digital privacy, and data security issues pertaining to technological convergence. The current state, challenges, and recent legislative activities are discussed. The third section of this report concludes with potential considerations for Congress. An overarching consideration for regulatory, digital privacy, and data security issues may be determining the role, if any, of the federal government in an environment where technological evolution changes quickly and continues to disrupt existing frameworks. Policies governing these three issues regulations, digital privacy, and data security may be of interest to Congress as well as other stakeholders, including U.S. government agencies, commercial entities, and the general public. <2. Description of Technological Convergence> "Technological convergence" is a concept whereby merging, blending, integration, and transformation of independent technologies leads to a completely new converged technology. This broad, complex concept encompasses a wide range of technologies, including IoT and smart home devices. When a converged technology emerges, it often replaces single-function technologies or renders them obsolete. In this sense, technological convergence can be viewed as a progression or evolution of technology. A discussion of technological convergence in isolation is difficult because technological convergence is closely associated with media convergence and network convergence. Technological, media, and network convergences are interdependent, but each possesses subtle distinctions. These three terms are often used interchangeably, further complicating the discussion of an already complex topic. Figure 1 illustrates relationships between technological, media, and network convergences. Technological convergence : This occurs when the functions of different technologies are merged and interoperate as a single unit. A converged unit can typically process multiple types of media that correspond to each technology that merged. Technological convergence includes devices and systems that interface with end users. For example, a user interacts with converged devices, such as a smart television (TV), to access the contents that are distributed over a network. A smart TV has combined the functions of a traditional TV, a computer, and several other devices that used to have one specific purpose. In addition to displaying over-the-air broadcast TV channels, smart TVs interface with users to surf the internet, view photos taken from smartphones and stored in the "cloud," display feeds from home security cameras connected to a network, play music, notify users of incoming calls and messages, and allow video teleconferencing. Smart TVs can process a variety of formats of media to perform multiple functions. Media convergence : This refers to content that is made available through multiple forms, formats, and access points. Media convergence proliferated as analog mediums of communication became digitized. For example, the contents on a newspaper used to be available only in print. The same content is currently available in both print and digital forms, as text, visual, and/or audio formats, and through multiple devices and platforms including social media. Network convergence : This refers to a single network infrastructure that handles and distributes multiple types of media. Network convergence became prominent when telecommunications and information networks integrated; it became prevalent when mobile cellular communications incorporated access to the internet and made it widespread. For example, today's cable companies process information in forms of voice, video, and data on a single network and often offer their services as a bundle package (e.g., phone, television, and internet services). Similarly, cellular networks, which distribute information to and from mobile devices and fixed platforms, process voice, video, and data. Prior to network, media, and technological convergences, a separate, independent network was dedicated to handling and distributing one particular type of media that was processed by a single-function device. For example, a telephone network distributed audio information (i.e., voice) between telephone handsets. A broadcasting network delivered video to television sets. Convergence removes such pairing (i.e., "decouples") between media, network, and device. Decoupling gives convergence its versatility, flexibility, and complexity. <2.1. Characteristics of Smart Devices> Many technological convergence devices are called "smart" devices, which often include IoT devices. (Examples of IoT devices are discussed in following sections.) Despite a wide range of applications, smart converged technologies share key characteristics: Smart devices can execute multiple functions to serve blended purposes; Smart devices can collect and use data in various formats and employ machine learning algorithms to deliver optimized and enhanced user experience; and Smart devices are connected to a network directly and/or are interconnected with other smart devices, offering ubiquitous access to users from anywhere on any platform. These key characteristics may present potential policy questions for Congress, including the following: Who will provide oversight and how will regulatory authorities be applied to technologies that serve multiple functions or that do not belong to an established category? How should consumer data be collected and used to protect digital privacy without limiting technology innovation? How to shape data security practices to safeguard personal information and physical security from malicious actors? <2.2. An Overview of Internet of Things> The IoT is a common example of technological convergence. The IoT is a system of devices that are connected to a network and each other, exchanging data without necessarily requiring human-to-human or human-to-computer interaction. In other words, IoT is a collection of electronic devices that can share information among themselves (e.g., smart home devices). The IoT possess all three characteristics of converged technologies: multiple functions, data collection and use, and ubiquitous access. Various categories of IoT include industrial Internet of Things, Internet of Medical Things, smart city infrastructures, and smart home devices. IoT industry is a growing market both globally and in the United States. According to some estimates, in 2018, the IoT retail market in the United States was almost $4 billion, and over 700 million consumer IoT devices were in use in 2017 in the United States. Figure 2 illustrates global revenue of the IoT from 2012 to 2018, according to Statista, a company that consolidates statistical data, based on information from IC Insights. In 2018, consumer IoT devices, such as wearable and connected smart home devices, generated over $14 billion globally. The connected cities category, or smart cities, was the largest (41%) of 2018 global IoT revenue. The industrial Internet of Things, such as smart factories, had the biggest growth in terms of global revenue between 2017 and 2018 among the different categories of the IoT. An estimate of various IoT markets by McKinsey also shows the industrial IoT as potentially increasing the most by 2025 compared to other IoT systems. The development, application, and usage of IoT will likely continue to grow with Fifth-Generation (5G) Technologies cellular service, which will allow a larger number of devices to be connected simultaneously to a network, supporting not only consumer but industrial use of IoT devices and systems. IoT devices are used in many different fields and serve a variety of functions. The IoT encompasses a broad range of applications. Selected categories of IoT devices are discussed below. Industrial Internet of Things (IIoT): Examples of commercial application of the IoT can be found in the manufacturing industry. Referred to as industrial Internet of Things (IIoT), networked machines in a production facility can communicate and share information to improve efficiency, productivity, and performance. The application of IIoT can vary significantly, from detecting corrosion inside a refinery pipe to providing real-time production data. Also, IIoTs can enable a variety of industries, such as manufacturing, chemicals, food and beverage, automotive, and steel, to transform their operations and potentially yield financial benefits. Currently in North America, there are more consumer IoT connections than IIoT connections, but this may change in the future. Incorporation of IIoT and analytics is considered by some as the Fourth Industrial Revolution (4IR). Internet of Medical Things (IoMT): Some experts project the use of Internet of Medical Things (IoMT) is increasing. IoMT devices, such as heart monitors and pace makers, collect and send a patient's health statistics over various networks to healthcare providers for monitoring, remote configuration, and preventions. In 2017, over 300 million IoT devices in the medical sector were connected worldwide, and, in 2018, over 400 million devices were connected. At a personal health level, wearable IoT devices, such as smart watches and fitness trackers, can track a user's physical activities, basic vitals, and sleeping patterns. In 2017, over 40 million fitness tracker IoT were in use in the United States. Smart Cities: IoT devices and systems in transportation, utilities, and infrastructure sectors may be grouped under the category of "smart city." An example of utilities IoT in a smart city is "smart" grid and meters for electricity, water, and gas where sensors collect and share customer usage data to enable the central control system to optimize production and distribution to meet demand real-time. An example of transportation IoT in a smart city is fare readers and status trackers or locaters that interface across all public transportation platforms. Columbus, OH's winning proposal for the Department of Transportation's (DOT) Smart City Challenge of 2016, included connected infrastructure that interacts with vehicles, trip planning and common payment system across multiple transit system, and electric autonomous vehicles and shuttles. Other finalists of the DoT Smart City Challenge were Austin, TX; Denver, CO; Kansas City, MO; Pittsburgh, PA; Portland, OR; and San Francisco, CA. Smart cities is currently the largest segment of IoT in terms of revenue. Smart Home: Consumer product IoT devices used in homes and buildings are often grouped under the "smart home" category. Included in this categories are smart appliances, smart TV, smart entertainment systems, smart thermostats, and network-connected light bulbs, outlets, door locks, door bells, and home security systems. These smart home IoT devices are connected to a single network and can be controlled remotely over the internet. Eight of 11 categories of consumer IoT devices used in 2017 were related to smart home. In 2018, the size of the global smart home market was estimated to be over $30 billion. <2.3. An Example: Smart Home> A smart home contains a collection of consumer IoT devices intended for personal use where user experience is improved by connecting various features of a house to a network. For example, smart home IoT devices may be interconnected to each other and to a central control system for a home with voice interface, often referred to as a virtual assistant. Commonly known examples of virtual assistants are Amazon's Alexa, Apple's Siri, Google Assistant, Microsoft's Cortana, and Samsung's Bixby. A virtual assistant is a platform that can manage and relay information to smart home devices based on user-established criteria. Moreover, a smart home may have a doorbell with a video camera and a speaker that allows a user to see who is at the door and to speak to the person at the door from anywhere over the internet. A smart home may have a smart door lock that can be locked and unlocked remotely. In addition, the thermostat, lights, electrical outlets, and appliances in a smart home may be remotely controlled by a user over the internet. A smart appliance, such as a smart refrigerator that is networked, can use its sensors to identify items and can notify a user based on set criteria, such as restocking alerts or suggested recipes. Some smart home devices resemble traditional devices, but with cross-over functions or networking abilities. Examples include smart lightbulbs, smart electrical outlet plugs, smart TV, and smart appliances. Some smart home devices are establishing a new category of industry segment that did not exist previously. An example is Amazon's Echo products with virtual assistant Alexa as voice user interface. Whether it is the former (evolutionary technologies) or the latter (new/revolutionary technologies), the smart home industry is fast emerging and growing. Smart home devices, which are a type of IoT, possess the three characteristics of converged technologies: multiple or blended functions, collection and use of data, and ubiquitous access through network connection. Thus, potential policy interests associated with technological convergence can be also observed in smart home devices. Potential smart home issues for Congress include the following. Congress may decide it is necessary to resolve oversight jurisdictions and regulatory authorities of smart home devices, especially for products like virtual assistants, which may not belong to an established category of technology. The mission of the Federal Trade Commission (FTC) includes both protecting consumers and promoting business competition. Congress may choose to review the FTC's current authorities to ensure that they are sufficient to oversee emerging smart home technologies. In addition, potentially deconflicting or harmonizing jurisdictions may be discussed if other federal government organizations and their mission are impacted by emerging smart home technologies. Congress may decide that new or expanded policies are necessary to protect consumer digital privacy, including personal data that are collected and used by smart home devices, such as a smart TV, in private spaces, such as a user's home. Although the FTC does promote a level of digital privacy through its consumer protection authorities, emerging digital privacy issues are linked to practices that are legal as opposed to fraud, theft, or other malicious activities. Congress may examine whether a federal law that comprehensively addresses personal digital privacy is necessary or an expansion of the FTC's consumer data protection authorities is required. Emerging smart home technologies may further necessitate safeguarding data from malicious actors. In addition to collecting and using personal data, smart home devices bridge physical security and cybersecurity. Malicious actors may have more means to exploit a user's information and home through smart home devices, which offer ubiquitous access as a key convenience feature. Whether current policies adequately addresses data, cyber, and physical security concerns may also be considered. <3. Selected Issues Associated with Technological Convergence> Regulation, digital privacy, and data security are three selected issues associated with technological convergence that may be of interest to many stakeholders, including Congress. As identified in the smart home example in the previous section, each of these three issues is discussed further in subsequent subsections. The three selected issues are tied to the three characteristics of converged technologies discussed previously in the " Characteristics of Smart Devices " section. First, convergence of technologies blend and blur existing categorical distinctions for each technology because a converged technology can perform multiple functions. Second, technological convergence consumes, collects, and generates a large volume of both personal and machine data. Third, converged technologies allow ubiquitous access points to the end users. These characteristics are typically observed as a result of decoupling the devices from media and network. <3.1. Regulatory Issues> Congress may consider policies that address blending standards and boundaries as converged technologies and companies merge and replace traditionally independent and distinct categories. Policy issues may include oversight jurisdictions, regulatory authorities, and commercial competitiveness since a converged technology could fall within multiple domains. An example may be delineating the Federal Communications and Commission's (FCC) and the FTC's authorities on convergence technologies as more devices and services become mobile and wirelessly connected. Merging and integrating multiple technologies from distinct functional categories into one converged technology pose challenges to regulatory policies and responsibilities. Determining oversight jurisdictions and regulatory authorities for converged technologies becomes unclear as the boundaries that once separated single-function technologies blend and blur together. A challenge for policymakers may be in delineating which government agency and which policies and standards would best apply to certain technologies or certain industries. Where there were once clear lines of authority by industry or media type (e.g., voice, video, data), they are no longer simple and straightforward for technologies where these functionalities have converged. How Congress oversees which industries and government agencies may become complicated due to converging technologies that blend existing categorical boundaries. Congress may decide that it is necessary for specific legislative committees to effectively oversee a converged technology that serves multiple functions. As a result, the alignment of converged technologies to regulatory authorities may shift as technologies evolve. The complexities in setting regulatory jurisdiction can be further subdivided into regulating converging technologies and regulating evolving technology companies . They are discussed below. <3.1.1. Regulating Converging Technologies> Regulating a converging technology, which is a result of blending or integrating multiple technologies, can be challenging. This is because (1) the one-to-one relationship between a converging technology and a regulatory entity is no longer clear, and (2) a converging technology may create a new sector where a regulatory entity has not been identified. Initially, the standards and oversight policies for a specific technology were established independently. They were not necessarily developed with merging or interoperability in mind. For example, telephony (when providing voice), cable TV (when providing video), and mobile cellular technologies each follow their respective standards, and these services were regulated by policies specific to each type. When a converged technology utilizes differing communications technologies, it may be required to adhere to multiple standards and regulations. In such cases, multiple agencies may need to regulate a single converged technology. This may require extended timelines for regulatory reviews. Industry may incur additional costs to meet standards and reporting requirements for converged technologies. In other situations, as technologies converge, the outcome may yield a completely new technology for which a regulatory category did not previously exist. Examples include social media, IoTs, and virtual assistants. Without a clear regulatory and oversight framework in place, new converged technologies may be left unregulated, partially regulated, or regulated under a newly developed framework. They could also be left to self-regulate by the industry; or they could be overlooked as governing bodies remain indeterminate on which jurisdictional boundaries need to be stretched to cover emerging technology fields. <3.1.2. Regulating Evolving Companies> Regulating companies that offer converged technologies is challenging because the services and product lines evolve and expand such that they do not fall within a single category. Although diversification is considered normal business practice, technological convergence broadens the operational range for companies, spanning multiple industry sectors. Antitrust concerns could arise, or companies may not be subjected to the same level of oversight and regulation due to lack of classification. For example, companies such as Amazon, Apple, and Google each offer smart home devices and platforms. Some of these devices, such as a smart doorbell with a video camera, smart doors and locks, and networked contact sensors and video cameras, may function as home security devices. Many of these products are bundled as a starting kit for home security. However, these technology convergence companies may not be required to follow state and local regulations as traditional home security companies that provide monitored security service do. Another example discussed widely in Congress is social media whether social media companies should be classified as information technology companies, as advertising and marketing firms, as communications platforms, or as the press. As converged technologies and associated companies straddle or fall between jurisdictional boundaries, regulatory roles and responsibilities become more complex. <3.2. Digital Privacy Issues> Congress may be interested in digital privacy concerns of converged technologies, which often collect and use personal information and machine data as they directly interface with end-users. Current federal laws protect certain types of data pertaining to privacy by specifying collection, storage, use, and dissemination practices. As converged technologies generate and innovatively leverage more types and volumes of data that can identify, locate, or track a person, consumer concerns for protecting digital privacy may intensify. Technological convergence facilitates increased consumption and collection of data, posing potential digital privacy concerns for consumers. Data collection and usage are tied to digital privacy issues because a piece or aggregation of information could identify an individual or reveal patterns in their activities. Converged technologies leverage large volumes of data to try to improve the user experience by generating more tailored and anticipatory results. However, such data can potentially identify, locate, track, and monitor an individual without the person's knowledge. As the use of converged technologies continues to propagate, digital privacy issues will likely remain central. <3.2.1. Current Data Protection Laws> While a federal law that comprehensively addresses digital privacy does not currently exist, many laws are in place to protect certain types of data and their impact on specific aspects of privacy. Current U.S. data protection laws include the following, as taken from CRS Report R45631, Data Protection Law: An Overview : Gramm-Leach-Bliley Act (GLBA): The GLBA imposes several data protection obligations on financial institutions. These obligations are centered on a category of data called "consumer" "nonpublic personal information" (NPI), and generally relate to: (1) sharing NPI with third parties, (2) providing privacy notices to consumers, and (3) security NPI from unauthorized access. Health Insurance Portability and Accountability Act (HIPAA): Under the HIPAA, the Department of Health and Human Services (HHS) has enacted regulations protecting a category of medical information called "protected health information" (PHI). These regulations apply to health care providers, health plans, and health care clearinghouses (covered entities), as well as certain "business associates" of such entities. The HIPAA regulations generally speak to covered entities': (1) using or sharing of PHI, (2) disclosure of information to consumers, (3) safeguards for securing PHI, and (4) notification of consumers following a breach of PHI. Fair Credit Reporting Act (FCRA): The FCRA covers the collection and use of information bearing on a consumer's creditworthiness. FCRA and its implementing regulations govern the activities of three categories of entities: (1) credit reporting agencies (CRAs), (2) entities furnishing information to CRAs (furnishers), and (3) individuals who use credit reports issued by CRAs (users). In contrast to HIPAA or GLBA, there are no privacy provisions in FCRA requiring entities to provide notice to a consumer or to obtain his opt-in or opt-out consent before collecting or disclosing the consumer's data to third parties. FCRA further has no data security provisions requiring entities to maintain safeguards to protect consumer information from unauthorized access. Rather, FCRA's requirements generally focus on ensuring that the consumer information reported by CRAs and furnishers is accurate and that it is used only for certain permissible purposes. The Communications Act : The Communications Act of 1934 (Communications Act or Act), as amended, established the Federal Communications Commission (FCC) and provides a "comprehensive scheme" for the regulations of interstate communication. [T]he Communications Act includes data protection provisions applicable to common carriers, cable operators, and satellite carriers. Video Privacy Protection Act (VPPA): The VPPA was enacted in 1988 in order to "preserve personal privacy with respect to the rental, purchase, or delivery of video tapes or similar audio visual materials." The VPPA does not have any data security provisions requiring entities to maintain safeguards to protect consumer information from unauthorized access. However, it does have privacy provisions restricting when covered entities can share certain consumer information. Specifically, the VPPA prohibits "video tape service providers" a term that includes both digital video streaming services and brick-and-mortar video rental stores from knowingly disclosing [personally identifiable information] (PII) concerning any "consumer" without that consumer's opt-in consent. The VPPA does not empower any federal agency to enforce violations or the Act and there are no criminal penalties for violations, but it does provide for a private right of action for persons aggrieved by the Act. Family Educational Rights and Privacy Act (FERPA): The FERPA creates privacy protections for student education records. "Education records" are defined broadly to generally include any "materials which contain information directly related to a student" and are "maintained by an educational agency or institution." FERPA defines an "educational agency of institution" to include "any public or private agency or institution which is the recipient of funds under any applicable program." FERPA generally requires that any "educational agency or institution" (i.e., covered entities) give parents or, depending on their age, the student (1) control over the disclosure of the student's educational records, (2) an opportunity to review those records, and (3) an opportunity to challenge them as inaccurate. Federal Securities Laws : While federal securities statutes and regulations do not explicitly address data protection, two requirements under these laws have implications for how companies prevent and respond to data breaches. First, federal securities laws may require companies to adopt controls designed to protect against data breaches. Second, federal securities laws may require companies to discuss data breaches when making required disclosures under securities laws. Children's Online Privacy Protection Act (COPPA): The COPPA and the FTC's implementing regulations regulate the online collection and use of children's information. Specifically, COPPA's requirements apply to: (1) any "operator" of a website or online service that is "directed to children," or (2) any operator that has any "actual knowledge that it is collecting personal information from a child" (i.e., covered operators). Covered operators must comply with various requirements regarding data collection and use, privacy policy notifications, and data security. Electronic Communications Privacy Act (ECPA): The ECPA was enacted in 1986, and is composed of three acts: the Wiretap Act, the Stored Communications Act (SCA), and the Pen Register Act. Much of ECPA is directed at law enforcement, providing "Fourth Amendment like privacy protections" to electronic communications. However, "ECPA's three acts also contain privacy obligations relevant to non-governmental actors. ECPA is perhaps the most compressive federal law on electronic privacy, as it is not sector-specific, and many of its provisions apply to a wide range of private and public actors. Nevertheless, its impact on online privacy has been limited. As some commentators have observed, ECPA "was designed to regulate wiretapping and electronic snooping rather than commercial data gathering," and litigants attempting to apply ECPA to online data collection have generally been unsuccessful. Computer Fraud and Abuse Act (CFAA): The CFAA was originally intended as a computer hacking statute and is centrally concerned with prohibiting unauthorized intrusions into computers, rather than addressing other data protection issues such as the collection or use of data. Specifically, the CFAA imposes liability when a person "intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains information from any protected computer." A "protected computer" is broadly defined as any computer used in or affecting interstate commerce or communications, functionally allowing the statute to apply to any computer that is connected to the internet. Federal Trade Commission Act (FTC Act): The FTC Act has emerged as a critical law relevant to data privacy and security. As some commentators have noted, the FTC has used its authority under the Act to become the "go-to agency for privacy," effectively filling in gaps left by the aforementioned federal statutes. While the FTC Act was originally enacted in 1914 to strengthen competition law, the 1938 Wheeler-Lea amendment revised Section 5 of the Act to prohibit a broad range of unscrupulous or misleading practices harmful to consumers. The Act gives the FTC jurisdiction over most individuals and entities, although there are several exemptions. For instance, the FTC Act exempts common carriers, nonprofits, and financial institutions such as banks, savings and loan institutions, and federal credit unions. Consumer Financial Protection Act (CFPA): Similar to the FTC Act, the CFPA prohibits covered entities from engaging in certain unfair, deceptive, or abusive acts. Enacted in 2010 as Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPA created the Consumer Financial Protection Bureau (CFPB) as an independent agency within the Federal Reserve System. The Act gives the CFPB certain "organic" authorities, including the authority to take any action to prevent any "covered person" from "committing or engaging in an unfair, deceptive, or abusive act or practice" (UDAAP) in connection with offering or providing a "consumer financial product or service." State laws, such as California Consumer Privacy Act (CCPA), and international laws, such as European Union's General Data Protection Regulations (GDPR), aim to provide a comprehensive guidance on digital privacy. The FTC Act and the Clayton Act are the primary statutes that give the FTC investigative, law enforcement, and litigating authority to protect consumers and promote competition (i.e., antitrust). The FTC "has enforcement or administrative responsibilities under more than 70 laws." The FTC's consumer protection mission currently focuses more on data security issues such as identity theft, violation of Do Not Call or Do Not Track, and deceptive advertising than digital privacy concerns associated with lawful activities. While consumer protection and digital privacy are increasingly becoming synonymous, consumer protection law alone may not provide sufficient jurisdiction and authority to encompass digital privacy and data security issues for all data on all devices. <3.2.2. Data Privacy and Data Security> Digital privacy discussions often involve two closely associated topics: data privacy and data security. Data privacy is the governing of data collection, use, and sharing. Data security is protection of data from unauthorized or malicious actors. These two topics often differ in the lawfulness of activities, the intended use of data, and the effect on an individual. Data security is an aspect of cybersecurity more so than privacy. Data security defends against illicit activities such as theft of data. Data security practices include proactive measures against cyber-attacks and responsive measures such as sending notifications to affected individuals upon a data breach. Data security issues typically involve actors whose intents are malicious, who carry out unlawful activities, and use data in ways that harm an individual. Examples include breaking into a database or sending spear phishing emails to steal identity and financial information. Stolen identity and financial information are often exploited, causing financial damage to individuals and businesses. Privacy implications arise when personal information is compromised during a data security incident. D ata privacy practices determine how and to what extent data are collected, used, and with whom the data are shared. Data privacy sets the scope for control of personal information this may include data ownership and responsibilities of involved entities. Data privacy issues typically arise from lawful activities, but personal information may have been collected, used, or shared beyond given permission or awareness of an individual. The process or results may reveal aspects of an individual that were unexpected. Examples of data privacy issues include mobile apps and websites collecting and using an individual's online activity and location data to suggest targeted ads. In general, such activities are a lawful commercial marketing strategy, from which the customers may benefit in forms of enhanced user experience and discounts. But, these activities become an issue when they lack transparency (i.e., when customers are not aware of what information is collected on them, who shares the information with whom, and how the information is used and for what purpose). Individuals may experience that their rights to privacy have been violated when aggregation of information reveals highly targeted information that an individual did not anticipate. Key aspects of data privacy such as data collection, storage, sharing, access, and use are not defined for digital data that are often leveraged by convergent technologies. These key aspects are defined only for certain types of information, such as medical and financial, where federal laws are in place. Similar guidance is limited or not available for other personal data, such as the following: Geolocation data collected by apps; Contact information and other user-generated content on social media; Video recordings made by smart home IoT devices; Voice recordings made by virtual assistants; and Vitals and health data collected by fitness tracking wearable IoT devices. Committees in both the House and the Senate of the 115 th Congress held several hearings where technology companies were present as witnesses. Over a dozen bills were introduced in the 115 th Congress to address various aspects of data privacy and security; but, none became a law. Committees in both the House and the Senate of the 116 th Congress have already held multiple hearings on privacy. Several bills were introduced by the 116 th Congress to address data privacy concerns as they relate to technological convergence. These bills include the following: H.R. 1282 (Representative Bobby Rush), introduced on February 14, 2019, as the Data Accountability and Trust Act, would "require certain entities who collect and maintain personal information of individuals to secure such information and to provide notice to such individuals in the case of a breach of security involving such information ." This bill would define the term personal information; outline special requirements for information brokers; and assign specific responsibilities to the FTC to regulate commercial entities' data security policies and procedures for using and protecting personal information. S. 142 (Senator Marco Rubio), introduced on January 16, 2019, as the American Data Dissemination (ADD) Act of 2019, would "impose privacy requirements on providers of internet services similar to the requirement imposed on Federal agencies under the Privacy Act of 1974." This bill would require the FTC to submit recommendations for privacy requirements for internet service providers. S. 189 (Senator Amy Klobuchar), introduced on January 17, 2019, as the Social Media Privacy Protection and Consumer Rights Act of 2019, would "protect the privacy of users of social media and other online platforms." This bill would require commercial entities with an online platform to clearly disclose their practices for personal data collection and use prior to obtaining user consents. This bill also outlines enforcement of privacy requirements by the FTC and the attorney general of each state. S. 583 (Senator Catherine Cortez Masto), introduced on February 27, 2019, as the Digital Accountability and Transparency to Advance (DATA) Privacy Act, would provide "digital accountability and transparency." This bill would require commercial entities to clearly disclose its privacy practices for various collected data. This bill also would require the FTC to enforce privacy practices to ensure that the minimum requirements are satisfied. <3.2.3. Data Brokers> According to the FTC, data brokers are companies that collect consumers' personal information and resell or share that information with others. Data brokers collect personal information about consumers from a wide range of sources and provide it for a variety of purposes, including verifying an individual's identity, marking products, and detecting fraud. Because these companies generally never interact with consumers, consumers are often unaware of their existence, much less the variety of practices in which they engage. The FTC classifies data brokers into three categories: 1. Entities subject to the FCRA; 2. Entities that maintain data for marketing purposes; and 3. Non-FCRA covered entities that maintain data for non-marketing purposes that fall outside of the FCRA. The FCRA governs the activities of credit reporting agencies, such as Equifax, Experian, and TransUnion; entities furnishing information to credit reporting agencies; and individuals who use credit reports issued by credit reporting agencies. These entities subjected to the FCRA fall within the first of the three categories of data brokers listed above. However, the FCRA does not have privacy or data security provisions. Regarding the second and third categories of data brokers, the FTC report notes that "while the FCRA addresses a number of critical transparency issues associated with companies that sell data for credit, employment, and insurance purposes, data brokers within the other two categories remain opaque." Data brokerage companies include Acxiom, Cambridge Analytica, Corelogic, Datalogix, Epsilon, Exactis, ID Analytics, Intelius, PeekYou, Rapleaf, and Recorded Future in addition to the "big three" credit reporting agencies (Equifax, Experian, and TransUnion). Many data brokers, which are conducting lawful activities, are self-regulated. As depicted in Figure 3 , data brokerage companies purchase and aggregate information from various sources, which are also self-regulated. These sources include app developers, websites, and social media. As technological convergence continues to proliferate, more data will likely be generated and consumed. Aggregations of seemingly simple and benign pieces of data when examined together could expose highly personal aspects in detail. Data brokers and entities that collect data could significantly impact digital privacy especially if individuals remain unaware of activities pertaining to their personal data. <3.3. Data Security Issues> Congress may be interested in data and physical security aspects of converged technologies because ubiquitous access equates to more possible entry points for both authorized and unauthorized users. This is often referred to as increase in attack surface. As more converged devices become connected to each other and to the internet, the overall impact of a compromise increases, along with the possibility of a cascading effect of a cyberattack. In policies, the requirements and responsibilities of data protection may be addressed separately from privacy concerns associated with legal use of personal data. Data security, a component of cybersecurity, protects data from unauthorized access and use. Along with digital privacy, data security is a pertinent issue to technological convergence, which generates and consumes large volumes of data. Technological convergence poses a number of different types of potential data security concerns, including the following: potentially increased number of access points susceptible to cyberattacks, linkage to physical security, and theft of data. Increased connectivity generally translates to increased risk of cyberattack. Converged technologies, such as IoT devices, offer the users ubiquitous access: access from anywhere, at any time, using any device. While this is an extremely convenient characteristic, it also poses cybersecurity concerns. Multiple access points equate to increased points or opportunities for potential exploitation by malicious actors. This is often described as increased attack vectors, or broadening attack surface, which is a sum of attack vectors. The same entry points a user may use for remote access can be exploited by an adversary to steal personal information. From the data security perspective, this is a tradeoff to consider between convenience and vulnerability. Cybersecurity and physical security are directly linked through converged technologies. For example, when smart doors and smart locks are remotely controlled by a malicious actor through cyberattack, the physical security of that building also becomes compromised. The damage may not be limited to loss of digital content or information. Loss of personal data stored in the compromised location as well as personal security could be in jeopardy. Potential loss or theft of personal data may be a data security concern for converged technologies because IoT devices often do not employ strong encryption at the device or user interface level. Not implementing strong encryption may be intentional due to associated benefits it usually keeps the cost low, increases battery life of devices, minimizes memory requirements, reduces device size, and is easier to use or implement. This means, not only is the attack vector increased, but a system is also easier to break into. IoT devices may be the most vulnerable points of a system targeted by malicious actors for exploitation. Some experts note that IoT security currently lacks critical elements such as end-to-end security solutions, common security standards across the IoT industry, and customers' willingness to pay additional cost for enhanced security. <4. Congressional Considerations for Technological Convergence> With relatively few policies in place for specifically overseeing technological convergence, Congress may consider potential policy options to address the issues discussed in this report. The fundamental policy considerations to identifying options may be determining the role, if any, of the federal government in overseeing technological convergence, digital privacy, and data security. <4.1. Regulatory Considerations> Regulating technological convergence may entail policies for jurisdictional deconfliction, harmonization, and expansion to address blended or new categories of technology. Currently, aspects of converged technologies may be regulated by different agencies based on the individual technologies that compose the convergence, but not as a whole. Regulating a converged technology as a whole can also be challenging because the combinations of technologies may generate too many possible outcomes. When converged technologies establish a new domain and fall outside of existing regulatory jurisdictions, they are often left to self-regulate. Congress and the Administration could take a number of approaches in regulating technological convergence. Three potential approaches are discussed here. First, the federal government could continue to allow industry to self-regulate, especially where technology evolves quickly. This may promote innovative space, but relies on the industry to exercise responsible and accountable practices. Second, Congress and the Administration could maintain current regulatory jurisdiction but leverage a deconfliction or harmonization policy so that convergent technologies are regulated under one primary authority instead of potentially multiple authorities. Preserving existing regulatory jurisdiction may require minimal restructuring and allow relatively short timeline for implementation. While a deconfliction or harmonization policy could increase coordination, overlaying such policy on an existing regulatory framework may not present the most efficient process. Third, the Administration could consider expanding regulatory jurisdictions and authorities to include new and emerging convergent technologies that are self-regulated. This may require a complete overhaul of the technology regulatory framework, requiring congressional action and a relatively lengthy adaptation timeline for the affected industries. Some could also view such actions as extensive regulation that stifles innovation and commercial growth. On the other hand, this approach could present an opportunity to update policies on par with technology progressions and posture for emerging capabilities. <4.2. Digital Privacy Considerations> Federal data protection laws currently in place apply to specific types of data and have varied privacy and data security provisions. A federal law that comprehensively addresses digital privacy for all types of data is not in place. While illegal use of personal information (such as identity theft and fraud) is defined and enforced by federal agencies, legal use of data generated by users or converged technologies (such as social media and IoT) is not regulated to the same extent. Transparency into the activities of legal data brokers and collectors is limited. Congress may choose to define the role of the federal government overseeing digital privacy by introducing new comprehensive federal law(s) and/or by determining minimal required standards of digital privacy. An alternative option could be expanding existing digital privacy authorities. This could include deciding whether federal entities, such as the FTC, should have their rulemaking abilities clarified or expanded. An expanded or new federal digital privacy policy may require a variety of decisions by Congress. Two of many potential decisions pertaining to federal digital privacy policy are determining how data privacy and data security could be addressed legislatively and determining whether various types, or categories, of personal data should be treated equally or differently under varied guidance. <4.3. Data Security Considerations> Data security, as it pertains to technological convergence, may impact both the cyber and physical fronts. Some of the federal data protection laws currently in place have data security provisions, though they vary and may be focused predominantly on the cyber-aspect. This also means that different data security protocols apply to different types of data. For instance, the guidance for notifying users when personal data gets compromised is different for health, financial, and location data. Similar to the digital privacy considerations, Congress could begin by determining whether overarching legislation for data security is necessary. Congress may consider new legislation explicitly addressing data security concerns pertaining to technological convergence. Or, Congress may consider new legislation to expand existing cybersecurity missions to address data security issues. Data security is often considered as a component of cybersecurity, but protection of the data is equally important as safeguarding a network or a system. As with any security challenge, finding the right balance between convenience and security measures is a key component of an effective security policy. A data security policy that predominantly focuses on security measures to address potential vulnerabilities created by converged technologies could negate convenient features and beneficial capabilities, such as ubiquitous access, offered by the converged technologies. On the other hand, allowing maximum accessibility without a security measure exposes both the data and the system to risks. Not having an updated data security policy relies on existing cybersecurity measures to address potential vulnerabilities introduced by technological convergence. Congress may determine whether data privacy and data security should be addressed in one policy. Data privacy and data security are linked and complementary, especially for digital information. While two coupled topics could be addressed in a single policy, data privacy and data security are two distinct issues. Having separate complementary policies could potentially focus more clearly on specific aspects of each issue.

Technological convergence, in general, refers to the trend or phenomenon where two or more independent technologies integrate and form a new outcome. One example is the smartphone. A smartphone integrated several independent technologies—such as telephone, computer, camera, music player, television (TV), and geolocating and navigation tool—into a single device. The smartphone has become its own, identifiable category of technology, establishing a $350 billion industry. Of the three closely associated convergences—technological convergence, media convergence, and network convergence—consumers most often directly engage with technological convergence. Technological convergent devices share three key characteristics. First, converged devices can execute multiple functions to serve blended purpose. Second, converged devices can collect and use data in various formats and employ machine learning techniques to deliver enhanced user experience. Third, converged devices are connected to a network directly and/or are interconnected with other devices to offer ubiquitous access to users. Technological convergence may present a range of issues where Congress may take legislative and/or oversight actions. Three selected issue areas associated with technological convergence are regulatory jurisdiction, digital privacy, and data security. First, merging and integrating multiple technologies from distinct functional categories into one converged technology may pose challenges to defining regulatory policies and responsibilities. Determining oversight jurisdictions and regulatory authorities for converged technologies can become unclear as the boundaries that once separated single-function technologies blend together. A challenge for Congress may be in delineating which government agency has jurisdiction over various converged technologies. Defining policies that regulate technological convergence industry may not be simple or straightforward. This may further complicate how Congress oversees government agencies and converged industries due to blending boundaries of existing categories. Second, converged technologies collect and use personal and machine data which may raise digital privacy concerns for consumers. Data collection and usage are tied to digital privacy issues because a piece or aggregation of information could identify an individual or reveal patterns in one's activities. Converged or smart technologies leverage large volumes of data to try to improve the user experience by generating more tailored and anticipatory results. However, such data can potentially identify, locate, track, and monitor an individual without the person's knowledge. Such data can also potentially be sold to third-party entities without an individual's awareness. As the use of converged technologies continues to propagate, digital privacy issues will likely remain central. Third, data security concerns are often associated with smart devices' convenient ubiquitous features that may double as vulnerabilities exploited by malicious actors. Data security, a component of cybersecurity, protects data from unauthorized access and use. Along with digital privacy, data security is a pertinent issue to technological convergence. As converged devices generate and consume large volumes of data, multiple data security concerns have emerged: potentially increased number of access points susceptible to cyberattacks, linkage to physical security, and theft of data. Relatively few policies are in place for specifically overseeing technological convergence, and current federal data protection laws have varied privacy and data security provisions for different types of personal data. To address regulatory, digital privacy, and data security issues, Congress may consider the role of the federal government in an environment where technological evolution changes quickly and continues to disrupt existing regulatory frameworks. Regulating technological convergence may entail policies for jurisdictional deconfliction, harmonization, and expansion to address blended or new categories of technology. One approach could be for Congress to define the role of federal government oversight of digital privacy and data security by introducing new legislation that comprehensively addresses digital privacy and data security issues or by expanding the current authorities of federal agencies. When considering new legislation or expanding the authorities of federal agencies, three potential policy decisions are (1) whether data privacy and data security should be addressed together or separately, (2) whether various types of personal data should be treated equally or differently, and (3) which agencies should be responsible for implementing any new laws.

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<1. Introduction> Election security is one of the most prominent policy challenges facing Congress. A November 2019 warning from the heads of several federal agencies illustrates the interdisciplinary and ongoing nature of the threat to American elections. According to the joint statement, in the 2020 election cycle, "Russia, China, Iran, and other foreign malicious actors all will seek to interfere in the voting process or influence voter perceptions. Adversaries may try to accomplish their goals through a variety of means, including social media campaigns, directing disinformation operations or conducting disruptive or destructive cyber-attacks on state and local infrastructure." These are just the latest challenges in securing American elections. Traditionally, election administration emphasizes policy goals such as ensuring that all eligible voters, and only eligible voters, may register and cast ballots; that those ballots are counted properly; and that the voting public views that process as legitimate and transparent. Preserving election continuity is a chief concern. Election officials therefore have long prepared contingency plans that address various risks, such as equipment malfunctions, power outages, and natural disasters. These traditional concerns remain, but have taken on new complexity amid foreign interference in U.S. elections. In addition to managing traditional security concerns about infrastructure and administrative processes (e.g., counting ballots), mitigating external threats to the accuracy of information voters receive, particularly from foreign sources, is a potential challenge for political campaigns, election administrators, and the public. Addressing any one of these topics might involve multiple areas of public policy or law. Doing so also can involve complex practical challenges about which levels of government, or agencies, are best equipped or most appropriate to respond. How those entities can or should interact with political campaigns, the private sector, and voters, are also ongoing questions. Technical complexity in some areas, such as cybersecurity, and the federal structure of shared national, state or territorial, and local responsibility for administering federal elections make election security even more challenging. Election security in general appears to be a shared policy goal, but debate exists in Congress about which policy issues and options to pursue. Debate over the scope of the federal government's role in election security shapes much of that debate. State, territorial, and local governments are responsible for most aspects of election administration, including security. This report provides congressional readers with an overview that includes how campaign and election security has developed as a policy field; recent legislative activity, especially bills that have advanced beyond introduction; federal statutes and agencies that appear to be most relevant for campaign and election security; state, territorial, or local roles in administering elections, and federal support for those functions; and highlights of recent policy debates, and potential future questions for congressional consideration. <1.1. Defining Election Security> There is no single definition of "election security," nor is there necessarily agreement on which topics should or should not be included in the policy debate. Broadly speaking, election security involves efforts to ensure fair, accurate, and safe elections. This can include a variety of activities that happen before, during, and after voters cast their ballots. A narrow definition of election security might address only efforts to protect traditional election infrastructure, such as voter registration databases, voting machines, polling places, and election result tabulations. More expansive definitions might also address issues affecting candidates and campaigns. This includes, for example, regulating political advertising or fundraising; providing physical or cybersecurity assistance for campaigns; or combating disinformation or misinformation in the political debate. The policy debates discussed herein can affect different kinds of entities uniquely. Perhaps most notably, security concerns affecting campaigns can differ from those for safeguarding elections and voting. Campaigns in the United States are about persuading voters in an effort to win elections. They are private, not governmental, operations and are subject to relatively little regulation beyond campaign finance policy. Elections are more highly regulated, although specific practices can vary, as their administration is primarily a state- or local-level responsibility. Provisions in state or local law, and, to a lesser degree, federal law, regulate how voters cast ballots and who may do so. Some security discussions include issues related to voter access, while others view access as a separate elections policy matter. This report briefly notes that access can be a component of campaign and election security policy debates, but the report does not otherwise address access issues. This report does not attempt definitively to resolve ongoing policy debates about what campaign and election security entails or should entail, nor does it fully address all aspects of the policy issues discussed. Instead, it provides congressional readers with background information to consider that debate and decide whether or how to pursue legislation (including appropriations) or oversight. Because all the topics noted above and others discussed throughout the report have been components of the recent congressional debate over how to safeguard American campaigns, elections, and voting, this report uses the general term campaign and election security . <2. Scope of the Report> This report discusses federal agencies, statutes, and policies designed to prevent or respond to deliberate domestic or foreign security threats to campaigns, elections, or voting. Concepts discussed in the report also have implications for some unintentional threats, such as natural disasters or other emergencies that could affect campaigns, elections, or voting. Legislation cited in the report contains specific references to campaign and election security. This includes bill text that uses variations of terms such as campaign , election , or vote near variations of the terms interference or security . Some readers might view areas addressed herein as more or less directly related to campaign or election security, and alternative methodologies could yield other bills or policy topics for consideration. The report does not include detailed attention to more traditional aspects of campaign finance, election administration, or voting, particularly voter mobilization. For example, the report discusses Help America Vote Act provisions that authorize funding states may use to help secure elections, but not provisions that authorize funding for the Election Assistance Commission generally. Similarly, the report briefly discusses Voting Rights Act provisions that prohibit voter intimidation, but it does not discuss other federal statutes enacted to make registration and voting easier. In addition, the report briefly notes lobbying statutes that might be relevant for regulating certain corporate or foreign activity related to U.S. election interference, but it does not substantially address lobbying as a policy area. The report emphasizes domestic implications of campaign and election security. This includes attention to protections for U.S. campaigns and elections from the effects of foreign disinformation and misinformation efforts. The Appendix at the end of this report includes sanctions or immigration legislation that specifically references interference in U.S. elections, and which has advanced beyond introduction during the 116 th Congress. However, foreign policy implications of such interference, or a discussion of offensive operations and tactics that the United States might or might not use against foreign adversaries, are otherwise beyond the scope of this report. Because of the still-developing and complex policy challenges surrounding campaign and election security, other areas of law, policy, or practice might also be relevant but are not addressed here. The report references other CRS products that contain additional discussion of several such topics. The report does not provide legal or constitutional analysis. It also does not attempt to catalog all alleged or established instances of campaign and election interference or security concerns, or to independently evaluate allegations. <3. Recent Legislative Activity> Highlights of recent legislative activity include the following. Additional discussion appears throughout the report. The 115 th Congress (2017-2019) appropriated $380 million for FY2018 for improvements to the administration of federal elections, including upgrades to election technology and security. The 116 th Congress (2019-2021) appropriated $425 million for FY2020 in the consolidated appropriations bill ( H.R. 1158 ; P.L. 116-93 ) enacted in December 2019. The " Funding for States After the 2016 Election Cycle " section of this report contains additional detail. The 116 th Congress enacted S. 1790 ( P.L. 116-92 ), the FY2020 National Defense Authorization Act (NDAA), in December 2019. The legislation contains several provisions related to campaign and election security. Table 1 below lists bills that have passed at least one chamber. The Appendix in this report briefly summarizes 116 th Congress legislation containing campaign and election security provisions that has advanced beyond introduction. In addition, during the 116 th Congress, committees in both chambers have held hearings on these and related campaign and election security topics. The Committee on House Administration and Senate Committee on Rules and Administration exercise primary jurisdiction over federal elections. Several other committees oversee related areas, such as intelligence or voting rights issues. Another CRS product contains additional discussion of committee roles in federal campaigns and elections generally. <4. Development of Federal Role in Campaign and Election Security> Foreign interference is only the highest-profile and latest campaign and election security policy challenge. Physical security, to protect voters, ballots, and vote counts, has been an ongoing concern. Specifically, in modern history, the federal government's first role in securing elections was primarily about access and voting rights. In 1965, Congress enacted the Voting Rights Act (VRA), which protects voters against race- or color-based discrimination in registration, redistricting, and voting. More explicitly related to security, the VRA prohibits intimidation, threats, or coercion in voting. Congress primarily tasked the U.S. Department of Justice (DOJ) with enforcing the statute and related criminal provisions. Federal law enforcement agencies, especially the Federal Bureau of Investigation (FBI), also support states and localities which retain primary responsibility for election administration in the United States in investigating election crimes and providing physical security at the polls. The federal role in election administration expanded after the disputed 2000 presidential election. In response, Congress authorized federal funding for the states, the District of Columbia, and territories to make improvements to the administration of federal elections. It also created the Election Assistance Commission (EAC) to administer those funds. Congress charged the agency with overseeing a voluntary voting system testing and certification program, and providing states and localities with voluntary election administration guidance, research, and best practices. These developments notwithstanding, securing campaigns and elections historically was not a major policy topic at the federal level, as most security matters were reserved for state- or local-level policy. The policy environment changed dramatically during the 2016 election cycle, when media reports and subsequent congressional and federal-agency investigations documented Russian government interference with that year's U.S. presidential election. According to Special Counsel Robert Mueller's report, these interference efforts targeted private technology firms that provide election-related software and hardware; state and local government entities; and a major political party and nominee. The investigations did not find that this activity was a determinative factor in the election outcome. However, the possibility of such activity, and of additional efforts to affect political attitudes or participation, remains. In July 2018 remarks at the Hudson Institute, then-Director of National Intelligence (DNI) Dan Coats, a former Senator, said that the Intelligence Community (IC) reported "aggressive attempts to manipulate social media and to spread propaganda focused on hot-button issues that are intended to exacerbate socio-political divisions" in elections. To the extent that those efforts affect campaigns including campaign security, or the information voters receive from campaigns campaign finance policy and law could be relevant. The Federal Election Campaign Act (FECA) originated in the 1970s amid concerns about limiting domestic political corruption. The act also contains a wide-ranging prohibition on foreign-national involvement in federal, state, or local U.S. elections. These provisions, and disclosure and disclaimer requirements for all "persons" who raise or spend funds to influence federal elections, are key elements of regulating both domestic and foreign efforts to affect political fundraising, spending, and advertising. Political committees (campaigns, parties, and political action committees [PACs]) are responsible for their own security measures, although, as noted elsewhere in this report, federal agencies (or private-sector entities) provide assistance in some cases. Today, election security is one of the most rapidly evolving policy issues facing Congress and the federal government. Both chambers have passed legislation on the topic during the 116 th Congress. Multiple House and Senate committees have held investigative and oversight hearings. Congress and the Obama and Trump Administrations have tasked federal agencies with new responsibilities for supporting states and thwarting future possible interference. The Intelligence Community has warned that countering foreign interference in U.S. elections "will require a whole-of-society approach, including support from the private sector and the active engagement of an informed public." <5. Selected Federal Statutes> The U.S. Constitution and federal statutes regulate the division of governmental responsibility for elections. No existing statute is devoted specifically to election security, although, as discussed below, some statutes address aspects of the topic. Most broadly, the Constitution's Elections Clause assigns states with setting the "Times, Places and Manner" for House and Senate elections, and also permits Congress to "at any time make or alter such Regulations." As discussed in the " State and Local Role in Election Security " section of this report, the federal government thus plays a largely supporting role in election administration generally, and in election security specifically. Two election-specific statutes can be particularly important for campaign and election security. Relevant legislation typically proposes amending one or both. First, the Help America Vote Act (HAVA, 2002) is the only federal statute devoted to assisting states with election administration. Congress relied on HAVA to establish the Election Assistance Commission, provide for a voluntary federal voting system testing and certification program, and authorize federal funding states could use to help secure their elections. Second, FECA's disclaimer and disclosure provisions, and the prohibition on foreign national fundraising or spending in U.S. elections, can be particularly relevant for concerns about foreign interference in U.S. elections. Several other statutes could be relevant in specific cases. Table 2 below provides a brief summary. <6. Selected Federal Agencies> No single federal agency has responsibility for providing election or campaign security. Only two federal agencies the Election Assistance Commission (EAC) and the Federal Election Commission (FEC) are devoted entirely to campaigns and elections. The EAC administers congressionally appropriated federal funding, oversees a voluntary voting system testing and certification program, and provides voluntary election administration guidance, research, and best practices. The FEC is responsible for administration and civil enforcement of FECA. Other departments and agencies, primarily with responsibilities for other areas of public policy, support campaign and election security in specific cases. Some agency roles developed from a January 2017 "critical infrastructure" designation. Additional detail appears below. Additional information about agency roles appears below, and in the " Coordination By and Among Selected Federal Agencies " section of this report. <6.1. Election Assistance Commission (EAC)> The EAC is the only federal agency focused specifically on assisting states with election administration. Congress has charged the EAC with administering funding states may use to help secure their elections. The EAC also provides states and localities with election administration assistance, adopting voluntary voting system guidelines (VVSG, discussed below), providing for systems to be tested to the VVSG, and certifying systems as meeting the guidelines. It also conducts research about state election administration and voting, and shares information about best practices. Although not mandated by Congress, the EAC also participates in activities related to the designation of election systems as critical infrastructure, such as serving on the Election Infrastructure Subsector Government Coordinating Council (EIS-GCC) and on the EIS-GCC executive committee. <6.2. Federal Election Commission (FEC)> The FEC enforces civil compliance with FECA provisions and commission regulations regarding campaign finance. This includes activities related to fundraising, spending, advertising disclaimers, and financial disclosure reports. These provisions are relevant for some aspects of security affecting political candidates or campaigns, parties, political action committees (PACs), or other entities (e.g., independent spenders that are not political committees) that raise or spend funds to affect federal campaigns. The FEC does not regulate election administration or voting matters. <6.3. Department of Homeland Security (DHS)> DHS provides states and localities with assistance mitigating risks to their election systems, especially concerning cybersecurity. DHS is the sector-specific agency (SSA) responsible for securing the election infrastructure subsector. Additional information appears later in this report. DHS's Cybersecurity and Infrastructure Security Agency (CISA) is responsible for most of the department's election security activities, including the Election Security Initiative (ESI). DHS protects major presidential candidates through the U.S. Secret Service (USSS). The Secret Service is also the lead security agency for "national special security events" (NSSEs), such as presidential nominating conventions. <6.4. Department of Justice (DOJ)> The Department of Justice enforces several federal statutes, discussed above, that could be relevant for campaign and election security. Within DOJ, the FBI is the lead federal law enforcement agency supporting state and local election administration, and is the lead federal agency in investigating and prosecuting foreign influence campaigns. <6.5. Intelligence Community (IC)> Several agencies contribute to or produce intelligence about election security threats. For example, a declassified version of a January 2017 Intelligence Community Assessment (ICA) documenting Russian attempts to influence 2016-cycle U.S. elections contained information and analysis from the CIA, FBI, and NSA. The " Coordination By and Among Selected Federal Agencies " section below provides additional discussion of the IC campaign and election security roles. <6.6. Selected Other Federal Agencies> The State Department's Global Engagement Center (GEC) is charged with coordinating federal efforts to counter foreign propaganda and disinformation efforts aimed at undermining U.S. national security interests. The GEC partners with other U.S. government agencies, including those within the State Department, at the Defense Department, and elsewhere. The Departments of Justice, State, and the Treasury all can be involved in administering sanctions for election interference. As noted previously, sanctions policy generally is beyond the scope of this report. Via the FY2020 NDAA bill ( S. 1790 ; P.L. 116-92 ), Congress assigned various agencies, especially DHS and the DNI, additional campaign and election security responsibilities. Most provisions involve providing Congress or federal or state agencies with information about election interference. The Appendix of this report provides additional detail. Table 3 provides a brief overview of selected agency roles in campaign and election security. <6.7. Coordination By and Among Selected Federal Agencies> Because no single federal agency is solely responsible for campaign and election security and because state and local governments have most practical responsibility for election security coordination among agencies and governments is an ongoing congressional concern. Adding to the complexity of the election security challenge, government agencies, in some cases, both support and regulate private actors such as political campaigns and sometimes rely on those private entities to provide threat information. Highlights of federal coordination issues appear below. Because some of these relationships appear to be in development, some information about agency coordination, or the lack thereof, remains unclear in the public record. Similarly, some information about coordination among intelligence-gathering agencies is publicly unavailable, beyond the scope of this report, or both. As such, other formal or information coordination among or by agencies likely occurs but is not reflected here. <6.7.1. Department of Homeland Security Coordination Roles> DHS takes a lead role in coordinating the federal support for campaign and election security. Most of the DHS coordination role stems from a January 2017 "critical infrastructure" designation that treats election infrastructure as an essential service requiring federal support and protection. The designation established the Elections Infrastructure Subsector (EIS) within the Government Facilities Sector, which includes various government buildings and equipment. As a result of the critical infrastructure designation, DHS prioritizes support for the subsector, including to those state and local election jurisdictions that choose to accept such assistance. This includes sharing information about threats; and conducting cyber hygiene and risk and vulnerability assessments. The critical infrastructure designation applies to physical and technical resources related to elections, such as communications technology, voting equipment, and polling places. It does not apply to political campaigns. The designation does not give DHS regulatory authority over federal elections. DHS serves as the Sector-Specific Agency (SSA) for the EIS. As SSA, the agency plays various coordinating roles among public and private entities, as highlighted below. As SSA, DHS coordinates information sharing among various governmental and nongovernmental entities (e.g., vendors) responsible for election administration. In this role, DHS also coordinates activities for the EIS Government Coordinating Council (GCC). The EIS-GCC includes representatives from DHS, EAC, and state and local governments. DHS also works with a Sector Coordinating Council (SCC), which consists of industry representatives (e.g., voting-machine manufacturers). DHS also funds the Elections Infrastructure Information Sharing and Analysis Center (EI-ISAC), a voluntary membership organization of state and local election jurisdictions run by the private Center for Internet Security. The EI-ISAC coordinates security information sharing among these entities. <6.7.2. Election Assistance Commission Coordination Roles> As the only federal agency devoted specifically to election administration, the EAC helps facilitate communication between state or local election administrators and other federal agencies, and vice versa. EAC commissioners serve on the EIS Government Coordinating Council (EIS-GCC), coordinated by DHS, and on the EIS-GCC executive committee. <6.7.3. Intelligence Community Coordination Roles> As noted previously, the IC includes more than a dozen agencies from throughout the federal government. Highlights of the IC role in coordination surrounding campaign and election security appear below. In July 2019, then-DNI Coats created an IC Election Threats Executive (ETE) position to serve as the DNI's principal elections adviser and to coordinate IC election security work. Coats also directed IC agencies to assign a senior executive to serve as the point-of-contact for that agency's election security work and to serve on a new IC Election Executive and Leadership Board. U.S. Cyber Command and the NSA monitors foreign threats to U.S. elections. This reportedly includes a recently established Election Security Group. In addition, the FY2020 NDAA bill requires the DNI to appoint a national counterintelligence officer within the National Counterintelligence and Security Center to coordinate election security counterintelligence, particularly regarding foreign interference and equipment issues. <6.7.4. Coordination Roles and Selected Other Federal Agencies> In addition to coordination on IC threat assessments noted above, multiple federal agencies have collaborated on campaign and election security educational resources for political committees, election administrators, or voters. Agencies also have issued joint warnings. The State Department's Global Engagement Center (GEC) is charged with coordinating federal efforts to counter foreign propaganda and disinformation. The State Department also works with the Treasury Department and Justice Department to administer sanctions for election interference. <6.7.4.1. The FY2020 NDAA and Coordination Roles> The FY2020 NDAA bill ( S. 1790 ; P.L. 116-92 ), enacted in December 2019, requires the DNI to "develop a whole-of-government strategy for countering the threat of Russian cyberattacks and attempted cyberattacks against election systems and processes in the United States." Congress specified that the strategy should include protecting federal, state, and local election systems, voter registration databases, voting tabulation equipment, and systems for transmitting election results. Congress also required the DNI to develop the strategy "in coordination" with the Secretaries of Defense, Homeland Security, State, and the Treasury, and with the Directors of the CIA and FBI. <6.8. Federal Agency Roles and Campaign Security> Perhaps because the 2017 critical infrastructure designation does not apply to political campaigns or other political committees, it appears that no federal agency has specific responsibility for coordinating security preparations for these entities. However, federal law enforcement agencies, particularly the FBI, can and do receive reports of, and investigate, suspected criminal activity. In preparation for the 2020 elections, the FBI also established a "Protected Voices" program that provides political campaigns, private companies, and individuals with information about how to guard against and respond to cyberattacks and foreign influence campaigns. In addition, DHS (CISA), the FBI, and ODNI have jointly briefed some 2020 federal political campaigns on security threats and best practices. <7. Federal Election Security Guidance> Federal election law takes a mostly voluntary approach to election security. Congress has set some security requirements for federal elections, such as directing election officials to provide a certain level of technological security for their HAVA-mandated computerized voter registration lists. Most election security standards are set at the state or local levels. Some examples of the voluntary election security guidance the federal government provides are the research, best practices, and technical assistance described in the " Selected Federal Agencies " section of this report. HAVA also charges the EAC with assistance from the agency's advisory bodies and NIST with developing voluntary voting system guidelines (VVSG), accrediting laboratories to test voting systems to the VVSG, and certifying systems as meeting the VVSG. The proposed update to the VVSG that was in development as of this writing (VVSG 2.0) includes some security-related principles and guidelines, such as ensuring that voting systems are auditable, limiting and logging access to voting systems, and preventing or detecting unauthorized physical access to voting system hardware. Participation in the federal voting system testing and certification program is voluntary under federal law. The testing and certification program covers the "voting system" as defined by HAVA, which does not include some components of the election system, such as voter registration databases and election night reporting systems. Changes to one part of a voting system, such as updating software to patch security vulnerabilities, might require recertification of the system under the policies in effect as of this writing, and updates to the VVSG require approval by a three-vote majority of the EAC's commissioners. <8. Federal Funding for Securing Election Systems> Congress has responded to the threats that emerged during the 2016 election cycle, discussed above, in part with funding. Since the 2016 elections, it has provided funding for helping secure election systems both to states, territories, and the District of Columbia (DC), and to federal agencies. <8.1. Funding for States After the 2016 Election Cycle> The Consolidated Appropriations Act, 2020 ( H.R. 1158 ; P.L. 116-93 ), and the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), included $425 million and $380 million, respectively, for payments under provisions of HAVA that authorize funding for general improvements to the administration of federal elections. The explanatory statements accompanying the bills listed the following election security-specific purposes as potential uses of the funds: replacing voting equipment that only records a voter's intent electronically with equipment that utilizes a voter-verified paper record; implementing a post-election audit system that provides a high level of confidence in the accuracy of the final vote tally; upgrading election-related computer systems to address cyber vulnerabilities identified through DHS or similar scans or assessments of existing election systems; facilitating cybersecurity training for the state chief election official's office and local election officials; implementing established cybersecurity best practices for election systems; and funding other activities that will improve the security of elections for federal office. The 50 states, DC, American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands were eligible for both FY2018 and FY2020 payments. The Commonwealth of the Northern Mariana Islands (CNMI) was eligible for FY2020 funding. Each recipient was guaranteed a minimum payment amount each year it was eligible $3 million for each of the 50 states and DC and $600,000 per eligible territory with the remainder of the appropriated funding distributed according to a formula based on voting-age population. Recipients are required to provide a 5% match for the FY2018 funds within two years of receiving a federal payment and a 20% match for the FY2020 funding. The EAC, which was charged with administering the payments, reported that all of the FY2018 funds were requested by July 16, 2018, and disbursed to the states by September 20, 2018. Each state has five years to spend the funds, according to the EAC, and must report on its spending each fiscal year. The EAC posts links to the states' reports and spending plans on its website and issues its own overview reports of state spending. <8.2. Funding for Federal Agencies After the 2016 Election Cycle> As noted in the " Selected Federal Agencies " section of this report, multiple federal agencies are involved in helping secure election systems. Congress has designated some of the funding it has appropriated to such agencies specifically for election system security. For example, following the designation of election systems as critical infrastructure in January 2017, the report language for DHS appropriations measures has specified funding for the department's election security initiative. The explanatory statement for the FY2018 spending bill also directed the FBI to use some of its funding to help counter threats to democratic institutions and processes. Agencies may also spend some of the funding they receive for more general purposes on activities related to election system security. The U.S. Department of Defense's (DOD's) Defense Advanced Research Projects Agency (DARPA) has provided funding under its System Security Integrated Through Hardware and Firmware (SSITH) program to advance development of a secure, open-source voting system, for example, and the EAC applies some of its operational funding to the federal voting system testing and certification program described in the " Federal Election Security Guidance " section of this report. <9. State and Local Role in Election Security> Some threats to U.S. elections including both intentional interference efforts and the unintended threats posed by errors and natural disasters involve the state and local systems used to administer elections. Other election security threats involve efforts to spread disinformation about elections or the integrity of the electoral process. States and localities may play a role in countering both types of threat. First, states and localities take the lead on defending their election systems. As noted previously, states and localities have primary responsibility for administering elections in the United States. The federal government has provided some funding and technical support to help them secure the systems they use to run elections, but states and localities have primary responsibility for ensuring that their systems are physically and technologically secure. That includes primary responsibility for funding election system security measures. Securing election systems may involve capital expenditures, such as replacing voting machines, that exceed funding provided by Congress. It may also involve ongoing costs from identifying and addressing emerging security threats to renewing software licenses, paying election security staff, and conducting post-election audits that extend beyond the period for which federal funding is available. Such expenses are covered, if they are covered, by states and localities. State and local responsibility for election system security also includes primary responsibility for making and implementing most decisions about how to secure election systems. Federal law sets some general standards for the administration of elections, such as the voter registration list digitization requirement noted in the " Federal Election Security Guidance " section of this report. States and localities decide within the broad parameters set by such general standards which election equipment and procedures to use and how to mitigate risks to them. They choose, for example, whether to use electronic devices to capture or count votes; whether, when, and how to conduct post-election audits; whether and how to set security standards for election equipment vendors; whether to have in-house security staff in local jurisdictions or rely on state or vendor IT support; which cybersecurity tools and procedures to use; whether and how to train election officials and poll workers on election security; how to secure election materials between elections and ensure a secure physical chain of custody on Election Day; and what cyber and physical security standards to set for election equipment. Second, states and localities can help combat disinformation or misinformation about elections or the integrity of the electoral process. They can, for example, use official websites and social media accounts to share accurate information about elections or counter false information; and help educate the public about the steps they take to safeguard the electoral process. States also can work through their professional associations using initiatives such as a public education campaign launched by the National Association of Secretaries of State (NASS) in November 2019 to help direct voters to trustworthy sources of election information. These efforts might occur as part of or in parallel with responses to disinformation or misinformation by the federal government or private entities like social media companies. States might partner with social media companies to remove posts containing election disinformation, for example, or adopt disclosure requirements that supplement or override the companies' policies on digital political advertising. <10. Selected Recent Policy Issues for Congress> Table 4 below briefly summarizes selected policy issues and options that have shaped recent policy debates in Congress. In addition, the Appendix at the end of this report briefly summarizes legislation primarily devoted to campaign and election security that has advanced beyond introduction during the 116 th Congress. The table reflects recent policy debates, but is not intended to be exhaustive. Some observers might consider other issues not reflected here to be relevant for campaign and election security. <11. Concluding Observations> Campaign and election security are developing fields that cross policy and disciplinary boundaries. This complexity is reflected in the various statutes, agencies, and congressional committees that share responsibility for policymaking and administrative matters relevant for security U.S. campaigns and elections. Questions such as those that follow reflect themes discussed throughout this report. These and other questions could help congressional readers decide whether they want to maintain the status quo, appropriate funds, or pursue oversight or legislation. Federal R ole. A key question for Congress is whether, where, and how it chooses to be involved in campaign and election security. Most broadly, this potentially includes how to define this rapidly developing policy area, and in so doing, considering which issues are most appropriately addressed at the federal level versus at the state or local levels. This report has emphasized the federal role because those topics are most relevant for Congress. As the report also explains, states, localities, and territories are responsible for making many of their own election security decisions just as political campaigns, parties, and PACs are responsible for their own security. Therefore, there are important debates about what campaign and election security includes that the federal government can influence, but that are primarily addressed below the federal level, in the private sector, or both. Examples include, but are not limited to, how election security might affect voter access, and vice versa; whether states require voter identification at the polls and whether or to what extent alleged vote fraud exists; how much and on what jurisdictions choose to spend available funds; and whether states, localities, or political campaigns and parties have sufficient resources to secure their elections or organizations. Communication. Does Congress want to encourage or require additional information sharing about campaign and election security matters between the federal government and nonfederal elections agencies? Similarly, do state, territorial, and local elections officials feel that they have or need clear points of contact within federal agencies, and do they know which agencies to contact in various circumstances? If it determines that the status quo is inadequate, does Congress want to encourage or require different reporting protocols, agency outreach, etc.? Coordination. Various agencies have reported to Congress that they have improved coordination among themselves, particularly through working groups or task forces. Less clear, at least from publicly available information, is specifically how such coordination works and whether current coordinating mechanisms are sufficient or whether agencies need additional resources or mechanisms to improve coordination. If it determines that the status quo is inadequate, does Congress want to exercise oversight in this area, provide additional information-sharing authorities, funding, etc., or does it consider current coordination authorities and mechanisms sufficient? Sectors. Much of the federal government's attention to campaign and election security appears to emphasize outreach to election administrators in states, territories, and localities. With respect to the private sector (such as political campaigns and equipment manufacturers), is federal agency support sufficient? To what extent are information-sharing practices among federal agencies and the private sector (or voters) similar to or different from those that shape communication between federal agencies and state, territorial, or local governments? If it determines that the status quo is inadequate, does Congress want to encourage or require additional federal agency support for nongovernmental entities in campaign and election security, or reporting requirements for those entities to the federal government? Voters. Some federal public education campaigns, such as those to counter disinformation in elections, are aimed at individual voters. Overall, however, much of the federal role in campaign and election security emphasizes communication among government agencies or, in some cases, the private sector. If it determines that the status quo is inadequate, does Congress want to task federal agencies and if so, which ones with additional responsibility for educating voters about campaign and election security; to provide funding for nongovernmental organizations to do so, etc.? The scope of potential campaign and election security threats, and the federal government's role in responding to those threats, has changed substantially in less than five years. The foreign interference revealed during the 2016 cycle and widely reported to be an ongoing threat has renewed congressional attention to campaign and election security and raised new questions. Whatever Congress determines about whether these or other questions are relevant for its consideration of campaign and election security policy, the issue is likely to remain prominent for the foreseeable future. <11.1. Appendix. Legislation Related to Campaign and Election Security That Has Advanced Beyond Introduction, 116th Congress>

In the United States, state, territorial, and local governments are responsible for most aspects of selecting and securing election systems and equipment. Foreign interference during the 2016 election cycle—and widely reported to be an ongoing threat—has renewed congressional attention to campaign and election security and raised new questions about the nature and extent of the federal government's role in this policy area. This report provides congressional readers with a resource for understanding campaign and election security policy. This includes discussion of the federal government's roles; state or territorial responsibilities for election administration and election security; an overview of potentially relevant federal statutes and agencies; and highlights of recent congressional policy debates. The report summarizes related legislation that has advanced beyond introduction during the 116 th Congress. It also poses questions for consideration as the House and Senate examine whether or how to pursue legislation, oversight, or appropriations. In the 116 th Congress, the FY2020 National Defense Authorization Act (NDAA; S. 1790 ; P.L. 116-92 ), enacted in December 2019, contains several provisions related to campaign and election security. Most provisions involve providing Congress or federal or state agencies with information about election interference. It also requires the Director of National Intelligence, in coordination with several other agencies, to develop a strategy for countering Russian cyberattacks against U.S. elections. In addition, the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ; H.R. 1158 ), also enacted in December 2019, includes $425 million for payments to states, territories, and the District of Columbia to make general improvements to the administration of federal elections, including upgrades to election technology and security. As of this writing, 116 th Congress legislation that has advanced beyond introduction in at least one chamber includes H.R. 1 ; H.R. 753 ; H.R. 1158 ; H.R. 2500 ; H.R. 2722 ; H.R. 3351 ; H.R. 3494 ; H.R. 3501 ; H.R. 4617 ; H.R. 4782 ; H.R. 4990 ; S. 482 ; S. 1060 ; S. 1321 ; S. 1328 ; S. 1589 ; S. 1790 ; S. 1846 ; S. 2065 ; and S. 2524 . Other bills also could have implications for campaign and election security even though they do not specifically reference the topic (e.g., those addressing cybersecurity generally or voter access). Several congressional committees also have held legislative or oversight hearings on the topic. Federal statutes—such as the Help America Vote Act (HAVA); Federal Election Campaign Act (FECA); and the Voting Rights Act (VRA)—all contain provisions designed to make campaign finance, elections, or voting more secure. Several federal agencies are directly or indirectly involved in campaign and election security. These include, but are not limited to, the Department of Defense (DOD); Department of Homeland Security (DHS); Department of Justice (DOJ); Election Assistance Commission (EAC); and Federal Election Commission (FEC). Securing federal elections is a complex policy challenge that crosses disciplinary lines. Some of the factors shaping that complexity include divisions of authority between the federal and state (or territorial or local) governments; coordination among federal agencies, and communication with state agencies; funding; changing elections technology; and the different needs of different sectors, such as campaigns, administrators, and vendors. This report does not attempt to resolve ongoing policy debates about what campaign and election security should entail. The report cites other CRS products that contain additional discussion of some of the topics discussed herein. The report does not address constitutional or legal issues.

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<1. Introduction> Pensions for civilian federal employees are provided through two programs, the Civil Service Retirement System (CSRS) and the Federal Employees' Retirement System (FERS). CSRS was authorized by the Civil Service Retirement Act of 1920 (P.L. 66-215) and FERS was established by the Federal Employees' Retirement System Act of 1986 ( P.L. 99-335 ). Under both CSRS and FERS, employees and their employing agencies make contributions to the Civil Service Retirement and Disability Fund (CSRDF), from which pension benefits are paid to retirees and their surviving dependents. Retirement and disability benefits under FERS are fully funded by employee and employer contributions and interest earned by the bonds in which the contributions are invested. The cost of the retirement and disability benefits earned by employees covered by CSRS, on the other hand, are not fully funded by agency and employee contributions and interest income. The federal government therefore makes supplemental payments each year into the civil service trust fund on behalf of employees covered by CSRS. Even with these additional payments into the trust fund, however, CSRS pensions are not fully pre-funded. Prior to 1984, federal employees did not pay Social Security payroll taxes and did not earn Social Security benefits. The Social Security Amendments of 1983 ( P.L. 98-21 ) mandated Social Security coverage for civilian federal employees hired on or after January 1, 1984. This change was made in part because the Social Security system needed additional cash contributions to remain solvent. Enrolling federal workers in both CSRS and Social Security, however, would have resulted in duplication of some benefits and would have required employee contributions equal to more than 13% of workers' salaries. Consequently, Congress directed the development of the FERS, with Social Security as the cornerstone. The FERS is composed of three elements: (1) Social Security, (2) the FERS basic retirement annuity and the FERS supplement, and (3) the Thrift Savings Plan (TSP). Most permanent federal employees initially hired on or after January 1, 1984, are enrolled in the FERS, as are employees who voluntarily switched from CSRS to FERS during "open seasons" held in 1987 and 1998. <2. Fundamentals of Pension Plan Financing> Retirement plans are classified as either defined benefit (DB) plans or defined contribution (DC) plans. In a DB plan, the retirement benefit typically is based on an employee's salary and years of service. Under federal law, a DB plan must offer participants the option to take their benefit as a life annuity. A DC plan for example, a 401(k) is much like a savings account maintained by the employer on behalf of each participating employee. The employer or the employee or both contribute to an account, which is invested in assets such as stocks and bonds. In some DC plans, the amount of the employer contribution depends on how much the employee contributes from his or her pay. When the worker retires, he or she receives the balance in the account, which is the sum of all the contributions that have been made plus interest, dividends, and capital gains (or losses). This is usually paid as a lump-sum, but the employee sometimes has the option to receive benefits as a series of fixed payments over a period of years or as an annuity. An important difference between DB plans and DC plans is that the employer bears the financial risk in a DB plan, whereas the employee bears the financial risk in a DC plan. In a DB plan, the employer promises to provide retirement benefits equal to a certain dollar amount or a specific percentage of the employee's pay. Under federal law, employers in the private sector are required to pre-fund these benefits by setting aside money in a trust fund, which is typically invested in stocks, bonds, and other assets. The employer is at risk for the full amount of retirement benefits its employees have earned. If the assets held in the pension fund are worth less than the present value of the benefits that have been accrued under the plan, the employer is required by law to make up this deficit called an unfunded liability through additional contributions over a period of years. In a DC plan, it is the employee who bears several types of risk, including the risk that markets will decline ( market risk ), the risk that specific investments he or she chooses will fall in value ( investment risk ), and the risk that the employee may outlive their retirement assets ( longevity risk ). If the contributions to the account are inadequate, or if the securities in which the account is invested lose value or increase in value too slowly, the employee risks having an income in retirement that is too small to maintain his or her desired standard of living. If this situation occurs, the worker might find it necessary to delay retirement. <2.1. Pre-funding of Pension Benefits in the Private Sector> Private-sector employers are not required to provide retirement plans for their employees, but those that do must comply with the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406 ). ERISA sets standards that plans must meet with respect to reporting and disclosure, employee participation and vesting, plan funding, and fiduciary standards. Because employers cannot be certain that their revenues in future years will be sufficient to pay the pension benefits they owe to retired workers, ERISA requires companies to pre-fund DB pension obligations. Pre-funding of DB pensions protects employees who have earned the right to receive a pension, even if the firm goes out of business. Employers in the private sector pre-fund their DB pension liabilities by establishing pension trusts, which are invested in assets such as stocks and bonds. ERISA also established the Pension Benefit Guaranty Corporation (PBGC), which pays pension benefits (up to limits set in law) in the event that a company goes out of business with an underfunded pension plan. The PBGC is funded by premiums paid by employers that sponsor defined benefit pensions. It does not insure defined contribution plans. Pre-funding DB pension benefits is consistent with the principles of accrual accounting, in which a firm's assets and liabilities are recognized in its financial records as they accrue, as opposed to waiting until cash is received or paid out. By providing for future pension liabilities as they are incurred, the firm is recognizing that the pension benefits that it must pay in the future are part of the cost of doing business today. When an employer fails to set aside enough money each year to pay the retirement benefits accrued by its workers that year, it accumulates an "unfunded liability." ERISA requires any employer that develops an unfunded liability in its defined benefit pension plan to make additional contributions over a period of years until the plan's assets equal the present value of its liabilities. <2.2. Pre-funding of Federal Employee Pension Benefits> When CSRS was established in 1920, it was not pre-funded. Benefits paid to federal retirees were paid from current contributions to the plan. Because the federal government is not likely to go out of business, it could have continued to pay the pensions earned by federal employees on a pay-as-you-go basis. Nevertheless, when Congress established FERS in 1986, it required all pension benefits earned under FERS to be fully pre-funded by the sum of employer and employee contributions and the interest earned by the U.S. Treasury bonds held by the Civil Service Retirement and Disability Fund. Congress required pre-funding of FERS retirement benefits so that federal agencies would have to recognize these costs in their budgets. Pre-funding promotes more efficient allocation of resources between personnel costs and other expenses because it forces federal agencies to recognize the full cost of employee compensation when they prepare their annual budget requests. <2.3. Investment of Trust Fund Assets> The assets in private-sector pension funds represent a "store of wealth" that firms can use to meet pension obligations as they come due. The CSRDF, however, is not a store of wealth for the federal government. The fund is required by law to invest exclusively in U.S. Treasury bonds. These bonds represent budget authority , which is the legal basis for the Treasury to disburse funds. When the CSRDF redeems the Treasury bonds that it holds, the Treasury must raise an equivalent amount of cash by collecting taxes or borrowing from the public. If the CSRDF held assets that earned a higher average rate of return than U.S. Treasury bonds, some of the future cost of civil service retirement annuities could be paid from these higher investment returns. However, in the short run, allowing the CSRDF to invest in private-sector securities such as corporate stocks and bonds would result in higher federal expenditures, which would be required to purchase such private-sector securities. The trust fund's two main sources of income are employee contributions and contributions from federal agencies on behalf of their employees. Employee contributions are income both to the federal government and to the trust fund. Agency contributions, however, are income to the trust fund, but they are not income to the federal government. Agency contributions to the CSRDF are intragovernmental transfers that have no effect on the government's annual budget deficit or surplus. Currently, most outlays from the trust fund are benefit payments to annuitants. If the CSRDF were to purchase private-sector assets rather than U.S. Treasury bonds, an outlay from the trust fund would be required to purchase these assets. If employee contributions were used to purchase private-sector assets, they would no longer be income to the Treasury, and they would increase the federal budget deficit by the amount diverted to purchase private-sector assets. Agency contributions currently an intragovernmental transfer would instead be used to purchase private-sector assets and would be a new outlay of funds from the Treasury. Over the long run, however, purchasing private-sector assets would not increase the budget deficit, and could reduce it. Outlays would be moved from the future where they would have occurred as benefit payments to the present, where they would occur to purchase assets. If the net rate of return on private-sector securities exceeded the rate of return on Treasury bonds, the extra investment income earned by the trust fund would reduce the amount of tax revenue that would have to be raised from the public in the future to pay pension benefits under CSRS and FERS. Such a change in policy, however, would raise important questions about the federal government owning private-sector assets, and also could result in greater volatility in the value of the assets held by the trust funds. <3. Financing Retirement Annuities for Federal Employees> Under both CSRS and FERS, retirement annuities are based on (1) the employee's years of service, (2) the average of the employee's highest three consecutive years of salary, and (3) the benefit accrual rate. Workers covered by CSRS accrue benefits equal to 1.5% of pay for their first five years of service, 1.75% for the next five years, and 2.0% of pay for each year of service beyond the 10 th year. Under CSRS, an employee with 30 years of service will have earned an annuity equal to 56.25% of the average of his or her highest three consecutive years of pay. Employees enrolled in FERS accrue benefits equal to 1.0% of pay for each year of service. If they have worked for the federal government for 20 or more years and retire at age 62 or older, the accrual rate under FERS is 1.1% for each year of service. With 30 years of service, an employee enrolled in FERS will have earned a pension equal to 30% of the average of his or her highest three consecutive years of pay, or 33% if the individual is 62 or older at retirement. Federal agencies pre-fund employee pensions by deferring some of their budget authority until it is needed to pay pensions to retired workers. Federal agencies defer this budget authority by transferring it to the CSRDF. The Treasury credits the fund with the appropriate amount of budget authority in the form of special-issue bonds that earn interest equal to the average rate on the Treasury's outstanding long-term debt. The CSRDF can redeem these bonds to pay pensions to retirees and survivors. <3.1. Employee Contributions> Federal employees have mandatory contributions to the CSRDF deducted from their paychecks. Employees who are under the CSRS contribute 7.0% of basic pay to the CSRDF. Employees under FERS first hired before 2013 contribute 0.8% of pay to the CSRDF and 6.2% of wages to the Social Security trust fund for Old-Age, Survivors, and Disability Insurance (OASDI) up to the Social Security taxable wage base. In 2019, wages up to $132,900 are subject to the OASDI tax. Employees under FERS first hired (or rehired with less than five years of FERS service) in calendar year 2013 contribute 3.1% of pay to the CSRDF and 6.2% of taxable wages to the Social Security trust fund. FERS employees first hired (or rehired with less than five years of FERS service) after December 31, 2013, contribute 4.4% of pay to the CSRDF and 6.2% of taxable wages to the Social Security trust fund. <3.2. Employer Contributions> Whether a federal employee is enrolled in CSRS or FERS, his or her employing agency contributes money to the CSRDF. Agency contributions differ between CSRS and FERS. The Office of Personnel Management (OPM) estimates the cost of CSRS annuities to be equal to 36.6% of employee pay. This is the amount that would have to be contributed to the CSRDF each year to fully fund the benefits that employees earn under the CSRS. Under CSRS, employees and their employing agencies each contribute an amount equal to 7.0% of pay the CSRDF. Agency and employee contributions total 14.0% of pay. The Treasury makes an annual contribution to the CSRDF that covers most of the costs of the CSRS that are not covered by employee and agency contributions. On September 30, 2018, the Treasury made a payment $34.16 billion for CSRS to the CSRDF. However, the CSRS continues to have an unfunded liability, which is estimated to be $813.1 billion in FY2018. Effective as of October 1, 2019, OPM estimates the cost of FERS at an amount equal to 16.8% of pay for employees first hired before 2013, 17.3% for employees first hired in 2013, and 17.5% for employees first hired after 2013. The employee contribution of 0.8% of pay under FERS for employees first hired before 2013 is equal to the difference between the CSRS contribution rate (7.0%) and the Social Security payroll tax rate (6.2%). Federal agencies are required to contribute to the CSRDF the full cost of the FERS benefits that employees earn each year, minus the employee contribution. Thus, federal agencies contribute an amount equal to 16.0% of payroll to the CSRDF for FERS employees hired before 2013 (16.8 - 0.8 = 16.0). Under P.L. 112-96 , FERS employees first hired in 2013 contribute 3.1% of pay toward their FERS annuity. The cost for this category of FERS employees is equal to 14.2% of payroll (17.3 - 3.1 = 14.2). Under P.L. 113-67 , the normal cost of the basic annuity for FERS employees first hired after 2013 is 17.5%. These employees contribute 4.4%, while their employing agencies contribute 13.1% (17.5 - 4.4 = 13.1). (The additional amounts provided by the increased employee contributions [i.e., 4.4% vs. 3.1%] are applied toward reducing the CSRS unfunded liability until it is eliminated.) Therefore, FERS benefits are fully funded by employer and employee contributions and interest earnings with the exception of FERS benefits for employees first hired (or rehired with less than five years of FERS service) after December 31, 2013. On behalf of these employees, the employee and agency contributions amount to more than the full cost of the FERS benefit until the point at which OPM determines that there is no longer a CSRS unfunded liability. <4. Operation of the Civil Service Retirement and Disability Fund> The CSRDF is a record of the budget authority available to pay retirement and disability benefits to federal employees. Each year, the trust fund is credited by the Treasury with contributions from current employees and their employing agencies, interest on the securities held by the fund, interest on previous service for which benefits have been accrued but for which budget authority has not yet been provided, and a transfer from the general revenues of the Treasury. Only a small part of the income to the fund mainly contributions from employees is income to both the trust fund and to the government. The remainder of these transactions are intragovernmental transfers in which budget authority is transferred from federal agencies to the trust fund. Intragovernmental transfers have no effect on the size of the government's annual budget deficit or surplus. The CSRDF is similar to the Social Security trust fund in that, by law, 100% of its assets are invested in special-issue U.S. Treasury bonds or other bonds backed by the full faith and credit of the U.S. government. When the trust fund needs cash to pay retirement benefits, it redeems the bonds and the Treasury disburses an equivalent dollar value of payments to civil service annuitants. Because the bonds held by the trust fund are a claim on the U.S. Treasury, they ultimately are paid for by the taxpayers. According to the U.S. Office of Management and Budget (OMB), balances in the trust fund are available for future benefit payments and other trust fund expenditures, but only in a bookkeeping sense. The holdings of the trust funds are not assets of the Government as a whole that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury. From a cash perspective, when trust fund holdings are redeemed to authorize the payment of benefits, the Department of the Treasury finances the expenditure in the same way as any other Federal expenditure by using current receipts or by borrowing from the public. The existence of large trust fund balances, therefore, does not, by itself, increase the Government's ability to pay benefits. Put differently, these trust fund balances are assets of the program agencies and corresponding liabilities of the Treasury, netting to zero for the Government as a whole. <5. Civil Service Retirement Fund Financial Status> <5.1. The Short-Term Picture> The CSRDF held a balance of $915.3 billion at the start of FY2019. (See Table 1 .) Obligations from the fund totaled $86.2 billion in FY2018, consisting mostly of annuity payments. Annuity payments totaled $85.6 billion in FY2018. Payments to the estates of decedents and refunds to separating employees accounted for another $421 million. The administrative expenses of the fund were $149 million, or about 0.17% of total obligations. In FY2018, an additional $2 million was transferred from the CSRDF to the Merit Systems Protection Board, which hears federal employee appeals (including federal retirement decisions). Each year, the CSRDF receives cash contributions and intragovernmental transfers. Cash contributions from required employee contributions, other employee deposits, and the District of Columbia amounted to $4.5 billion in FY2018. The largest payments into the CSRDF were contributions from federal agencies ($27.4 billion in FY2018) and the Postal Service ($3.5 billion in FY2018) on behalf of their employees, interest payments ($25.6 billion), and a payment from the general fund of the Treasury to make up for the insufficient funding of benefits accrued under CSRS ($42.9 billion in FY2018). In FY2018, there was also a $38 million payment into the CSRDF due to offsets from the re-employment of annuitants. These payments are intragovernmental transfers. The CSRDF receives Treasury bonds as a record of available budget authority. It redeems bonds periodically as annuity payments come due. <5.2. The Long-Term Picture> Table 2 presents the annual income and expenditures of the CSRDF through FY2090, as estimated by OPM. Table 2 also shows the year-end balance of the trust fund and its estimated unfunded actuarial liability at the end of the year. The unfunded actuarial liability represents the difference between the present value of the fund's future benefit obligations and the present value of future credits to the fund plus the value of the securities it holds. The final two columns of the table show, respectively, the expenditures of the CSRDF relative to the government's total payroll expense for employee wages and salaries and CSRDF expenditures relative to the nation's annual gross domestic product (GDP). The estimates presented in Table 2 show the income to the CSRDF rising over the projection period from $103.5 billion in FY2017 to $151.0 billion in FY2025 and to $759.9 billion in FY2090. The total expenses of the fund are projected to rise more slowly, increasing from $85.8 billion in FY2018 to $104.9 billion in FY2025 and t o $506.6 billion in FY2090. Consequently, the assets held by the CSRDF also are projected to increase steadily from $947.8 billion in FY2018 to about $1.2 trillion in FY2025 and to $10.6 trillion in FY2090. According to actuarial projections, the unfunded liability of the CSRDF peaked in FY2017, when it was $968.1 billion. From that point onward, the unfunded liability has and is projected to steadily decline until it is projected to be eliminated by FY2085. In FY2018, expenditures from the CSRDF totaled $85.8 billion. The federal government's payroll expense for employees in FY2018 was approximately $213.0 billion (not presented in Table 2 ). Therefore, expenditures from the CSRDF were equal to about 40% of the amount paid as salaries and wages to federal employees. CSRDF expenditures are projected to decline relative to the government's wage and salary expenses, beginning around FY2025. By FY2090, the expenditures of the CSRDF are estimated to be equal to about 32% of the government's wage and salary payments to its employees. The decline in the ratio of CSRDF outlays to salary expense after FY2020 will occur mainly because future retirees will receive smaller pension benefits under FERS than they would have received under CSRS. The final column of Table 2 shows federal outlays for civil service pensions as a percentage of GDP. Relative to the total economic resources of the economy, the expenditures of the CSRDF are expected to remain roughly steady for the next 10 years before declining substantially from FY2020 to FY2090. Federal expenditures for civil service retirement annuities were estimated to equal 0.48% of GDP in FY2012, down from a high of 0.55% in FY1991 (not presented in Table 2 ). Between FY2013 and FY2020, the annual expenditures of the CSRDF are projected to remain in the range of 0.47% to 0.41% of GDP. From that point on, outlays from the CSRDF will fall steadily to about 0.13% of GDP by FY2090. CSRDF expenditures will fall relative to GDP mainly as a result of the decline in the proportion of civil service annuitants who are covered by CSRS and the increase in the number who are covered by FERS. The FERS basic annuity was designed to be smaller relative to high-three average pay than a CSRS annuity because FERS annuitants also receive benefits from Social Security and the Thrift Savings Plan. Because the transition from CSRS to FERS is mandated by law, the constant-dollar value of CSRDF outlays per annuitant will decline due to the different benefit formulas between CSRS and FERS. Consequently, outlays for civil service annuities are almost certain to decline relative to GDP, even if GDP grows more slowly than is assumed in the projections displayed in Table 2 . <6. The Civil Service Retirement and Disability Fund in the Federal Budget> In FY2019, the total receipts of the CSRDF are estimated to be approximately $104.4 billion, and obligations from the fund are estimated to be about $88.4 billion. Only a small part of the revenues to the fund ($4.9 billion) in this year were cash receipts. The remainder will consist of budget authority transferred from other federal agencies. The cash receipts of the fund come primarily from the contributions of federal employees toward their future retirement benefits. Other cash income to the fund comes from payments made by the District of Columbia on behalf of its employees covered by CSRS or FERS. Cash payments into the CSRDF are income to both the U.S. government and to the trust fund. These cash receipts reduce the government's budget deficit. Benefit payments to retirees and survivors are cash outlays of the federal government. Most of the payments into the CSRDF an estimated $124.8 billion in FY2018 are intragovernmental transfers. These transactions are income to the fund, but they are not income to the U.S. government. Intragovernmental transactions rarely involve cash. They do not affect the government's budget deficit or surplus because no money is received or spent by the government. Cash is rarely involved in intragovernmental transfers because individual government agencies, in general, have no cash to spend. What Congress appropriates to federal agencies each year is budget authority . Budget authority is legal permission for an agency to spend money from the accounts of the U.S. Treasury. The Treasury takes in money from the public by collecting taxes and by borrowing, and in most cases it is only the Treasury that disburses cash to the public. It has been suggested from time to time that the CSRDF should be taken "off budget," as has already been done with the financing of Social Security benefits (but not Social Security administrative costs). Taking an account off budget means that its income and expenditures are not included in calculations of the government's annual budget surplus or deficit. Off-budget accounts are portrayed separately in the budget documents prepared by the Office of Management and Budget and the Congressional Budget Office (CBO). However, both OMB and CBO also publish unified budget accounts that include Social Security and other programs that are off budget. This is done because taking an account off budget does not end the activity or remove its effects from the U.S. economy. Whether Social Security or civil service retirement is on-budget or off-budget, it still collects revenues from the public, pays benefits to the public, and affects the nation's financial markets by influencing the amount of private capital that is absorbed by government borrowing. Taking the CSRDF off-budget would not affect the government's revenues or outlays in the unified budget accounts, but it would affect the size of the budget deficit or surplus as portrayed in any budget documents that excluded the CSRDF. For example, employee contributions to CSRS and FERS that are now counted as revenue to the Treasury would not be treated as revenue if they were paid to an off-budget CSRDF. The money that federal agencies now send to the trust fund in the form of intragovernmental transfers would instead be recorded as outlays, and would therefore increase the government's reported budget deficit or reduce the budget surplus in the year that the transfer occurs rather than in the future when benefits are paid. The outlays made by the fund to pay civil service annuitants would not appear at all in the federal budget. The net effect of these changes if the CSRDF had been off-budget in FY2018 would have been an increase of about $17.6 billion in the government's reported budget deficit, even though the amount of money collected from the public and the amount of money paid to civil service annuitants would have been no different than under current law. One purpose of the federal budget is to show whether the government's revenues and outlays are in balance or out of balance. Therefore, taking any account off-budget distorts the picture of the government's fiscal condition. It is for this reason that financial analysts and economists focus almost exclusively on the unified budget totals when evaluating the effect of the federal budget on the nation's financial markets and the economy. If "outlays" were to include amounts not actually paid from the Treasury in the current year (as would be the case if the CSRDF were off-budget), then no revenue from the public would be needed in that year to pay for them. In years of budget deficits, some of the deficit would require borrowing from the public, and some of it would not. In years of modest budget surplus, there might appear to be a deficit because transfers to an off-budget account would be recorded as outlays, even though they do not involve payments from the Treasury to the public. For these reasons, taking the CSRDF off-budget might lead to greater confusion about the size of the real budget deficit or surplus, as has been the case with the off-budget status of Social Security. <7. Civil Service Retirement: Funding and Accounting Issues> <7.1. Accounting for Pension Costs Under CSRS and FERS> Actuaries use a concept called "normal cost" to estimate the amount of money that must be set aside each year from employer and employee contributions to pre-fund pension benefits. Normal cost is usually expressed as a percentage of payroll. There are two measures of normal cost: static and dynamic. Static normal cost is the amount, expressed as a percentage of payroll, that must be set aside each year to fund pension benefits based on current employee pay with no future pay raises, no future COLAs for retirees, and a fixed rate of interest. Dynamic normal cost is the amount, expressed as a percentage of payroll, that must be set aside each year to fully fund pension benefits for workers who will continue to accrue new benefits, including the effects of employee pay raises, post-retirement COLAs, and changes in the rate of interest. By law, the FERS basic retirement annuity and FERS supplement must be pre-funded according to its dynamic normal cost. Every year, OPM estimates the dynamic normal cost of FERS retirement annuities for employees entering the federal work force that year. For each group of new employees, OPM must estimate average job tenure, turnover, future salaries, age at retirement, rates of disability, death rates, the number of employees who will become annuitants, and how many will leave surviving dependents. OPM periodically re-estimates the dynamic normal cost of FERS to reflect anticipated changes in interest rates, inflation, and employee and retiree demographic characteristics. OPM has estimated the current normal cost of the FERS to be 16.8% of payroll for employees first hired before 2013, 17.3% for employees first hired in 2013, and 17.5% for employees first hired after 2013. Federal agencies are required to contribute to the CSRDF the full cost of the FERS benefits that employees earn each year, minus the employee contribution. Thus, federal agencies contribute an amount equal to 16.0% of payroll to the CSRDF for FERS employees hired before 2013 (16.8 - 0.8 = 16.0). Under P.L. 112-96 , FERS employees first hired in 2013 contribute 3.1% of pay toward their FERS annuity. The cost for this category of FERS employees is equal to 14.2% of payroll (17.3 - 3.1 = 14.2). Under P.L. 113-67 , the normal cost of the basic annuity for FERS employees first hired after 2013 is 17.5%. These employees contribute 4.4%, while their employing agencies contribute 13.1% (17.5 - 4.4 = 13.1). If the assumptions underlying these cost estimates prove to be accurate, FERS will be "fully funded." OPM has estimated the dynamic normal cost of CSRS, using the same economic assumptions used in FERS, at 29.3% of payroll. The financing of CSRS has at times been a topic of controversy, however, because it is not funded according to its dynamic normal cost. CSRS is funded through a combination of employee and agency contributions that together are equal to the static normal cost of CSRS, along with contributions from the general fund of the U.S. Treasury that make up some of the difference between the static normal cost of CSRS and its dynamic normal cost. <7.2. Why Are CSRS Revenues Less Than the Present Value of Benefits?> At the time that Congress established the CSRS in 1920, it set up a trust fund from which benefits would be paid. From the beginning, however, CSRS was funded on a "pay-as-you-go" basis. The trust fund was used to pay benefits to already-retired workers, rather than to pre-fund the pension benefits of current workers. Initially, only employees made regular payroll contributions to the fund. Regularly scheduled agency contributions were not mandated until the 1950s. For many years, there were so few federal retirees that the fund was able to meet its financial obligations to beneficiaries from employee contributions alone. In 1956, Congress passed P.L. 84-854, which required federal agencies to make contributions to the Civil Service Retirement Trust Fund on behalf of their eligible employees. The contributions made by federal agencies were equal in amount to the money paid into the fund by their employees, and were made from appropriations that agencies received specifically for this purpose. Even with regular contributions from the employing agencies, however, the CSRS was still being funded on a pay-as-you-go basis. Contributions to the fund were sufficient to meet current benefit obligations but not to pre-fund the future retirement benefits of federal employees. As the federal civil service pension system matured (that is, as the ratio of annuitants to workers began to rise), it became necessary to establish a formal system of accounting for the pension obligations that had been incurred by the federal government but for which funds had not yet been set aside. In response to this need, Congress enacted P.L. 91-93 in 1969. This law set the employee contribution to CSRS at 7.0% of pay and required an equal amount to be contributed from funds appropriated to federal agencies. This amount (equal to 14.0% of payroll) represented the total contribution required to pay the costs of pension liabilities accrued by federal employees, using "static" assumptions: no future pay increases, no COLAs, and a 5.0% annual rate of return on the securities in the Civil Service Retirement and Disability Fund. Agency and employee contributions under CSRS have remained at the same percentage of payroll since 1969. P.L. 91-93 also requires three payments to be made annually from the general revenues of the U.S. Treasury into the CSRDF. These payments are the amount necessary to amortize (pay off with interest) over a 30-year period any increase in pension liability that results from pay increases (but not retiree COLAs) or from bringing newly covered groups of workers into the CSRS; the amount of the employer's share of the cost of benefits attributable to military service; and interest, fixed at a rate of 5%, on the estimated amount of the previously accrued liabilities of the CSRS for which contributions have not yet been made to the fund. Thus, while the static costs of the CSRS were shared equally between federal employees and their employing agencies, the Treasury was given responsibility for pension liabilities that are not part of the pension system's static normal costs. By including the 30-year amortized cost of pay raises in the annual transfer from the general fund, the Treasury assumed the additional pension expenses that result from pay raises. All costs of the CSRS that are not paid by employee and agency contributions or through the transfers to the CSRDF mandated by P.L. 91-93 ultimately will be paid from the general revenues of the Treasury. The costs of retiree COLAs, which also are not part of the static normal cost of the CSRS, are not included in the annual transfer from the Treasury to the CSRDF, and ultimately will be paid from the general fund of the Treasury. Because the full costs of CSRS are not met by the combined total of employee contributions, agency contributions, interest earnings, and the supplemental payments from the Treasury, some future CSRS benefits will of necessity be paid from contributions that were made to the CSRDF on behalf of employees who are enrolled in FERS. This will create an unfunded liability for FERS, which will be paid off through a new series of 30-year amortization payments from the general fund of the Treasury to the CSRDF. As stated by OPM: When the non-Postal CSRS account is depleted, projected to occur in 2022, the resulting transfers from the FERS account to the CSRS account create supplemental liabilities for the non-Postal FERS account. These supplement liabilities for non-Postal FERS must then be amortized by means of 30-year payments made by the Treasury. Current law specifies that funds that were paid into the CSRDF on behalf of employees covered by FERS will be used to pay the unfunded liability of CSRS. FERS will then be reimbursed by a series of payments with interest from the general fund of the Treasury to the CSRDF. <7.3. Accounting Issues Raised by the Way CSRS Benefits Are Financed> Actuarial estimates indicate that the unfunded liability of the CSRS does not pose a threat to the solvency of the Civil Service Retirement and Disability Fund. In its current annual report, OPM has stated that "total assets of the CSRDF ... including both CSRS and FERS are expected to continue to grow throughout the term of the projection under the existing statutory funding provisions." Nevertheless, the current method of funding the CSRS has in recent years been a source of debate for at least two reasons: (1) Because employee and government contributions do not account for the full actuarial cost of CSRS pension obligations as they accrue each year, the CSRS continues to accumulate additional unfunded liabilities. Consequently, some of the pension costs that are incurred each year will not be reflected in the government's budget until those benefits are paid at some time in the future. Some budget experts argue that these costs should be accounted for in each agency's budget as they accrue, just as is done in the FERS. (2) The supplemental payments to the trust fund that are required by the 1969 law come from the general revenues of the Treasury rather from the budgets of the various federal agencies where these costs are incurred. As a result, the amount of employee compensation for which agencies must account in their budgets each year understates the full costs of employment. Critics say that this contributes to an inefficient allocation of resources in the federal government by making labor costs appear lower than they really are. If agencies were required to fully fund the current and future costs of the CSRS through increased contributions, they could do so from their current-law appropriations or they could be granted additional budget authority for this purpose. The two approaches would have different effects on the federal budget. For agencies to be held harmless for the increased contributions, they would have to receive additional appropriations to their salary and expense accounts. Because agencies would transfer the appropriated funds to the CSRDF, which would in turn use them to purchase Treasury bonds, no additional outlays would occur as a result of these appropriations, and they would not affect the federal budget deficit or surplus. The outlays would occur in the future when retired employees collect their CSRS annuities, just as under current law. An alternative means of fully financing the normal cost of the CSRS would be to require agencies to increase their contributions to the CSRDF without receiving any additional appropriations to their salary and expense accounts. Pre-funding the full costs of the CSRS in this way would reduce the federal budget deficit, because the outlays of each agency would have to be cut by the amount of its additional transfers to the CSRDF. Outlays to CSRS annuitants would still occur in the future just as under current law. However, these future outlays would be offset by a reduction in current outlays so that the future payments to CSRS annuitants could be fully pre-funded. The reduction in resources available for current spending, however, would force federal agencies to cut spending elsewhere in their budgets. Paying the full normal cost of CSRS through employee and agency contributions would prevent the system from accruing additional unfunded liabilities, but it would not reduce the previously accumulated liability of the CSRS. Under current law, this liability will be paid off eventually through a series of 30-year amortization payments from the general fund of the Treasury to the CSRDF. Some observers favor starting these amortization payments sooner. They note that private-sector employers are required by ERISA to begin paying down accumulated liabilities when they occur. Others advocate paying down the liability now as a way to forestall proposals calling for reduced pension benefits or increased employee contributions in the future. <8. Conclusion> Proposals to pre-fund CSRS in the same manner as required under FERS have grappled with the question of whether additional budget authority should be granted to federal agencies, or whether agencies should make higher contributions from their current budget authority. Many policymakers believe that greater pre-funding of CSRS retirement annuities would lead to improved accounting of personnel costs among federal agencies. However, CSRS has been closed to new enrollment since 1984, and the percentage of federal employees enrolled in CSRS is declining rapidly as these workers retire. At the beginning of FY2018, about 4% of federal employees, including Postal employees, were enrolled in CSRS. With the proportion of federal employees enrolled in CSRS declining each year, the budgetary treatment of government contributions toward their retirement annuities is becoming a less pressing issue. Some observers have suggested that investing the CSRDF entirely in U.S. Treasury bonds does not represent true "pre-funding" of CSRS and FERS annuities because these bonds are merely a claim held by the government against its own future revenues. They suggest that at least part of the trust fund's assets should be invested in private-sector stocks and bonds where they could earn a higher rate of return than is available from U.S. Treasury securities (albeit at greater risk). In addition to issues of investment risk, however, this proposal would raise questions about how purchases of private-sector assets would be scored under current budget rules, and also whether it would be appropriate for federal trust funds to own the stocks and bonds of private-sector companies.

Most of the civilian federal workforce is covered by one of two retirement systems: (1) the Civil Service Retirement System (CSRS) for individuals hired before 1984 or (2) the Federal Employees' Retirement System (FERS) for individuals hired in 1984 or later. FERS annuities are fully funded by the sum of employee and employer contributions and interest earned by the Treasury bonds held by the Civil Service Retirement and Disability Fund (CSRDF). The federal government makes supplemental payments into the CSRDF on behalf of employees covered by the CSRS because employee and agency contributions and interest earnings do not meet the full cost of the benefits earned by employees covered by that system. The Office of Management and Budget (OMB), in its FY2020 Budget, estimated that in FY2019, obligations from the CSRDF would total $88.4 billion, of which $87.9 billion will represent annuity payments to retirees and survivors. Other outlays consist of refunds, payments to estates, and administrative expenses. Obligations from the fund are projected to increase by 3.7% to $91.7 billion in FY2020, of which $91.3 billion will represent annuity payments. OPM estimated that receipts to the CSRDF from all sources would be $104.4 billion in FY2019 and $108.8 billion in FY2020. The year-end balance of the CSRDF was projected to increase from $915.3 billion at the end of FY2018 to $931.4 billion at the end of FY2019. According to the most recent reporting from the Office of Personnel Management, the total annual income of the CSRDF will increase from $124.9 billion in FY2018 to an estimated $151.0 billion in FY2025 and to $759.9 billion in FY2090. The total expenses of the fund are projected to rise more slowly, increasing from $85.8 billion in FY2018 to an estimated $104.9 billion in FY2025 and to $506.6 billion in FY2090. Consequently, the assets held by the CSRDF also are projected to increase steadily, rising from $947.8 billion in FY2018 to an estimated $1.2 trillion in FY2025 and $10.6 trillion in FY2090. Expenditures from the CSRDF currently are about 40% as large as federal expenditures for the salaries and wages paid to federal employees. Pension expenditures are projected to decline relative to the government's wage and salary expenses, beginning around FY2020. By FY2090, the expenditures of the CSRDF are estimated to be only about 32% as large as the government's expenditures for wage and salary payments to employees. Because CSRS retirement benefits have never been fully funded by employer and employee contributions, the CSRDF has an unfunded liability. The total unfunded liability of the CSRDF was $968.1 billion in FY2017. According to actuarial estimates, the unfunded liability of the CSRDF has already peaked, will steadily decline, and is projected to be eliminated by FY2085. Actuarial estimates indicate that the unfunded liability of the CSRS does not pose a threat to the solvency of the trust fund. There is no point over the next 80 years at which the assets of the Civil Service Retirement and Disability Fund are projected to run out.

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Congressional employees are retained to perform public duties that include assisting Members in official responsibilities in personal, committee, leadership, or administrative office settings. The roles, duties, and activities of congressional staff are matters of ongoing interest to Members of Congress, congressional staff, groups, and individuals, including those who raise concerns about congressional operations. Most observers recognize that Congress does not function without staff, but there is little systematic attention to what staff do, or what Members expect of them. In congressional offices, there may be interest in identifying Member expectations of congressional staff duties by position from multiple perspectives, including assessment of staffing needs in Member offices; guidance in setting position expectations, qualifications, and experience when offices choose to hire staff; and informing current and potential congressional employees of position expectations. Members of the House and Senate generally establish their own employment policies and practices for their personal offices. It is arguably the case that within Member offices, a common group of activities is executed for which staff with relevant skillsets and other qualifications are necessary. A body of publicly available job advertisements for staff positions from a number of different offices can shed light on the expectations Members have for position duties, as well as staff skills, characteristics, experience, and other expectations. For 33 commonly used congressional staff position titles, this report describes the most frequently listed job duties, applicant skills, characteristics, prior experiences, and other expectations found in a sample of job advertisements placed by Members of Congress between approximately December 2014 and September 2019 seeking staff in their offices. Table 1 lists the position titles and the frequency with which advertisements for them appeared in the sample. <1. Identifying Job Advertisements for Congressional Staff Positions> Data used in developing sample position expectations were taken from several publicly available sources, including the following, over the periods specified: The House Employment Bulletin, published weekly by the House Vacancy Announcement and Placement Service (HVAPS) in the Human Resources Office of the House Chief Administrative Officer (CAO). Data were collected from ads published between approximately January 2015 and September 2019. The Employment Bulletin, published online by the Senate "as a service to Senate offices choosing to advertise staff vacancies." Data were collected from ads, which were not dated, appearing from approximately July 2016 to July 2019. The House GOP Job and Resume Bank, which posts ads on behalf of the House Republican Conference on Facebook. Ads were collected between approximately January and June 2017. Other ads were collected from the period between approximately December 2014 and January 2017 from the House GOP Job Bank web page on the website of Representative Virginia Foxx during part of her tenure as the House Republican Conference Secretary. The Job Announcements Board hosted by Representative Steny Hoyer during part of his tenure as House Minority Whip. Data were collected from ads posted between approximately January 2016 and December 2017. <2. Categorizing and Coding Job Advertisements> More than 1,800 ads were collected from all sources. Duplicate ads resulting from posts to more than one source, and ads that appear to have been frequently reposted, were removed, as were ads for positions in congressional settings other than personal offices, yielding 880 ads for positions in Member personal offices. Substantially similar position titles (e.g., deputy scheduler and state deputy scheduler) for which there were five or more ads were identified and grouped together, as were related job titles (e.g., positions designated as district, field, or regional representative that had essentially similar job duties and expectations) for which there were five or more substantially similar ads, yielding a total of 704 ads. Ads for the 33 identified position titles were further categorized if there were five or more ads that specified the advertised position as "not entry level" or other signifier of presumptive advanced status. The 704 ads were coded against a variety of variables within eight categories, including ad tracking information; ad details; position responsibilities and responsibility areas; expected job skills, qualifications, and credentials; application materials; and office type. The distribution of ads by job title and level is provided in Table 1 . Solicitations of applicants for congressional staff appear to originate in a highly decentralized manner. Means of identifying appropriate candidates might potentially include reassigning staff within offices, placing ads in services that make them available by subscription, word of mouth, and other nonpublic means of identifying potential applicants for congressional staff positions. Consequently, it cannot be determined whether the dataset of ads analyzed in this report is representative of all congressional employment solicitations. In addition, the process by which candidates for some Member office senior staff positions are identified may not be public-facing. Based on information specified within the ads, most position titles were identified by one of the following four primary responsibility areas (some positions were identified by up to three responsibility areas): Legislative, Policy, and Oversight, Media, Messaging, and Speeches, Constituent Communications, Outreach, and Service, and Office Administration and Support. For each position, at least one sample position description was created based on the coded data. Information includes the most frequently occurring of the following: primary responsibility areas; widely expected duties, typically up to six of the most frequently occurring duties specified in all ads for that position; other potential duties, typically up to six other duties mentioned in more than one ad; applicant information, including characteristics, skills, and knowledge and prior experience; and other expectations. <3. Concluding Observations> Categorizing congressional staff positions by position title relies on an assumption that similarly titled positions in House and Senate personal offices carry out the same tasks under essentially similar circumstances. While personal offices may carry out similar activities, the assumption might be questionable given the differences in staff resources in House and Senate offices, as well as potential differences within offices of each chamber. Generalizations about staff roles and duties may also be limited in some ways due to the broad discretion Members have with regard to running their office activities. Variations from office to office, which might include differences in job duties, work schedules, office emphases, and other factors, may limit the extent to which sample position expectations provided here match operational practices in all congressional offices. <4. Sample Position Expectations> <4.1. Caseworker18> <4.2. Communications Director19> <4.3. Communications Director, "Senior Level" or "Not Entry Level"20> <4.4. Constituent Services Representative21> <4.5. Correspondence Manager22> <4.6. Deputy Press Secretary23> <4.7. Deputy Scheduler24> <4.8. Deputy Scheduler/Assistant to Chief of Staff25> <4.9. Digital Director/Press Assistant26> <4.10. Digital Media Director27> <4.11. District Director28> <4.12. Executive Assistant29> <4.13. Executive Assistant/Scheduler30> <4.14. Executive Assistant/Scheduler, "Not Entry Level"31> <4.15. Field, District, or Regional Representative32> <4.16. Field Representative/Caseworker33> <4.17. Legislative Aide34> <4.18. Legislative Assistant35> <4.19. Legislative Assistant, "Not Entry Level"36> <4.20. Legislative Correspondent37> <4.21. Legislative Correspondent/Press Assistant38> <4.22. Legislative Correspondent/Staff Assistant39> <4.23. Legislative Counsel40> <4.24. Legislative Director, House41> <4.25. Legislative Director "Senior Level," or "Not Entry Level"42> <4.26. Legislative Director, Senate43> <4.27. Military Legislative Assistant44> <4.28. Press Assistant45> <4.29. Press Secretary46> <4.30. Regional Coordinator47> <4.31. Scheduler48> <4.32. Scheduler, "Not Entry Level"49> <4.33. Scheduler/Office Manager50> <4.34. Senior Legislative Assistant51> <4.35. Speechwriter52> <4.36. Staff Assistant53> <4.37. Staff Assistant/Driver54> <4.38. Staff Assistant/Press Assistant55> <4.39. Systems Administrator56>

The roles, duties, and activities of congressional staff are matters of ongoing interest to Members of Congress, congressional staff, and observers of Congress. Members of the House and Senate establish their own employment policies and practices for their personal offices. It is arguably the case that within Member offices, a common group of activities is executed for which staff are necessary. Accordingly, a group of job advertisements for those positions from a number of different offices can shed light on the expectations Members have for position duties, as well as staff skills, characteristics, experience, and other expectations. This report provides a set of 39 widely expected job duties, applicant skills, characteristics, prior experiences, and other expectations based on a sample of ads placed by Members of Congress between approximately December 2014 and September 2019 seeking staff in their offices for 33 position titles: Sample position expectations might assist Congress from multiple perspectives, including assessment of staffing needs in Member offices; guidance in setting position expectations, qualifications, and experience when offices need to hire staff; and informing current and potential congressional employees of position expectations. At the same time, categorizing congressional staff positions by position title relies on an assumption that similarly titled positions in House and Senate personal offices carry out the same tasks under essentially similar circumstances. Although personal offices may carry out similar activities, the assumption might be questionable given the differences in staff resources in House and Senate offices, as well as potential differences among offices of each chamber, particularly the Senate. Genera lizations about staff roles and duties may also be limited in some ways due to the broad discretion Members have with regard to running their office activities. Variations from office to office, which might include differences in job duties, work schedules, office emphases, and other factors, may limit the extent to which sample position expectations might match operational practices in all congressional offices. This is one of several CRS products on congressional staff. To access those products, see CRS Report R44688, Congressional Staff: CRS Products on Size, Pay, and Job Tenure .

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<1. Overview> The International Trade Administration (ITA), the U.S. International Trade Commission (USITC), and the Office of the United States Trade Representative (USTR) are funded through the annual Commerce, Justice, Science, and Related Agencies (CJS) appropriations. This report provides an overview of these agencies' programs and a comparison of the FY2020 CJS proposals with the previous year's enacted legislation. For FY2019, the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), provided a total of $647.0 million in funding for the three CJS trade-related agencies. The FY2019 act provided $484.0 million in direct appropriations for ITA, $95.0 million for USITC, and a total of $68.0 million for USTR. The FY2019 appropriations for the three CJS trade-related agencies was a 0.2% decrease (-$1.3 million) from FY2018 appropriations ($648.3 million). For FY2020, the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ), provided $678.7 million for the three trade-related agencies, which was $31.7 million (4.9%) more than the FY2019 amount, and $58.5 million (9.4%) more than the Administration's request. See the Appendix for enacted budget authority for the trade-related agencies for FY2009-FY2020. In the FY2020 budget cycle, the House and Senate each passed different versions of their CJS proposals under the same bill number, H.R. 3055 . In this report, the House and Senate versions of H.R. 3055 refer to the CJS provisions passed on June 25, 2019 (House) and October 31, 2019 (Senate). The CJS provisions were later struck from H.R. 3055 , and a continuing resolution was inserted in their place. The CJS provisions were then inserted into a new measure, H.R. 1158 , which passed both chambers and was signed into law as the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ). <2. FY2020 Appropriations> The President submitted his FY2020 budget request to Congress on March 11, 2019. The agencies released their congressional budget justification documents in the weeks afterward. In the President's FY2020 budget, the Administration requested a total of $620.2 million for the three CJS trade-related agencies. This request was $26.8 million less (-4.1%) than the FY2019 enacted level. The House Committee on Appropriations reported its FY2020 CJS appropriations proposal, H.R. 3055 , in early June 2019 and passed the measure on June 25, 2019 by a 227-194 vote. The House-passed bill included a total of $694.0 million for the three CJS trade-related agencies. This proposal was $47.0 million more (7.3%) than the FY2019 enacted funding, and $73.8 million more (11.9%) than the Administration's request. The House-passed bill included $521.0 million for ITA, $101.0 million for USITC, and a total of $72.0 million for USTR. The Senate Committee on Appropriations reported its CJS bill, S. 2584 , on September 26, 2019. In late October, the Senate took up the House-adopted proposal, H.R. 3055 , and passed it with amendments by a vote of 84-9. The Senate-passed version of H.R. 3055 included a total of $678.7 million for the three CJS trade-related agencies, which was $31.7 million more (4.9%) than the FY2019-enacted amount and $58.5 million more (9.4%) than the Administration's request. The Senate-passed version included $510.3 million for ITA, $99.4 million for USITC, and a total of $69.0 million for USTR. The Senate's proposed funding levels were enacted in the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ). The President signed the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ), on December 20, 2019, approving FY2020 annual appropriations for the three CJS trade agencies. The act provided $678.7 million for these agencies, which was $31.7 million more (4.9%) than the FY2019 amount, and $58.5 million more (9.4%) than the Administration's request. (For a full summary, see Table 1 ) <2.1. International Trade Administration (ITA)10> The International Trade Administration is a bureau within the Department of Commerce. ITA's mission is to improve U.S. prosperity by strengthening the competitiveness of U.S. industry, promoting trade and investment, and ensuring compliance with trade laws and agreements. ITA provides export promotion services; works to enforce and ensure compliance with trade laws and agreements; administers trade remedies such as antidumping and countervailing duties; and provides analytical support for ongoing trade negotiations. ITA went through a major organizational change in October 2013 in which it consolidated four organizational units into three more functionally aligned units: (1) Global Markets, (2) Enforcement and Compliance, and (3) Industry and Analysis. ITA also has a fourth organizational unit, the Executive and Administrative Directorate, which is responsible for providing policy leadership, information technology support, and administration services for all of ITA. ( Table 2 outlines ITA FY2020 budget proposals by unit, and Table A-1 shows budget amounts for ITA by unit between FY2009 and FY2019.) For FY2020, the Administration requested $460.1 million for ITA in direct appropriations, with an additional $11.0 million to be collected in user fees, for a total of $471.1 million in authorized spending. With respect to direct appropriations, this request was $23.9 million less (-4.9%) than the FY2019 enacted funding level. The House-passed H.R. 3055 included $521.0 million in direct appropriations for ITA, with an additional $11.0 million to be collected from user fees, for a total of $532.0 million in authorized spending. With respect to direct appropriations, this proposal was $37.0 million more (7.6%) than the FY2019 enacted funding level and $60.9 million more (13.2%) than the Administration's request. The Senate-passed version proposed $510.3 million in direct appropriations for ITA with an additional $11.0 million to be collected from user fees, for a total of $521.3 in authorized spending. With respect to direct appropriations, this proposal was $26.3 million more (5.4%) than the FY2019 funding, and $50.2 million more (10.9%) than the Administration's request. The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ), adopted the Senate-proposed funding level of $510.3 for ITA's top-level funding ( Table 1 ). <2.1.1. Global Markets Unit> ITA's Global Markets (GM) unit is a combination of the United States and Foreign Commercial Service (US&FCS) program that provides export promotion services to U.S. businesses and the SelectUSA program that works to attract foreign investment into the United States. Through US&FCS, GM aims to promote U.S. exports by helping U.S. exporters research foreign markets and identify opportunities abroad. GM's country and regional experts in domestic and overseas offices advise U.S. companies on market access, local standards, and regulations. The unit also helps to make connections through business-to-business trade shows, fairs, and missions. GM is designed to advance U.S. commercial interests by engaging with foreign governments and U.S. businesses, identifying and resolving market barriers, and leading efforts that advocate for U.S. firms with foreign governments. Through its SelectUSA program, the GM unit promotes the United States as a destination for foreign investment. (For more on SelectUSA, see section " SelectUSA Program " below.) For FY2020, the Administration proposed reducing funding for the Global Markets unit. The Administration requested $278.0 million for Global Markets, an amount $42.0 million less (-13.1%) than the FY2019-enacted amount ( Table 2 ). The Administration proposed rescaling the Global Markets unit by "reducing personnel worldwide and closing overseas and domestic offices ITA estimated the need to close 32 offices overseas, 18 offices domestically, and reduce personnel [by 114 positions]" in an effort "to reduce fixed operational expenses. " In the reports accompanying the committee-reported bills, the House and Senate Committees did not adopt the Administration's proposed cuts to Global Markets, and instead recommended boosting funding for the Global Markets unit. For FY2020, the House Appropriations Committee recommended $338.6 million for Global Markets, an amount $18.6 million more (5.8%) than the FY2019 enacted funding level and $60.7 million more (21.8%) than the Administration's request. The Senate Committee on Appropriations recommended $335.3 for Global Markets, which was $15.3 million more (4.8%) than the FY2019 enacted amount, and $57.3 million more (20.6%) than the Administration's request. The report to accompany the Senate committee-reported CJS appropriations bill included language directing ITA to spend "no less than $130 million on employee compensation [for Global Markets];" and noted that, "at this funding level, the Committee will not approve any request to close foreign or domestic offices." As outlined in the explanatory statement accompanying the act, the Consolidated Appropriations Act, 2020, provided "no less than $333,000,000 for Global Markets." <2.1.2. Enforcement and Compliance> The mission of ITA's Enforcement and Compliance unit is to enforce U.S. trade laws and ensure compliance with negotiated international trade agreements. The Enforcement and Compliance unit is responsible for enforcing U.S. antidumping and countervailing duty (AD/CVD) laws; overseeing a variety of programs and policies regarding the enforcement and administration of U.S. trade remedy laws; assisting U.S. industry and businesses with unfair trade matters; and administering the Foreign Trade Zone program and other U.S. import programs. For FY2020, the Administration proposed $93.8 million for Enforcement and Compliance. This request was $5.3 million more (6.0%) than the FY2019 budget authority ( Table 2 ). According to ITA's congressional budget submission, some of the Administration's objectives for the proposed increase for Enforcement and Compliance were: to address increasing caseloads of AD/CVD investigations; to provide technical assistance on Section 232 exclusion requests; and to establish a dedicated team to investigate allegations of circumvention and duty evasion by foreign exporters and their U.S. importers. For FY2020, the House-passed version of H.R. 3055 included $94.8 million for Enforcement and Compliance, which was $6.3 million more (7.2%) than the FY2019 budget authority, and $1.0 million more (1.1%) than the Administration's request ( Table 2 ). In the Senate, language in the report accompanying the Senate committee-reported bill recommended "$1,000,000 above the fiscal year 2019 enacted level [$88.5 million] for the Office of Enforcement and Compliance to establish a dedicated anti-circumvention and duty evasion enforcement unit." The explanatory statement accompanying the Consolidated Appropriations Act, 2020, did not provide specific funding levels. The statement outlined that: The agreement does not assume House levels for Industry and Analysis, Enforcement and Compliance, and Executive Direction and Administration. However, ITA is directed to take steps to fill important vacancies across the agency in support of trade promotion, facilitation, and enforcement, as well as additional staff to support the Committee on Foreign Investment in the United States and the new Anti-Circumvention and Evasion Unit. <2.1.3. Industry and Analysis> ITA's Industry and Analysis unit brings together ITA's industry, trade, and economic experts to advance the competitiveness of U.S. industries through the development and execution of international trade and investment policies, export promotion strategies, and investment promotion. It develops economic and international policy analysis to improve market access for U.S. businesses, and designs and implements trade and investment promotion programs. The unit serves as the primary liaison between U.S. industries and the federal government on trade and investment promotion. It administers programs that support small and medium-sized enterprises, such as the Market Development Cooperator Program. For FY2020, the Administration proposed increasing funding for the Industry and Analysis unit. The Administration requested $62.6 million for Industry and Analysis. This request was $10.0 million more (19.1%) than the FY2019 budget authority ( Table 2 ). According to ITA's budget justification, some of the Administration's objectives for the proposed increase were: to meet the expected increase in cases related to foreign investment in the United States and to implement the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA); to develop staff with economic modeling skills and sectoral expertise; to manage the trade processes related to the tariffs imposed under certain U.S. trade law (Sections 301, 201, 232 ); and to provide analysis relevant to ongoing and future trade negotiations and the resolutions of trade barriers. For FY2020, the House-passed bill included $62.6 million for Industry and Analysis, which was $10.0 million (19.1%) more than the FY2019 budget authority and equal to the Administration's request ( Table 2 ). In the Senate, a specific funding level was not provided for Industry and Analysis. Language in the report accompanying the Senate committee-reported CJS bill did recommend "provid[ing] the requested program changes for Industry and Analysis to implement [FIRRMA] ( P.L. 116-115 232) and for increased analytical capabilities." The explanatory statement accompanying the Consolidated Appropriations Act, 2020, did not provide specific funding levels. The statement outlined that: The agreement does not assume House levels for Industry and Analysis, Enforcement and Compliance, and Executive Direction and Administration. However, ITA is directed to take steps to fill important vacancies across the agency in support of trade promotion, facilitation, and enforcement, as well as additional staff to support the Committee on Foreign Investment in the United States and the new Anti-Circumvention and Evasion Unit. <2.2. U.S. International Trade Commission (USITC or the Commission)> USITC is an independent, quasi-judicial agency responsible for conducting trade-related investigations and providing independent technical advice on U.S. international trade policy to Congress, the President, and USTR. The Commission (1) investigates and determines whether imports injure a domestic industry or violate U.S. intellectual property rights; (2) provides independent tariff, trade, and competitiveness-related analysis to the President, Congress, and USTR; and (3) maintains the U.S. tariff schedule. USITC also serves as a federal resource for trade data and other trade policy information. It makes most of its information and analyses available to the public to promote understanding of competitiveness, international trade issues, and the role that international trade plays in the U.S. economy. USITC's annual budget request to Congress is subject to two types of submission: (1) the President's budget request for the Commission, included in the President's annual budget; and (2) the Commission's independent budget request. USITC has the authority to submit its budget directly to Congress without revision by the President, pursuant to Section 175 of the Trade Act of 1974. The President's FY2020 budget requested $91.1 million in funding for USITC. This request was $3.9 million less (-4.1%) than FY2019-enacted appropriation ( Table 1 ). While the President requested a decrease in funding for USITC, the Commission's independent budget submission requested $101.0 million, which was $6.0 million more (6.3%) than FY2019 funding and $9.9 million more (10.9%) than the President's budget request. The House-passed H.R. 3055 included $101.0 million for USITC. This represented $6.0 million more (6.3%) than FY2019 funding and $9.9 million more (10.9%) than the President's budget request. The Senate-passed version of H.R. 3055 included $99.4 million for USITC. This proposal was $4.4 million more (4.6%) than the FY2019 funding, and $8.3 million more (9.1%) than the President's budget request. The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) enacted the Senate's funding level of $99.4 million for USITC ( Table 1 ). <2.3. Office of the U.S. Trade Representative (USTR)> USTR has primary responsibility for developing and coordinating U.S. international trade and direct investment policies, as the head of the interagency trade policy coordinating process. Located in the Executive Office of the President, USTR is the President's principal advisor on trade policy and the President's chief negotiator for international trade agreements, including commodity and direct investment negotiations. USTR negotiates directly with foreign governments to create trade agreements and resolve disputes, and participates in global trade policy organizations such as the World Trade Organization. It also meets with business groups, policymakers, and public interest groups on trade policy issues. In addition to direct appropriations for USTR, supplementary funding for the agency is available through the congressionally established Trade Enforcement Trust Fund. For more detail on the trust fund, see section " Trade Enforcement Trust Fund (TETF) " below. For FY2020, the Administration requested a total of $69.0 million for USTR, including $59.0 million for salaries and expenses and $10.0 million to be derived from the TETF for certain trade enforcement activities ( Table 3 ). This request was $1.0 million more (1.5%) than the FY2019 enacted funding level. The House-passed version of H.R. 3055 recommended a total of $72.0 total for USTR, including $57.0 million for salaries and $15.0 million to be derived from the TETF for certain trade enforcement activities ( Table 3 ). The House proposal for USTR was $4.0 million more (5.9%) than the FY2019 enacted funding and $3.0 million more (4.3%) than the request. The Senate-passed version recommended a total of $69.0 million for USTR, including $54.0 million for salaries and expenses and $15.0 million to be derived from the TETF. The proposed amount was $1.0 million more (1.5%) than the FY2019 funding amount. While the Senate-passed total funding amount for USTR was equal to the Administration's request, it included a different distribution of funds between USTR's salaries and expenses account and funds to be derived from the TETF (see Table 3 ). The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) enacted the Senate's funding levels of $69.0 million for USTR, including $54.0 million for salaries and expenses and $15.0 million to be derived from the TETF ( Table 3 ). <2.4. Selected Trade-Related Programs and Activities> Over the past decade, Congress has provided funding for specific trade-related programs or activities within broader agency budgets. The following programs are highlighted in this report, due to ongoing congressional interest: (1) ITA's China trade enforcement and compliance activities; (2) ITA's investment promotion activities in its SelectUSA Program; (3) the Survey of International Air Travelers (SIAT) within ITA; and (4) the Trade Enforcement Trust Fund, which funds certain activities of USTR. <2.4.1. China Trade Enforcement and Compliance Activities, ITA> Since 2004, Congress has dedicated some of ITA's funding to AD/CVD enforcement and compliance activities with respect to China and other nonmarket economies. ITA's Office of China Compliance was established by the Consolidated Appropriations Act of 2004 ( P.L. 108-199 ). Its primary role has been to enforce U.S. AD/CVD laws and to develop and implement other policies and programs aimed at countering unfair foreign trade practices in China. ITA's China Countervailing Duty Group was established by the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ) to accommodate the workload that resulted from the application of countervailing duty law to imports from nonmarket economy countries. The Office of China Compliance is within the Enforcement and Compliance unit at ITA. ITA's FY2020 budget justification did not provide a breakdown of funding for its China AD/CVD activities. In agreement with both the House and Senate-passed proposals, the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) provided $16.4 million for China antidumping and countervailing duty enforcement and compliance activities in FY2020, an amount equal to the FY2019-enacted funding. <2.4.2. SelectUSA Program, ITA> SelectUSA was established by executive order in 2011 as a Commerce Department program to (1) promote the United States as an investment market and (2) address investor climate concerns that could impede investment in the United States. SelectUSA coordinates investment-related resources across more than 20 federal agencies; serves as an information resource for international investors; and advocates for U.S. cities, states, and regions as investment destinations. SelectUSA currently is part of ITA's Global Markets unit. ITA's FY2020 budget justification did not provide a breakdown for requested funding for SelectUSA. The House-passed H.R. 3055 also did not include a breakdown for specific funding for SelectUSA, within ITA's Global Markets unit. The Senate-passed H.R. 3055 included up to $10.0 million for SelectUSA for FY2020. The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) adopted the Senate funding level. <2.4.3. Survey of International Air Travelers (SIAT), ITA> ITA's Survey of International Air Travelers (SIAT) gathers statistics about air passenger travelers in the United States. Federal agencies use these statistics for a variety of purposes, such as to estimate the contribution of international travel to the economy, develop public policy on the travel industry, and forecast staffing needs at consulates and ports of entry. SIAT is within the Industry and Analysis unit at ITA. The Administration proposed an increase of $3.0 million to support SIAT in FY2020, within the Industry and Analysis' funding. The House and Senate both recommended $3.0 million to support SIAT in FY2020, within the ITA budget. The Consolidated Appropriations Act, 2020, did not provide a specific funding amount for SIAT. <2.4.4. Trade Enforcement Trust Fund (TETF), USTR> In order to provide additional funding for USTR's trade enforcement activities, Congress established the Trade Enforcement Trust Fund (TETF) in 2016. In Section 611 of the Trade Facilitation and Trade Enforcement Act of 2015 ( P.L. 114-125 ), Congress set up the trust fund and outlined authorized uses of the funds. According to Section 611(d), USTR can use funds from the TETF to (1) monitor and enforce trade agreements and World Trade Organization (WTO) commitments; (2) support trade capacity-building assistance to help partner countries meet their free-trade agreement obligations and commitments; and (3) investigate petitions concerning unfair trade practices under Section 301 of the Trade Act of 1974. USTR can also transfer funds to select federal agencies for trade enforcement activities authorized in Section 611(d) of the Trade Facilitation and Trade Enforcement Act of 2015. For FY2020, the Administration requested $10.0 million to be derived from the TETF. This request was $5.0 million less than the FY2019-enacted amount. (See Table 3 ). Both the House- and Senate-passed versions of H.R. 3055 included $15.0 million to be derived from the TETF, for trade enforcement activities authorized by the Trade Facilitation and Trade Enforcement Act of 2015. The recommendations were equal to the FY2019 enacted funding level, and were $5.0 million more than the Administration's request. (See Table 3 .) The House and Senate Appropriation committees also directed USTR to provide more detailed reporting on how funds from the Trust Fund are used. The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) provided $15.0 million to be derived from the TETF, for trade enforcement activities authorized by the Trade Facilitation and Trade Enforcement Act of 2015. The funding level was equal to the FY2019 enacted funding level, and was $5.0 million more than the Administration's request. <2.4.4.1. Appendix. Budget Authority Tables>

This report provides an overview of the Fiscal Year (FY) 2020 budget request and appropriations for the International Trade Administration (ITA), the U.S. International Trade Commission (USITC), and the Office of the United States Trade Representative (USTR). These three trade-related agencies are funded through the annual Commerce, Justice, Science, and Related Agencies (CJS) appropriations. This report also provides a review of these trade agencies' programs. The Administration's FY2020 Budget Request The President submitted his budget request to Congress on March 11, 2019. For FY2020, the Administration requested a total of $620.2 million for the three CJS trade-related agencies. The request was $26.8 million less (a 4.1% decrease) than the FY2019 appropriated amount. The request included the following for the three agencies. ITA : $460.1 million, 4.9% less than the FY2019 amount. USITC : $91.1 million, 4.1% less than the FY2019 amount. USTR : $69.0 million, 1.5% more than the FY2019 amount. Congressional Actions The House Committee on Appropriations reported its FY2020 CJS appropriations proposal, H.R. 3055 , in early June 2019 and passed the measure on June 25, 2019 by a 227-194 vote. The House-passed bill included a total of $694.0 million for the three CJS trade agencies, which was $47.0 million (or 7.3%) more than the FY2019-enacted amount, and $73.8 million (11.9%) more than the Administration's request. The House proposal included the following for the three agencies. ITA : $521.0 million, 7.6% more than the FY2019 amount, and 13.2% more than the Administration's request. USITC : $101.0 million, 6.3% more than the FY2019 amount, and 10.9% more than the Administration's request. USTR : $72.0 million, 5.9% more than the FY2019 amount, and 4.3% more than the Administration's request. The Senate Committee on Appropriations reported a CJS bill, S. 2584 , on September 26, 2019. In late October, the Senate took up the House-adopted CJS proposal, H.R. 3055 , and passed it with amendments, by a vote of 84-9 on October 31, 2019. The Senate-passed version included a total of $678.7 million for the three CJS trade agencies, which was $31.7 million (4.9%) more than the FY2019-enacted amount, $58.5 million (9.4%) more than the Administration's request, and overall $15.3 million less than the House-adopted bill. The Senate-passed version included the following for the three trade agencies. ITA : $510.3 million, 5.4% more than the FY2019 amount, and 10.9% more than the Administration's request. USITC : $99.4 million, 4.6% more than the FY2019 amount, and 9.1% more than the President's budget request. USTR : $69.0 million, 1.5% more than more than the FY2019 amount, and equal to the Administration's request. On December 20, 2019, the President signed the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ), approving FY2020 annual appropriations for the three CJS trade agencies. The act included the Senate's proposed funding levels for these agencies. The act provided $678.7 million for the three trade-related agencies, which was $31.7 million (4.9%) more than FY2019, and $58.5 million (9.4%) more than the Administration's request. The act provided the following for the three trade-related agencies. ITA : $510.3 million, 5.4% more than the FY2019 amount, and 10.9% more than the Administration's request. USITC : $99.4 million, 4.6% more than the FY2019 amount, and 9.1% more than the Administration's request. USTR : $69.0 million, 1.5% more than more than the FY2019 amount, and equal in total to the Administration's request.

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<1. Introduction> Congress has a long-standing interest in ensuring access to broadband internet service in rural areas. Federal subsidies underwritten by taxes and long-distance telephone subscriber fees have injected billions of dollars into rural broadband markets over a period of decades mostly on the supply side in the form of grants, loans, and direct support to broadband providers. As of 2019, more than 20 million Americans still lacked broadband access. According to many stakeholders and policy experts, federal spending on broadband expansion has not adequately accounted for local conditions in rural areas that depress effective demand for broadband. Lower demand in rural areas may discourage private-sector investment and reduce the effectiveness of federal efforts to expand and improve broadband service. According to the authors of a 2015 study on rural broadband expansion, "While the vast majority of federal programs dealing with broadband have focused on the provision of infrastructure, many economists and others involved in the debate have argued that the emphasis should instead be on increasing demand in the areas that are lagging behind." The study found that rural households' broadband adoption rate lagged that of urban households by 12-13 percentage points and that while 38% of the rural-urban "broadband gap" in 2011 was attributable to lack of necessary infrastructure, 52% was attributable to lower adoption rates. "Implicit in many supply-side arguments is an assumption that demand-side issues will resolve themselves once there is ample supply of cheap and ultra-fast broadband," wrote the directors of the Advanced Communications Law & Policy Institute (ACLP) in a public comment to the Commerce Department's Broadband Opportunity Council in 2015. "Though appealing, this reductive cause and effect has been questioned by social scientists, researchers, practitioners, and others who have worked to identify and better understand the complex mechanics associated with broadband adoption across key demographics and in key sectors." The geographic and demographic distribution of rural broadband demand is uneven. There is unmet demand in some rural areas. In others, even where there is access, that may not translate into widespread adoption. Observers cite a range of factors. On average, rural areas are less wealthy than urbanized areas, and have older populations with lower educational attainment factors which negatively correlate with demand for broadband service. Related barriers to adoption, such as lower perceived value, affordability, computer ownership, and computer literacy, have persisted over many years. Rural areas with relatively favorable geography and demographics may attract significant investment in broadband service, but even subsidies may fail to spur buildout in less-attractive rural markets. This report complements separate CRS analyses of major federal subsidy programs on the supply side of the market by providing an analysis of demand-side issues at the nexus of infrastructure buildout and adoption. It focuses exclusively on demand for fixed broadband among rural households and small businesses. It does not address the role of schools, healthcare facilities, public libraries, and other "community anchor institutions" as end users of broadband. However, it does include discussion of the role schools and libraries play as providers of broadband service and training to rural residents who may lack home access to the internet, and how this may affect overall household adoption behavior. It also includes discussion of broadband-enabled services, such as telemedicine and precision agriculture, which may incentivize more rural households and small businesses to adopt broadband service. The report begins with a discussion of the rural broadband market specifically, the characteristics of demand in rural households and small businesses, and how these affect private-sector infrastructure investments. It then provides a survey of federal broadband programs and policies designed to spur broadband buildout and adoption, with a discussion of how demand-side issues may impede achievement of these goals. It concludes with a discussion of selected options for Congress. <2. The Rural Broadband Market> According to the U.S. Census Bureau, 60 million Americans, or 19.3% of the total population, live in rural areas, defined as "all population, housing, and territory not included within an urbanized area or urban cluster." As of 2010, urbanized areas and urban clusters occupied about 3% of the U.S. land mass, yet contained more than 80% of the U.S. population. As a result, fixed broadband network infrastructure, which largely relies on wireline connections to the physical addresses of subscribers, is geographically concentrated. Urban areas have benefited from this concentration, especially areas with favorable geographic locations and economic conditions. For example, the City of Huntington Beach, CA, charges broadband providers rent for access to its utility poles $2,000 per pole per year and leases access to city-owned fiber-optic cable (fiber) infrastructure. "We continue to have a lot of carriers wanting to site on our poles in our downtown area which is next to the beach," a city official said during a 2019 webinar, noting that other, less favorably located cities had not been able to duplicate Huntington Beach's development model. "[An] inland city is not going to get what we get here on the coast." In contrast, in many rural areas, the cost of providing broadband service may approach or even exceed the predicted return on investment. Broadband providers may not be willing to serve these areas without support from direct government subsidies, grants, or loans. Local conditions in rural areas vary widely, though. Some rural markets may be relatively attractive on commercial terms, because of unique characteristics such as the presence of post-secondary educational institutions or tourism attractions, relatively high levels of economic development and educational attainment, favorable demographics, or proximity to urban areas. Other rural markets that lack these characteristics are likely to be less commercially attractive. Long-term demographic trends suggest a growing bifurcation of the rural broadband market. According to a 2018 U.S. Department of Agriculture (USDA) analysis, rural areas have witnessed "declining unemployment, rising incomes, and declining poverty," as well as more favorable net migration rates since 2013. However, the analysis also found that "people moving to rural areas tend to persistently favor more densely settled rural areas with attractive scenic qualities, or those near large cities. Fewer are moving to sparsely settled, less scenic, and more remote locations, which compounds economic development challenges in those areas." For reasons that will be explained in more detail below, household and small business demand for broadband service is likely to be impacted in rural areas by demographic trends, geography, and economic context. As a result, these factors affect the infrastructure investment behavior of broadband providers, raising policy questions about the appropriate level of federal assistance and how it can be distributed most effectively and efficiently. The next three sections of this report discuss the adoption of broadband service by rural households and rural small businesses and the implications of market demand for private-sector investment in rural broadband infrastructure. <2.1. Valuation of Broadband Service by Rural Households> Adoption rates for broadband service are highly dependent on the valuation that households and small businesses place on internet access. Studies suggest that on average, valuation of internet access measured as willingness to pay for broadband service is lower for rural households than for urban households. Knowledge of computers, computer ownership, and perceived relevance of the internet all of which affect consumer valuation tend to be lower among older, less educated, and less wealthy households. Because rural households tend to be older, less educated, and less wealthy than their urban counterparts, their willingness to pay for broadband also tends to be lower. Not all households are the same, of course. A substantial number of low-income households do not subscribe to broadband service even when it is offered to them at no cost, indicating a valuation of zero. At the same time, many reports indicate that some rural residents are willing go to extensive lengths to access the internet for tasks they view as essential, even if broadband service is not available at their home or business. The relatively lower proportion of potential subscribers in rural areas who are both highly motivated to adopt broadband and are able to pay for it complicates the business case. A 2010 study, based on a report commissioned by the Federal Communications Commission (FCC), found that survey respondents were, on average, willing to pay an extra $45 per month for "fast" speeds adequate for music, photo sharing, and videos. However, on average, respondents were only willing to pay an extra $48 a difference of $3 for "very fast" speeds adequate for gaming, large file transfers, and high-definition movies. Households that already had relatively high speed broadband were generally willing to pay more than average for very fast service. While consumer expectations have certainly evolved over the past decade, the 2010 study's findings are broadly consistent with those of subsequent studies: most consumers, regardless of where they reside, value basic internet access at speeds adequate for everyday use, but only a relative few are willing to pay substantially more for very high speeds. Members of the latter group generally have higher levels of broadband connectivity than others, and belong to relatively wealthier, better-educated demographic groups. The FCC sponsored a series of field experiments, beginning in 2012, to gain better understanding of broadband demand among low-income households. The goal of these experiments was to inform administration of the federal Lifeline program, which subsidizes voice and broadband service charges for qualifying low-income consumers. A 2015 report on a field experiment conducted in West Virginia and eastern Ohio found that Lifeline-eligible non-subscribers in that region were overwhelmingly willing to pay $3 more per month to move from bottom-tier speeds (1 megabits-per-second (Mbps), offered at $31.99 per month) to moderate broadband speeds (6 Mbps, offered at $34.99 per month). However, only one out of 118 participants was willing to pay $44.99 per month an extra $10 to double their maximum download speed from 6 to 12 Mbps. The Lifeline program itself has long been undersubscribed, despite the fact that it frequently reduces consumer out-of-pocket costs to zero (see text box above, "Why Is the Lifeline Program Undersubscribed?"). A 2014 study, based on a survey funded by the Department of Commerce of 15,000 non-adopting households at all income levels, found that approximately two-thirds of respondents would not consider adopting broadband at any price, and that non-adopters were disproportionately rural (36% of non-adopters lived in rural areas, as compared to 19.3% of all Americans). The remaining one-third of respondents voiced interest in broadband adoption. Rural respondents were more likely to belong to this group than their urban counterparts, despite making up a disproportionately large share of non-adopters overall. These respondents most commonly identified price and availability as the main barriers to adoption. The study authors estimated that achieving a 10% increase in subscribership among members of the group who reported price as a factor in their decision would require an average price decrease of 15%. A 2012 study of broadband usage among Kentucky farmers broadly tracks with other studies that show a higher propensity for broadband adoption among younger, better educated, higher earning, business-oriented households with experience using the internet, regardless of location. The study found that a representative 45-year-old producer earning more than $50,000 on a 750 acre farm, who had experience using the internet but did not have broadband access, was willing to pay $171.42 as a hypothetical one-time property tax payment to support buildout of the necessary local infrastructure to provide broadband access to area farms. On the other end of the spectrum, a representative 63-year-old producer with a 250 acre farm earning less than $50,000, who had not subscribed to broadband service even when it was available, was willing to pay a one-time payment of just 20 cents to support broadband infrastructure improvements. The average age of survey respondents was 59.2 years. The Kentucky Department of Agriculture reported in 2019 that the demographic profile of Kentucky farmers is shifting, including a larger number of younger producers. This demographic shift may lead to increased demand for broadband service expansion and improvements in the rural areas of Kentucky where it is most pronounced. Given that demographic trends vary at the local level, though, they will likely not affect broadband market development equally in all parts of the state. <2.2. Valuation of Broadband Service by Rural Small Businesses> Small businesses are generally more likely than residential households to regard broadband internet access as essential. However, within the small business sector there are significant differences in willingness to pay for any given level of service. Businesses with relatively modest data requirements may elect not to upgrade to a higher tier of service if the expected productivity benefits are less than the expected subscription and equipment upgrade costs. A 2010 study sponsored by the Small Business Administration (SBA), in fulfilment of requirements of the Broadband Data Improvement Act ( P.L. 110-385 ), found that "broadband is central to U.S. small businesses in ways that it is not to individuals. The small business broadband adoption rate has increased to 90% as of the date of this survey (April 2010), compared to 74% of adults with broadband access in their homes.... " Surveys conducted for the SBA study showed that both rural and urban respondents viewed high-speed internet "as an essential service" that enabled them to "achieve strategic goals, improve competitiveness and efficiency, reach customers, and interact with vendors." However, the study found that non-agricultural rural businesses were significantly less likely to have their own website than their urban counterparts were. Likewise, they were less likely to be willing to pay substantially more for improved service, even though the study found that they rated the quality of service in rural areas lower than respondents in urban areas did. Most rural businesses surveyed indicated that they were not willing to pay 10% more for significantly improved service. Studies that are more recent have made similar findings. Although basic access to the internet in rural areas is much more widespread than it was a decade ago, usage practices of many small businesses do not appear to have changed significantly. Most appear to value basic internet access to support a few essential low-bandwidth functions, such as making the name and location of the business available on internet searches, but proportionately fewer appear to demand high-bandwidth advanced business applications. For example, a 2017 study comparing selected rural and urban areas of North Carolina found that many small rural businesses have no web presence beyond a listing in Google search results, and that more than half of those businesses that did have a web page used it solely to provide basic information about the business. "Overall, small rural businesses are not using internet-based technology to support their businesses. While they may have broadband access, their use of websites, e-commerce and social media is limited, and it is significantly lower than small urban businesses," the study authors wrote. Apparently, small businesses find internet access useful, but many do not use applications requiring high bandwidth. It is not clear from these results what immediate benefits would be provided to non-intensive business users in remote rural areas by improvements in broadband service speed and quality. However, broadband advocacy groups have suggested that emerging new applications and encouraging small businesses to adopt more sophisticated web development strategies may increase demand for improved service over time. Other studies indicate that the type and location of business activity may have a significant influence on demand for higher-speed broadband. The businesses covered in the North Carolina study were, by and large, small retail establishments in isolated rural areas. Businesses in "intermediate" exurban locales that work in healthcare or knowledge-intensive sectors are more likely to use high-bandwidth applications, according to one study. For example, a survey of local businesses by the Central Coast Broadband Consortium, a nonprofit representing independent broadband providers serving the greater Monterey Bay area, found that business respondents had significant data and file transfer needs. The area surveyed includes many sparsely populated rural areas with difficult terrain, but it is also home to significant tourist destinations, large agriculture enterprises, and a University of California campus, and its northern boundary extends to the exurbs of San Jose, one of the most highly developed technology hubs in the nation. <2.3. Market Demand and Private-Sector Investment> Observers often comment that rural broadband markets are hyper-local that is, that conditions affecting broadband deployment and adoption vary widely from one area to the next. Historically, investments in broadband infrastructure have tended to cluster in areas with lower risk and potentially higher returns. Broadband providers may view investment in rural markets with little history of internet usage as a high-risk endeavor. Subsidies may lower financial risk to broadband providers, but do not change their basic preference for low-risk, high-return projects, which guides private sector investment in expansion of broadband service. In a 2019 report, Merit Network, Inc., a nonprofit corporation owned and governed by Michigan's public universities, highlighted the business challenges faced by broadband providers in nascent rural broadband markets. According to the report, "Despite the significant qualitative benefits that a broadband project may bring, depending on the method of financing, it is critical to accurately estimate adoption rates and build a solid financial model to ensure that adequate revenue will be achieved to repay any loan obligations, maintain ongoing operations and fund depreciation of capital equipment." "Even if rural areas are profitable for telecommunications companies, urban areas offer still higher returns on investment. This makes rural areas less attractive markets and perpetuates the urban focus of market decisions," according to the authors of one academic study. "The market for telecommunications shows that a free-market rationale can ensure an efficient use of limited resources, i.e. using the resources for profitable markets in high-density areas, but it cannot ensure an equal delivery of services in all areas, leaving the rural underserved." A 2019 report from the Arkansas governor's office stated that low broadband adoption rates "have consistently been a primary barrier to investment by the provider community." Noting that age affects adoption rates, the report concluded that "increased adoption within [the older] demographic has the potential to strengthen the business case for broadband deployment." The Arkansas report also highlighted low statewide enrollment in the Lifeline program as a barrier to investment. The FCC estimates that the Lifeline enrollment rate was 18% for Arkansas in 2018. The Arkansas report found that "raising adoption rates [of the Lifeline program] could also strengthen the business case for private companies to invest in broadband infrastructure, resulting in better internet access for both poor and non-poor Arkansans.... " Studies elsewhere have found a similar relationship between demand and investment. For example, in a 2015 report on its broadband expansion projects, the Appalachian Regional Commission, which serves 13 Appalachian states, found that "broadband internet service providers [are] less likely to provide services in sparsely populated areas because it initially has a lower return on investment and is less cost-effective." <3. Federal Programs and Policies> Federal programs and policies play a significant role in the development of rural broadband markets, given their often-challenging economics. In 2018, USDA and the FCC spent a combined $9.1 billion on broadband programs, largely in rural areas (see Figure 1 ). The following four sections discuss the major USDA and FCC broadband programs, rural considerations for the FCC's broadband speed benchmarks, demand factors in awarding federal funds for broadband infrastructure buildout, and selected federal broadband adoption programs that may influence rural demand. <3.1. Major USDA and FCC Broadband Programs> There are two major sources of federal funding for broadband in rural areas: the broadband and telecommunications programs of the USDA's Rural Utilities Service (RUS) and the Universal Service Fund (USF) programs of the FCC. Most of these programs focus on the supply side, targeting infrastructure deployment, but they also include some affordability initiatives that offer limited discounts on broadband subscription costs to low-income households, certain rural healthcare providers, and schools. <3.1.1. Rural Utilities Service Programs34> The RUS houses three ongoing assistance programs exclusively dedicated to financing broadband deployment: the Rural Broadband Access Loan and Loan Guarantee Program, the Community Connect Grant Program, and the ReConnect Program. The primary legislative authority for the Rural Broadband Access Loan and Loan Guarantee Program, and the Community Connect Grant Program, derives from the Rural Electrification Act of 1936, which Congress subsequently amended in various farm bills to support broadband buildout in rural areas. Section 6103 of the Farm Security and Rural Investment Act of 2002 ( P.L. 107-171 ) amended the Rural Electrification Act of 1936 to authorize the Rural Broadband Access Loan and Loan Guarantee Program to provide funds for the costs of the construction, improvement, and acquisition of facilities and equipment for broadband service in eligible rural communities. The 2018 farm bill ( P.L. 115-334 , Agriculture Improvement Act of 2018) authorized a grant component the Community Connect program in combination with the broadband loan program. This provision increased the annual authorization level from $25 million to $350 million, raising the proposed service area eligibility threshold of unserved households from 15% to 50% for broadband loans; authorizing grants, loans, and loan guarantees for middle mile infrastructure; directing improved federal agency broadband program coordination; and providing eligible applicants with technical assistance and training to prepare applications. Congress authorized the ReConnect Program separately through the annual appropriations process, funding it at $600 million through the Consolidated Appropriations Act of 2018 ( P.L. 115-141 ). The ReConnect Program includes both loans and grants to promote broadband deployment in rural areas where 90% of households do not have sufficient access to broadband at 10 Mbps/1 Mbps. Two additional programs also support broadband deployment in rural areas. The Telecommunications Infrastructure Loan and Loan Guarantee Program (previously the Telephone Loan Program) is similar in purpose to the Rural Broadband Access Loan and Loan Guarantee Program, but eligibility requirements are tailored to support deployment in areas with extremely low population densities. Distance Learning and Telemedicine (DLT) grants while not principally supporting connectivity fund equipment and software that operate via telecommunications to rural end-users of telemedicine and distance learning applications. Congress funds RUS programs through annual appropriations. For FY2019, the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provided $5.83 million to subsidize a Rural Broadband Access loan level of $29.851 million; $30 million for Community Connect broadband grants; $550 million for the ReConnect Program (in addition to $600 million provided for that program in FY2018); $1.725 million to subsidize a total loan level of $690 million for the Telecommunications Infrastructure Loan and Loan Guarantee Program; and $47 million for DLT grants. <3.1.2. Universal Service Fund Programs37> The FCC established the USF in 1997 to meet objectives and principles established by the Telecommunications Act of 1996 ( P.L. 104-104 ). The Universal Service Administrative Company (USAC), an independent not-for-profit organization, administers the USF under FCC direction. USF programs are not funded via annual appropriations, but rather from fees the FCC receives from telecommunications carriers that provide interstate service. The FCC has discretion to spend these fees without congressional appropriations. FCC supply-side support for broadband infrastructure, primarily through the USF High Cost program, totaled nearly $14 billion from FY2016 through FY2018. The High Cost program includes several funds that support broadband infrastructure deployment and provide ongoing subsidies to keep the operation of telecommunications and broadband networks in high cost areas economically viable for broadband providers. These providers must meet deployment benchmarks and offer service at rates reasonably comparable with those offered in urban areas. The subsidy indirectly benefits households and businesses in cases where there is a significant urban-rural price differential by making below-market subscription rates available. The other USF programs are the Lifeline program, which directly supports low-income households by subsidizing affordable or no-cost monthly broadband plans, and the Schools and Libraries program and Rural Health Care program, which pay for local network equipment purchases and some broadband subscription costs for eligible schools, libraries, and health care facilities. <3.1.3. Broadband Provider Discretion> Broadband providers have wide discretion in how and whether they choose to participate in these programs. Although the federal government imposes certain conditions on its subsidies, grants, and loans to broadband providers, it does not make participation compulsory. Even in subsidized markets, broadband provider investment behavior is conditioned to a greater or lesser degree by demand, predicted adoption rates, and anticipated return on investment. The federal government may within the existing legislative framework adjust the structure and funding levels of its major funding programs to encourage private-sector investment in rural areas that supports its policy goals. <3.2. FCC Service Benchmarks and Market Demand for Higher Speeds> The FCC changes its definition of broadband service as technologies, user expectations, and markets evolve. It reviews its data speed benchmarks on an annual basis, and its decisions have regulatory implications that may affect private-sector investment decisions in rural areas. The degree to which these benchmarks should be aspirational or reflect current market demand is a topic of frequent debate in policy circles. Assessment of demand and its likely development over time informs many of these debates. Section 706 of the Telecommunications Act of 1996 ( P.L. 104-104 ; the Telecommunications Act) requires the FCC to report yearly on whether "advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion." The act does not specifically define advanced telecommunications capability, delegating this determination to the FCC. It directs the FCC to "take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market" if its determination is negative. Since 1999, there have been 11 Section 706 reports, each providing a snapshot and assessment of broadband deployment. As part of this assessment, and to help determine whether broadband is being deployed in "a reasonable and timely fashion," the FCC has established minimum data speeds that qualify as broadband service for the purposes of the Section 706 determination. In 2015, citing changing broadband usage patterns and multiple devices using broadband within single households, the FCC raised its minimum fixed broadband benchmark speed from 4 megabits-per-second (Mbps) (download)/1 Mbps (upload) to 25 Mbps/3 Mbps. The 25/3 Mbps threshold is meaningful in both technical and policy terms, because the legacy copper-based connections utilized by some broadband providers would likely require significant upgrades in order to meet higher thresholds. While fiber-based "middle-mile" cable has been broadly deployed over the last two decades, "fiber-to-the-home" installations that enable faster speeds are much less widespread, especially in remote rural areas. Increases in minimum speed thresholds have frequently engendered policy debates about the regulatory role of the FCC and how best to allocate limited resources for broadband expansion. Stakeholders in both the public and private sectors have frequently raised the issue of market demand for improved service when justifying their positions on the FCC's annual Section 706 determinations. During the Obama Administration, FCC leadership justified increases in service speed thresholds as necessary to ensure that broadband infrastructure kept pace with changes in consumer behavior and the increasing number of bandwidth-hungry electronic devices and applications. "Application and service providers, consumers, and the broadband providers are all pointing to 25/3 as the new standard," wrote then-Chairman Tom Wheeler when commenting on the agency's 2015 progress report. "Content providers are increasingly offering high-quality video online, which uses a lot of bandwidth and could use a lot more as 4K video emerges." Opponents argued that demand does not justify investments in faster service that requires costly fiber-optic installations. Two FCC commissioners then serving released dissenting statements, citing tepid demand for faster broadband service as a reason to refrain from mandating higher speeds. Some criticized the FCC for subsidizing infrastructure buildout under one standard, which was then superseded by a new higher standard in effect designating newly built-out areas as unserved. Commissioner Ajit Pai wrote, "The driving factor in defining broadband should be consumer preference.... 71% of consumers who can purchase fixed 25 Mbps service over 70 million households choose not to." As FCC Chairman since 2017, Pai has retained the 25/3 Mbps standard as sufficient to meet the Telecommunications Act requirement for the FCC to ensure availability of advanced telecommunications capabilities. In public comments submitted for the 2019 FCC progress report, some large broadband providers and associated trade and public policy groups expressed concerns that any increase of speed requirements beyond the existing 25/3 Mbps standard would impose unnecessary burdens on providers based on predicted cost and market demand. "The Commission should not change benchmarks based on aspirations that do not reflect widespread consumer demand and that are not grounded in the text of Section 706," wrote the Free State Foundation. "Instead, Section 706 implies a realistic analysis that takes stock of actual market data regarding deployment of infrastructure and the availability of advanced capabilities that a substantial majority or at least an early majority of consumers subscribe to." By contrast, rural co-ops and other independent broadband providers have tended to argue (directly or through trade associations) for a higher speed benchmark, which would lead to federal subsidization of higher-speed service. In a 2018 letter to a Member of Congress, the manager of an Iowa electric co-op wrote, "Broadband systems funded with limited federal funds should meet the growing speed and data consumption needs of today and into the future.... [Congress] should recognize that in today's 21 st century economy, broadband systems built to 10/1 or slower speeds cannot support a modern household much less attract and retain new businesses." Trade organizations with memberships that include a cross-section of companies by size, corporate structure, and technology type have generally avoided discussing speed benchmarks in their submitted comments, focusing instead on other issues, such as substitutability of mobile broadband for fixed broadband. FCC data released as part of the 2019 progress report indicated that 25.3% of households in the nation's least rural counties where service was available had adopted 100/10 Mbps broadband more than double the 9.9% adoption rate in the nation's most rural counties (see Figure 2 ). The same data indicated higher overall adoption of the current standard of 25/3 Mbps, with a 57.7% adoption in the least rural counties and 23.1% in the most rural. Some recent state and regional reports have questioned whether market demand justifies government-subsidized investment in higher speed broadband in all cases. "There is an ongoing, multifaceted debate about whether, where, and when the performance advantages of fiber justify the investment in upgrading communications networks," according to the Arkansas Development Finance Authority. "Most uses of the internet today do not require the capacity and speed that fiber internet offers, and internet service providers who deploy fiber don't necessarily experience strong demand for the upgraded service." According to an April 2019 report from the Southeastern Indiana Regional Planning Commission, "Some providers argue that even when broadband is available, customers do not subscribe as expected." The authors argued for energetic measures to promote broadband affordability and adoption as a remedy. <3.3. Federal Programs' Consideration of Market Demand When Awarding Funds for Broadband Infrastructure Buildout> The primary purpose of the RUS and USF High Cost programs is to support expansion of broadband availability in unserved or underserved areas, rather than to promote broadband adoption. Funding under these programs has typically been awarded based on ISP commitments to making a certain level of service available to a certain number of eligible households and businesses within a certain period of time. However, there are some important differences. The RUS programs include loans, which recipients must repay. Applicants for funding under the Rural Broadband Access Loan program are required to complete and submit a financial forecast to demonstrate that they can repay the loan, and that the proposed project "is financially feasible and sustainable." The forecast must include with few exceptions a market survey that describes service packages and rates, and provides the number of existing and proposed subscribers. This requirement may incentivize recipients to encourage adoption in their service areas in order to increase revenues that they can then use for loan repayment. At the same time, it may also deter providers from accepting loans to serve areas where the business case for deployment is particularly difficult. Perhaps because of disincentives for investment in unattractive markets, RUS selection criteria and loan terms prioritize buildout to unserved or underserved areas over subscription rates or other business performance metrics. According to the application guide, "Priority must be given to applicants that propose to offer broadband service to the greatest proportion of households that, prior to the provision of the broadband service, had no incumbent service provider." Program administrators prioritize projects according to four tiers, which range from 25% to 100% of households unserved. The standard loan term is 3 years, but applicants can request up to a 35-year repayment term and a principal deferral period of up to 4 years if at least 50% of the households in the proposed service area are unserved. The RUS ReConnect program has similar goals, but also includes grants and loan-grant combinations. Applicants can likewise request more generous loan terms if they plan to serve a Substantially Underserved Trust Area (typically tribal lands), and their application may be granted priority status. Reviewers score applications against evaluation criteria using a points-based system. They award points for population density (less dense areas receiving preference), number of farms served, number of businesses served, number of educational facilities served, performance of the offered services, and other criteria. Neither projected business performance metrics nor adoption rates are included in the evaluation criteria. Under the High Cost program, federal subsidies are premised on the absence of a business case for broadband expansion. In announcing the latest proposed round of support, known as the Rural Digital Opportunity Fund (RDOF), the FCC stated that it would prioritize buildout in areas where "there is currently no private sector business case to deploy broadband without assistance." USF programs only require that participating broadband providers advertise the availability of broadband service within their service areas, and that the broadband provider be able to provide service at rates "reasonably comparable to rates offered in urban areas" to any area household within 10 business days if requested to do so. Census blocks the administrative-territorial unit used by the FCC to measure broadband coverage are considered served if a local broadband provider meets these conditions. As with the RUS programs, the High Cost program has prioritized buildout and higher broadband performance over adoption. Phase I of the proposed RDOF program would prioritize support to broadband providers that serve "completely unserved areas" at higher data speeds, higher usage allowances, and lower latency, but sets no specific adoption benchmarks. The FCC expressed concerns in its RDOF proposal that recipients of support might lack any incentive to aggressively market their services or otherwise stimulate demand beyond relatively low-cost high-return areas, and might even take measures to limit subscription in order to protect profits. Since [RDOF] support may require certain providers to offer much higher data caps than they do to [non-RDOF] subscribers and price the services similarly, such providers may have an incentive to limit [RDOF] subscribers to sell their capacity to more profitable [non-RDOF] subscribers. Spectrum-based providers that do not have a network sufficient to serve most locations in a geographic area would also have an incentive to limit subscription if expanding capacity would be less profitable than limiting subscription and collecting [RDOF] subsidies based purely on deployment. Even wireline bidders may lack the proper incentives to serve additional customers in some areas, given that it may not be profitable without a per-subscriber payment to run wires from the street to the customer location and install customer premises equipment. Having expressed these concerns, the FCC put forward a proposal to introduce subscribership milestones for RDOF recipients. It requested comment on several different implementation options. One proposal would offer a baseline level of support to broadband providers and then add per-subscriber payments. Another would withhold a certain percentage of support if broadband providers failed to meet subscription milestones, although it raised the question of what milestones were appropriate given "the unique challenges of serving rural areas." Eliciting private sector participation in rural broadband programs appears to be a concern for the FCC, just as it is for USDA. In its last round of USF funding support, FCC increased the term of support to broadband providers from 5 years to 10 years in order to gain "robust participation" in the program. <3.4. Federal Programs That May Stimulate Broadband Demand> A number of federal programs may stimulate demand for broadband in underserved areas, though this is not always their primary purpose. Such programs include end-user subsidies to reduce out-of-pocket costs for subscribers; education and outreach activities to promote digital awareness and skills; infrastructure-oriented programs that support community anchor institutions such as schools and libraries; and infrastructure-oriented programs supporting specific applications, such as telemedicine and precision agriculture. This section presents a non-exhaustive summary of these programs. <3.4.1. End-User Subsidies> The FCC's Lifeline program is the only major federal broadband program that directly targets broadband adoption by residential subscribers. It targets households earning less than 135% of the federal poverty level. Program enrollment rates vary widely by state, with a nationwide average of 28% of eligible beneficiaries. The program subsidizes enrollees to cover the recurring monthly service charges associated with broadband subscribership. Support is not given directly to the subscriber but to the subscriber-selected service provider. Although stimulating broadband demand is not an explicit purpose of the Lifeline program, expansion of Lifeline enrollment may improve the business case for broadband deployment in rural areas, which on average have a disproportionately high number of low-income residents. In many cases, facilities-based telecommunications providers sell excess capacity in areas they already serve to resellers, who then rebrand the service and market low-cost plans to eligible Lifeline beneficiaries. In 2017, the FCC proposed changes to the Lifeline program that would bar resellers from participation. Some in Congress claimed that these changes would reduce enrollment by 70% from current levels. In a further action, the proposed FCC update to Lifeline minimum service standards for 2019 raised concerns in some quarters that low-income subscribers would be priced out of the market by required upgrades. In a letter to the FCC, NTCA The Rural Broadband Association wrote that unless the FCC requirement is waived, "current Lifeline subscribers to fixed broadband service will be forced to upgrade to a higher speed tier than they may need, want, or have the ability to afford resulting in either stretched consumer budgets or the potential for price-sensitive customers to cease buying broadband altogether." The FCC stated that the increase was required under provisions of the 2016 Lifeline Order. In its November 2019 decision, the FCC retained the existing subsidy level for broadband service and increased the monthly data minimums from 2 gigabytes to 3 gigabytes a reduction from the 8.75 gigabyte minimum originally proposed. <3.4.2. Outreach and Education Programs> The federal government has supported numerous broadband-related outreach and education activities over the years, typically as part of broad-ranging development grant programs focused primarily on housing and education. Agencies providing grant support of this type include the Departments of Education, Housing and Urban Development, and Commerce, as well as the National Science Foundation and several regional development commissions. The Broadband Technology Opportunities Program (BTOP) is an exception to this pattern, as it includes dedicated funding for broadband adoption programs. The American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) provided approximately $4 billion for BTOP, to be administered by the National Telecommunications and Information Agency (NTIA, an agency of the Department of Commerce) as a program including broadband infrastructure grants, grants for expanding public computer capacity, and grants to encourage sustainable adoption of broadband service. As of August 2015, BTOP had awarded $3.48 billion for infrastructure buildout, $201 million for public computer centers, and $250.7 million for sustainable broadband adoption. Most BTOP funds have been expended, but NTIA continues to monitor existing grants. A 2015 Government Accountability Office (GAO) report found that affordability, lack of perceived relevance, and lack of computer skills are the "principal barriers" to broadband adoption. It identified outreach and training, along with discounts, as "key approaches" to addressing those barriers. Regarding BTOP, it noted, "NTIA compiled and published self-reported information from its BTOP grantees about best practices, but has not assessed the effectiveness of these approaches in addressing adoption barriers." In a response to the GAO, the Deputy Secretary of Commerce wrote that grant recipients were individually responsible for program design and assessments of program effectiveness. <3.4.3. Support to Community Anchor Institutions> The FCC's E-Rate (Schools and Libraries) Program under the USF provides discounts of up to 90% for broadband to and within public and private elementary and secondary schools and public libraries in both rural and nonrural areas. Some have suggested that broadband non-adopters may be more likely to subscribe to at-home service if they gain experience using the internet and become more aware of the benefits it can provide in finding employment, accessing educational resources, and interacting with government agencies, among other uses. However, a 2015 study found that "counties with libraries that aggressively increased their number of Internet-accessible computers between 2008 and 2012 did not see measurably higher increases in their rates of residential broadband adoption." <3.4.4. Telemedicine and Telehealth> The USDA's Distance Learning and Telemedicine (DLT) grants fund end-user equipment and broadband facilities to help rural communities use telecommunications to "link teachers and medical service providers in one area to students and patients in another." DLT grants serve as initial capital for purchasing equipment and software that operate via telecommunications to rural end-users of telemedicine and distance learning. Eligible applicants include most entities in rural areas that provide education or health care through telecommunications, including most state and local governmental entities, federally recognized tribes, nonprofits, for-profit businesses, and consortia of eligible entities. The FCC Rural Health Care Program provides similar benefits to eligible public and nonprofit health care providers in rural areas. Additionally, providers may receive a 65% discount on the costs of broadband service (if available) or a discount equal to the urban-rural broadband service price differential. This program does not address the issue of household connectivity with providers. The effect that support for the emerging telehealth sector has on rural demand for broadband service is unclear. Rural counties with the least access to medical care typically also have the least access to broadband internet. The demographic profiles typical of these locations are associated with both lower broadband adoption and lower rates of health insurance coverage, so broadband buildout there might or might not lead to substantially greater telehealth use. A 2018 USDA study on rural telehealth, conducted by the agency's Economic Research Service, found that rural residents were significantly less likely to use telehealth services than urban residents were, even when broadband availability was not a factor. The study measured usage across three categories: online health research; online health maintenance; and online health monitoring. According to the study, a usage gap between rural and urban patients existed across all three categories. Usage rates appeared to track closely with cost. The highest usage rates were for online health research that costs little and can be conducted anywhere that has basic internet access. According to the study, "Lack of Internet service in the home, whether by choice or due to lack of availability, did not deter everyone from conducting online health research." The study also found that existing rural connectivity was sufficient for most health maintenance activities, but "the issue of acceptance and/or remuneration levels by the health insurance industry and government health support programs and not technology [was] cited as an impediment to implementation." Online health monitoring the most expensive telehealth service category was also the least used. "As online monitoring was costly, the results largely reflect who had or did not have health insurance." Some industry groups have argued that subsidized buildout of higher speed broadband will enable the use of new applications, which may promote telehealth use. NTCA, which represents rural broadband providers, commented in 2019, "The capabilities and promise of telemedicine are as unlimited as other applications and technology that are evolving to take full advantage of broadband capabilities." These may include use of virtual and augmented reality applications, embedded devices, and wearables, technologies that depend on high-speed fiber-based broadband networks, according to NTCA. Likewise, some advocacy groups and researchers highlight regulatory issues, such as varying state regulations for Medicaid reimbursement, which they claim may hinder development of the market for telehealth services. <3.4.5. Precision Agriculture> Section 12511 of the Agriculture Improvement Act of 2018, commonly known as the 2018 farm bill ( P.L. 115-334 ), established the Task Force for Reviewing the Connectivity and Technology Needs of Precision Agriculture in the United States. The FCC announced the creation of this congressionally mandated task force on June 17, 2019. The task force plans to "develop policy recommendations to promote the rapid, expanded deployment of broadband Internet access service on unserved agricultural land," in consultation with the Secretary of Agriculture. However, the USDA has noted that adoption of precision agriculture methods by the farm community "has been hesitant and weak," especially among smaller producers, because of concerns over upfront costs, uncertain economic returns, and technological complexity. In addition to the interagency task force, the 2018 farm bill authorizes several initiatives to fund research and development on precision agriculture. It also modifies prioritization criteria for USDA broadband loans and grants to include precision agriculture activities. However, these provisions do not directly address end-user affordability issues. <4. Options for Congress> Promoting universal access to broadband has generally enjoyed wide bipartisan support in Congress. Despite federal support for broadband infrastructure buildout, however, adoption continues to lag in rural areas, even where the infrastructure exists and service is available. In turn, low adoption rates may lower the private sector's incentive to invest in nascent rural broadband markets, despite federal subsidies for high-cost service. This section highlights selected options Congress could consider as it addresses rural broadband demand issues. <4.1. Oversight or Legislation Addressing the Lifeline Program> In the Lifeline program, intended to address broadband affordability for low-income households, FCC changes to provider eligibility rules and minimum service requirements have prompted considerable debate (see " End-User Subsidies "). The FCC has wide latitude to set program rules, subject to the established rulemaking process. Congress might continue its oversight of that rulemaking process or might choose in some cases to direct FCC actions through legislation. Issues of potential interest include beneficiary eligibility requirements, beneficiary eligibility verification procedures, the level of the benefit (currently $9.25 per household, with additional benefits for beneficiaries who reside on tribal lands), ISP eligibility requirements, ISP minimum service requirements, and how oversight authorities are shared between the federal government and the states. <4.2. Research on How the Costs of Broadband-Enabled Services Affect Rural Broadband Demand> In addition to the direct cost of broadband connectivity, cost barriers may reduce the attractiveness of broadband-related services that might otherwise stimulate rural broadband demand. For example, access to affordable health insurance may be one factor affecting the affordability, and hence adoption, of telehealth services (see " Telemedicine and Telehealth "). Similarly, the upfront costs of sensors and other technology may be slowing the adoption of precision agriculture practices (see " Precision Agriculture "). Congress might consider mandating further research on the extent to which these factors influence broadband demand, and how such barriers could be overcome. <4.3. Broadband-Focused Education and Outreach Grants> With the exception of BTOP, most federal support for broadband-related education and outreach activities has been through housing and education grant programs that include internet and computer skills among numerous other eligible funding categories (see " Outreach and Education Programs "). Grant recipients typically expend the majority of funds on the non-broadband-related categories, which may be considered more central to housing development and education goals. Congress might consider whether a focused grant program or programs specifically designated for support of broadband-enabled applications would be more effective, and if so, how lessons from BTOP might be applied to program design and implementation. In addition to general internet and computer skills, Congress might consider including broadband-enabled applications in such an education and outreach program. Rural adoption of precision agriculture practices may be stymied if the benefits are not fully understood or if familiarity with the technology is lacking. Rural small businesses often do not make full use of broadband technology, even when adequate connectivity is available (see " Valuation of Broadband Service "). Even farmers and small rural business owners who can afford broadband service might benefit from education on the use of web-based applications to improve their operations or on how to calculate long-term benefits more accurately. Rural use of telehealth services might increase if potential users were more aware of the health and convenience benefits offered by emerging applications. <4.4. Incentivizing Adoption via the Terms of Federal Infrastructure Buildout Programs> The RUS and USF programs that support broadband infrastructure buildout (see " Major USDA and FCC Broadband Programs ") rely on private-sector broadband providers for on-the-ground deployment. Therefore, the conditions of federal support need to be sufficiently attractive in business terms to elicit participation from the private sector. At the same time, taxpayer or ratepayer value-for-money is also a policy concern that becomes especially salient if wide scale broadband adoption does not follow subsidized buildout. Under current RUS program rules, award recipients must demonstrate the economic viability of proposed projects. However, scoring criteria heavily favor applicants proposing to build out infrastructure in the most remote, underserved areas, which are least likely to present a strong business case. Some in Congress have expressed concern about RUS loan subscription rates (see " Federal Programs' Consideration of Market Demand When Awarding Funds for Broadband Infrastructure Buildout "). Through legislation or enhanced oversight of RUS program rules, Congress might seek to change end-user subsidy programs to improve the business case for buildout projects, or to adjust program rules in other ways to mitigate disincentives for investment. Under current USF program rules, participating broadband providers have limited responsibility to develop the demand side of local broadband markets. They are only responsible for ensuring availability of service at a given speed and latency benchmark, and advertising it within a designated service area. There is no other requirement for broadband providers to develop their subscriber base or otherwise promote adoption. The FCC included requests for comments on this issue in its 2019 proposal for the RDOF program. Congress might consider legislation or oversight to effect changes in program rules that would incentivize ISP investments in broadband adoption. For example, under current FCC rules, the term of support for High Cost program subsidies is 10 years; Congress might consider directing the FCC to lengthen or shorten this term to adjust ISP business incentives. <4.5. Oversight of FCC Section 706 Process> Finally, broadband speed benchmarks and other service quality metrics are frequently debated as part of the congressionally mandated requirement for the FCC to assess deployment of communications technology under Section 706 of the Telecommunications Act (see " FCC Service Benchmarks and Market Demand for Higher Speeds "). Higher service quality requirements may boost American technological leadership and ensure that citizens can use high-bandwidth internet applications, but they may also impose costs on broadband providers and lead to higher costs for customers pricing some of them out of the market. Congress may consider the costs and benefits of proposed service requirements, and how such requirements might affect rural broadband adoption, when exercising oversight of the FCC's Section 706 responsibilities.

As of 2019, over 20 million Americans—predominantly those living in rural areas—lacked access to high speed broadband service according to the Federal Communications Commission (FCC). Federal subsidies underwritten by taxpayer funds and long-distance telephone subscriber fees have injected billions of dollars into rural broadband markets over the past decade—mostly on the supply side in the form of grants, loans, and direct support to broadband providers. Yet, adoption rates have leveled off after more than a decade of rapid growth, even as broadband providers have extended service to remote and hard-to-serve areas. The overall share of U.S. adults using the internet has not grown significantly since 2013, according to the Pew Research Center—a trend reflected in rural broadband subscription rates, which continue to lag significantly behind rates in urban areas. Observers note that weak demand in nascent broadband markets makes it more difficult for federal agencies to elicit private-sector program participation and investment in high-cost, high-risk rural areas. Even in subsidized markets, broadband infrastructure buildout ultimately rests on business decisions made in the private sector. On average, rural areas are less wealthy than urbanized areas, and have older populations with lower educational attainment—factors which negatively correlate with demand for broadband service. Related barriers to adoption, such as lower perceived value, affordability, computer ownership, and computer literacy, have persisted over many years. Markets tend to be highly localized. Those with favorable geography and demographic profiles often have higher demand, and thus present relatively attractive investment opportunities, for broadband providers. However, the federal government has found it difficult to incentivize sustained private-sector investment in more isolated and sparsely populated locales where it is clear that new or upgraded service will be costly to provide, and may fail to attract a large number of new paying subscribers. Overall, current federal spending on affordability and adoption programs amounts to less than one-quarter of total spending for rural broadband expansion. The FCC's Lifeline program reduces monthly subscription costs for qualifying low-income households, but enrollment rates are comparatively low. No major federal programs currently support consumer outreach and education, although certain federal grants may use funds for related activities. Other programs to support broadband buildout to schools, clinics, and other community institutions have improved access for residents of rural areas, but it is not clear that these programs have affected overall market demand. Broadband advocates frequently identify broadband enabled services like telemedicine and precision agriculture as potential demand drivers. However, lower rates of health insurance coverage in rural areas and certain state regulations limiting Medicaid reimbursement for telemedicine services may depress demand growth and private sector investment in broadband. Likewise, high up-front costs and unfamiliarity have hindered adoption of precision agriculture technology by small producers in isolated rural areas. Federal broadband programs have generally been agnostic to the demand side of rural broadband markets, based on the implicit assumption that demand for broadband service will quickly emerge as broadband providers extend new or upgraded service to these locales. Program rules typically require broadband providers to extend service availability to a certain area within a certain timeframe, but they generally do not require them to achieve specific market development goals for adoption and usage. The FCC has expressed concern that some subsidized providers may lack incentive to develop markets in their service areas. Options for congressional consideration include measures to address obstacles to adoption and additional incentives for private sector investment in the rural broadband sector. These may include expansion of end-user subsidies, both within the broadband sector and other sectors that utilize broadband-enabled technologies. Congress may also consider measures to encourage broadband providers to increase investment in persistently underserved rural areas and more aggressively develop nascent broadband markets. These may include adjustment to subsidy rates and program rules, including introduction of adoption milestones for subsidy recipients. Additionally, Congress may consider measures to increase education and outreach.

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The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) was enacted on February 15, 2019.This omnibus bill included appropriations for the U.S. Department of Agriculture (USDA), of which USDA's domestic food assistance is a part. Prior to its enactment, the government had continued to operate for the first six months of the fiscal year under continuing resolutions (CRs). USDA experienced a 35-day lapse in FY2019 funding and partial government shutdown prior to the enactment of the Further Additional Continuing Appropriations Act, 2019 ( P.L. 116-5 ), a continuing resolution enacted prior to the Omnibus bill. (See the Appendix .) This report focuses on USDA's domestic food assistance programs; their funding; and, in some instances, policy changes provided by the enacted FY2018 appropriations law. USDA's domestic food assistance programs include the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program), Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and the child nutrition programs (such as the National School Lunch Program). The domestic food assistance funding is, for the most part, administered by USDA's Food and Nutrition Service (FNS). CRS Report R45230, Agriculture and Related Agencies: FY2019 Appropriations provides an overview of the entire FY2019 Agriculture and Related Agencies appropriations law as well as a review of the reported bills and CRs preceding its enactment. With its focus on appropriations, this report discusses programs' eligibility requirements and operations minimally. See CRS Report R42353, Domestic Food Assistance: Summary of Programs for more background. <1. Overview of FY2019 USDA-FNS Funding> Domestic food assistance SNAP and child nutrition programs in the mandatory spending accounts, and WIC and other programs in the discretionary spending accounts represents over two-thirds of the FY2018 Agriculture appropriations act ( Figure 1 ). The federal budget process treats discretionary and mandatory spending differently. Discretionary spending is controlled by annual appropriations acts and receives most of the attention during the appropriations process. The annual budget resolution process sets spending limits for discretionary appropriations. Agency operations (salaries and expenses) and many grant programs are discretionary. Mandatory spending though carried in the appropriation is controlled by budget rules during the authorization process. Appropriations acts then provide funding to match the parameters required by the mandatory programs' authorizing laws. For the domestic food assistance programs, these laws are typically reauthorized in farm bill and child nutrition reauthorizations. Domestic food assistance funding ( Table 1 ) largely consists of open-ended, appropriated mandatory programs that is, it varies with program participation (and in some cases inflation) under the terms of the underlying authorization law. The largest mandatory programs include SNAP and the child nutrition programs (including the National School Lunch Program and School Breakfast Program). Though their funding levels are dictated by the authorizing law, in most cases appropriations are needed to make funds available. The three largest discretionary budget items are WIC, the Commodity Supplemental Food Program (CSFP), and federal nutrition program administration. The enacted FY2019 appropriation would provide over $103 billion for domestic food assistance ( Table 1 ). This is a decrease of approximately $1.7 billion from FY2018. Declining participation in SNAP is responsible for most of the difference. Over 95% of the FY2019 appropriations are for mandatory spending. Table 1 summarizes funding for the domestic food assistance programs, comparing FY2019 levels to those of prior years. In addition to the accounts' appropriations language, the enacted appropriation's general provisions include additional funding, rescissions, and/or policy changes. These are summarized in this report. <1.1. President's FY2019 Budget Request> Table 1 compares the enacted funding to the House- and Senate-reported bills, prior years' enacted funding, and the President's FY2019 budget request. The President's budget request includes the Administration's forecast for programs with open-ended funding such as SNAP and the child nutrition programs; this assists the appropriations committees in providing funding levels expected to meet obligations. The budget also includes the Administration's requests for discretionary programs. Additionally, it is a place for the Administration to include legislative requests. The FY2019 request did include SNAP legislative proposals. Most significantly for the FNS programs, the President's FY2019 budget request did the following: It included 14 legislative proposals pertaining to SNAP. The majority of these would have restricted SNAP eligibility and made changes to the benefit calculation. This request also proposed to replace a portion of the SNAP benefit with a box of USDA-purchased foods and to limit federal funding for states' administrative costs, nutrition education, and performance bonuses. Together, these proposals were estimated by both the Administration and Congressional Budget Office (CBO) to reduce program spending in FY2019 and over the 10-year budget window. None of these policies were enacted as part of the FY2019 appropriation. Some of these policies were debated in the formulation of the 2018 farm bill (Agriculture Improvement Act of 2018, P.L. 115-334 ), but ultimately only the elimination of performance bonus funding was enacted in the December 2018 law. It requested no funding for a number of discretionary spending programs, including the following: school meals equipment grants, which have received discretionary funding since FY2009; the WIC Farmers' Market Nutrition Program (FMNP), which has received annual discretionary funding since 1992; and the Commodity Supplemental Food Program (CSFP), which has received annual discretionary funding since 1969. <2. Domestic Food Assistance Appropriations Accounts and Related General Provisions> <2.1. Office of the Under Secretary for Food, Nutrition, and Consumer Services> For the Under Secretary's office, the enacted FY2019 appropriation provides approximately $0.8 million. This office received approximately equal funding in FY2018. The enacted appropriation ( 734) continues to require the coordination of FNS research efforts with USDA's Research, Education and Economics mission area. This is to include a research and evaluation plan submitted to Congress. <2.2. SNAP and Other Programs under the Food and Nutrition Act> Appropriations under the Food and Nutrition Act (formerly the Food Stamp Act) support (1) SNAP (and related grants); (2) a nutrition assistance block grant for Puerto Rico and nutrition assistance block grants to American Samoa and the Commonwealth of the Northern Mariana Islands (all in lieu of SNAP); (3) the cost of food commodities as well as administrative and distribution expenses under the Food Distribution Program on Indian Reservations (FDPIR); (4) the cost of commodities for TEFAP, but not administrative/distribution expenses, which are covered under the Commodity Assistance Program budget account; and (5) Community Food Projects. The enacted appropriation provides approximately $73.5 billion for programs under the Food and Nutrition Act. This FY2019 level is approximately $540 million less than FY2018 appropriations. This difference is largely due to a forecasted reduction in SNAP participation. The enacted appropriation provides $3 billion for the SNAP contingency reserve fund. The SNAP account also includes mandatory funding for TEFAP commodities. The enacted appropriation provides nearly $295 million, according to the terms of the Food and Nutrition Act. This is an increase ($5.0 million, 1.7%) over $289.5 million provided in FY2018. (TEFAP also receives discretionary funding for storage and distribution costs, as discussed later in " Commodity Assistance Program .") <2.2.1. SNAP Account: Other General Provisions and Committee Report Language> SNAP-Authorized Retailers. The FY2017 and FY2018 appropriations law limited USDA's implementation of December 2016 regulations regarding SNAP retailers' inventory requirements, and the enacted FY2019 appropriation ( 727) continues those limits. Only SNAP-authorized retailers may accept SNAP benefits. On December 15, 2016, FNS published a final rule to change retailer requirements for SNAP authorization. The final rule would have implemented the 2014 farm bill's changes to inventory requirements for SNAP-authorized retailers ( P.L. 113-79 , 4002). Namely, the 2014 farm bill increased both the varieties of "staple foods" and the perishable items within those varieties that SNAP retailers must stock. In addition to codifying the farm bill's changes, the final rule would have changed how staple foods are defined, clarified limitations on retailers' sale of hot foods, and increased the minimum number of stocking units. Section 727 in the enacted appropriation continues to require that USDA amend its final rule to define "variety" more expansively and that USDA "apply the requirements regarding acceptable varieties and breadth of stock" that were in place prior to P.L. 113-79 until such regulatory amendments are made. In the meantime, USDA-FNS implemented other aspects of the 2016 final rule, such as increased stocking units. On April 5, 2019, USDA did publish a proposed rule, proposing amendments to the definition of "variety". <2.3. Child Nutrition Programs16> Appropriations under the child nutrition account fund a number of programs and activities authorized by the Richard B. Russell National School Lunch Act and the Child Nutrition Act. These include the National School Lunch Program (NSLP), School Breakfast Program (SBP), Child and Adult Care Food Program (CACFP), Summer Food Service Program (SFSP), Special Milk Program (SMP), assistance for state administrative expenses, procurement of commodities (in addition to transfers from separate budget accounts within USDA), state-federal reviews of the integrity of school meal operations ("Administrative Reviews"), "Team Nutrition" and education initiatives to improve meal quality and food safety, and support activities such as technical assistance to providers and studies/evaluations. (Child nutrition efforts are also supported by permanent mandatory appropriations and other funding sources discussed in the section " Other Nutrition Funding Support .") The enacted FY2019 appropriation provides approximately $23.1 billion for child nutrition programs. This is approximately $1.1 billion less (-4.6%) than the amount provided in FY2018, and reflects a transfer of more than $9.1 billion from the Section 32 account. The enacted appropriation funds certain child nutrition discretionary grants. These include the following: School Meals Equipment Grants. The law provides $30 million, the same amount as FY2018. Summer EBT (Electronic Benefit Transfer) Demonstration Projects. These projects provide electronic food benefits over summer months to households with children in order to make up for school meals that children miss when school is out of session and as an alternative to Summer Food Service Program meals. The projects were originally authorized and funded in the FY2010 appropriations law ( P.L. 111-80 ). The enacted appropriation provides $28 million, the same amount as FY2018. The child nutrition programs and WIC were up for reauthorization in 2016, but it was not completed. Many provisions of the operating law nominally expired at the end of FY2015, but nearly all operations continued via funding provided in appropriations laws since that time, including the enacted FY2018 appropriation. The enacted appropriation also continued to extend, through September 30, 2019, two expiring provisions: mandatory funding for an Information Clearinghouse and food safety audits. (See the Appendix for information about the child nutrition programs during the partial government shutdown.) <2.3.1. Child Nutrition Programs: General Provisions> One general provision in the enacted FY2019 appropriation included additional funding for child nutrition programs: Farm to School Grants. Section 754 of the enacted appropriation provides $5 million for competitive grants to assist schools and nonprofit entities in establishing farm-to-school programs. The same amount was provided in FY2018. This is in addition to $5 million in permanent mandatory funding (provided annually by Section 18 of the Richard B. Russell National School Lunch Act), for a total of $10 million available in FY2019. FY2019 general provisions also included policy provisions : Processed Poultry from China. The enacted appropriation includes a policy provision ( 749) to prevent any processed poultry imported from China from being included in the National School Lunch Program, School Breakfast Program, Child and Adult Care Food Program, and Summer Food Service Program. This policy has been included in enacted appropriations laws since FY2015. Paid Lunch Pricing . For school year 2019-2020, Section 760 of the enacted appropriation changes federal policy on the pricing of paid (full-price) meals. Included in the 2010 child nutrition reauthorization, and first implemented in the 2011-2012 school year, this policy required schools annually to review their revenue from paid lunches and to determine, using a calculation specified in law and regulation, whether paid prices had to be increased. The purpose of the calculation was to ensure that federal funding intended for F/RP meals was not instead subsidizing full-price meals. For school year 2019-2020, the enacted appropriation requires a smaller subset of schools only those with a negative balance in their nonprofit school food service account as of December 31, 2018 to be subject to this calculation and potentially to be required to raise prices. The same provision was included in the FY2018 enacted appropriation for school year 2018-2019. Vegetables in School Breakfasts. Section 768 of the enacted appropriation increases the frequency with which starchy vegetables can be substituted for fruits in the School Breakfast Program. Under current regulations, schools are allowed to substitute vegetables for the required servings of fruits (at least one cup daily, and at least five cups weekly) in school breakfasts. The regulations also specify that, "the first two cups per week of any such substitution must be from the dark green, red/orange, beans and peas (legumes) or 'Other vegetables' subgroups." This excludes the starchy vegetable subgroup, which includes corn, plantains, and white potatoes. The enacted appropriation specifies that FY2019 funds cannot be used to enforce this requirement, thereby allowing schools to substitute any type of vegetables for any or all of the required daily and weekly servings of fruits. Child Nutrition Program Commodities. Section 775 of the enacted appropriation changes the calculation of commodity assistance in child nutrition programs. Under current law, commodity assistance in child nutrition programs must comprise at least 12% of total funding provided under Sections 4 and 11 (reimbursements for school lunches) and Section 6 (commodity assistance) of the Richard B. Russell National School Lunch Act. Section 775 eliminates the inclusion of bonus commodities in this calculation as of September 30, 2018, thereby ensuring that only appropriated funds inform the required level of commodity assistance. <2.4. WIC Program24> Although WIC is a discretionary funded program, since the late 1990s the practice of the appropriations committees has been to provide enough funds for WIC to serve all projected participants. The enacted FY2019 appropriation provides $6.075 billion for WIC; however, the law also rescinds available carryover funds from past years. This funding level is $175 million less than the FY2018 appropriation. The enacted appropriation also includes set-asides for WIC breastfeeding peer counselors and related activities ("not less than $60 million") and infrastructure ($19.0 million). The peer counselor set-aside is equal to FY2018 levels. The infrastructure set-aside is an increase of $5 million from FY2018, and further sets aside $5 million for telehealth competitive grants to increase WIC access as specified in the law. The enacted law ( 723) rescinds $500 million in prior-year (or carryover) WIC funds. The House-reported and Senate-passed bills also would have rescinded carryover funds: H.R. 5961 ( 723) would have rescinded $300 million; H.R. 6147 ( 724) would have rescinded $400 million. <2.5. Commodity Assistance Program> The Commodity Assistance Program budget account supports several discretionary programs and activities: (1) Commodity Supplemental Food Program (CSFP), (2) funding for TEFAP administrative and distribution costs, (3) the WIC Farmers' Market Nutrition Program (FMNP), and (4) special Pacific Island assistance for nuclear-test-affected zones in the Pacific (the Marshall Islands) and areas affected by natural disasters. The enacted appropriation provides over $322 million for this account, no change from FY2018. Within the account, CSFP receives just below $223 million (a decrease of approximately $15 million or 6.8%); TEFAP Administrative Costs receives nearly $110 million this includes $79.6 million in FY2019 funding (+$15.2 million compared to FY2018) as well as a transfer of $30.0 million in prior-year (carryover) CSFP funds; in addition to this discretionary TEFAP funding, the law allows the conversion of up to 15% of TEFAP entitlement commodity funding (included in the SNAP account discussed above) to administrative and distribution costs; and WIC FMNP receives $18.5 million, the same level as FY2018. <2.6. Nutrition Programs Administration> This budget account funds federal administration of all the USDA domestic food assistance program areas noted previously; special projects for improving the integrity and quality of these programs; and the Center for Nutrition Policy and Promotion, which provides nutrition education and information to consumers (including various dietary guides). The enacted appropriation provides nearly $165 million for this account, an increase of approximately $11 million from FY2018. As in FY2018 and prior years, the law sets aside $2 million for the fellowship programs administered by the Congressional Hunger Center. <3. Other Nutrition Funding Support> Domestic food assistance programs also receive funds from sources other than appropriations: In addition to appropriated funds from the child nutrition account for commodity foods (which provides over $1.4 billion), USDA purchases commodity foods for the child nutrition programs using "Section 32" funds a permanent appropriation. For FY2019, the enacted appropriation specifies that up to $485 million from Section 32 is to be available for child nutrition entitlement commodities, compared to $465 million in FY2018. The Fresh Fruit and Vegetable Program (FFVP) for selected elementary schools nationwide is financed with permanent, mandatory funding from Section 32. The underlying law (Section 19 of the Richard B. Russell National School Lunch Act) provides funds at the beginning of every school year (July). For FY2019, there is $171.5 million available for FFVP, which is consistent with the FY2018 base amount adjusted for inflation. The Food Service Management Institute (technical assistance to child nutrition providers, also known as the Institute of Child Nutrition) is funded through a permanent annual appropriation of $5 million. The Senior Farmers' Market Nutrition program receives nearly $21 million of mandatory funding per year (FY2002-FY2023) outside of the regular appropriations process. <3.1. Appendix. USDA-FNS Programs during the FY2019 Partial Government Shutdown> USDA was one of the departments affected by a lapse in FY2019 funding and the resulting 35-day partial government shutdown (during parts of December 2018 and January 2019). Most of USDA's Food and Nutrition Service (FNS) programs, whether mandatory or discretionary, rely on funding provided in appropriations acts. As a result, the lapse in FY2019 appropriations required the execution of contingency plans, including staff furloughs, and at times the operating status of programs was in flux. FNS program operations during a government shutdown vary based on the different programs' available resources, determined by factors such as contingency or carryover funds and terms of the expired appropriations acts as well as USDA's decisionmaking. Beginning in late December 2018, FNS released program-specific memoranda to states and program operators describing the status of different nutrition assistance programs during the funding lapse. In addition to the impact on programs' funding discussed below, furloughs of FNS staff during this time period may have affected program operations (for example, the availability of technical assistance) on a case-by-case basis. This appendix summarizes some of the key issues and impacts on the SNAP, Child Nutrition, and WIC programs during this partial government shutdown. Further detail can be found in the FNS documents referenced above. It is important to note that because circumstances during a lapse in appropriations and executive-branch decisionmaking can vary, operations during this partial shutdown are not necessarily how a future shutdown would proceed. SNAP Benefits States issue SNAP benefits on a monthly basis. As in the FY2019 appropriations law, the FY2018 appropriations law ( P.L. 115-141 ) provided one year of SNAP funding as well as a contingency fund of $3 billion that can be spent in FY2018 or FY2019. The $3 billion is less than the cost of one month of SNAP benefits, so the contingency fund alone would not fund a month of SNAP benefits in the case of a lapse of funding. At the start of the partial shutdown, when a continuing resolution ( P.L. 115-298 ) expired after December 21, 2018, December 2018 benefits had already been provided. In addition, during the shutdown period, a provision of the continuing resolution allowed for payments to be made 30 days after the continuing resolution's expiration; this allowed states to issue January 2019 benefits. On January 8, 2019, USDA interpreted the provision to authorize issuance of February 2019 benefits as well, so long as states conducted early issuance before January 20, 2019. By the end of the partial shutdown, recipients had received their December 2018, January 2019, and February 2019 benefits. However, at the beginning of the shutdown, it was not clear that benefits would be provided for these months. USDA-FNS provided a series of memoranda to states during the shutdown that included answers to frequently asked questions. Child Nutrition and WIC Unlike SNAP, the appropriations language for the child nutrition programs (National School Lunch Program and others) and WIC accounts provides funding that can be obligated over a two-year period. WIC also has a contingency fund. In addition, the child nutrition programs may have more flexibility to continue operating during a shutdown because federal funds are generally provided retroactively (on a reimbursement basis). During the FY2019 lapse in funding, the Administration had carryover and contingency funds to maintain program operations. This includes FY2018 appropriations that are available for spending through FY2019 and contingency funds (in the case of WIC). Programs with this source of funding potentially available are those with two-year funding from the Child Nutrition Programs account and the WIC account. How long these operations could continue would depend on (1) the funding lapse's duration and (2) the amount of carryover or contingency funding available. Ultimately, for child nutrition and WIC programs, USDA continued operating the child nutrition programs "with funding provided under the terms and conditions of the prior continuing resolution [P.L. 115-245]"; USDA stated that the programs had enough funding to continue operating at least through March 2019 if the shutdown were to continue; and USDA continued WIC and WIC FMNP operations using funding that had already been allocated to states and, for WIC, prior-year carryover funding.

The Consolidated Appropriations Act, 2019 (P.L. 116-6) was enacted on February 15, 2019. This omnibus bill included appropriations for the U.S. Department of Agriculture (USDA), of which USDA's domestic food assistance programs are a part. Prior to its enactment, the federal government had continued to operate for the first six months of the fiscal year under continuing resolutions (CRs). This report focuses on the enacted appropriations for USDA's domestic food assistance programs and, in some instances, policy changes provided by the omnibus law. CRS Report R45230, Agriculture and Related Agencies: FY2019 Appropriations provides an overview of the entire FY2019 Agriculture and Related Agencies portion of the law as well as a review of the reported bills and CRs preceding it. USDA experienced a 35-day lapse in FY2019 funding and partial government shutdown prior to the enactment of P.L. 116-6. Domestic food assistance funding is primarily mandatory but also includes discretionary funding. Most of the programs' funding is for open-ended, appropriated mandatory spending—that is, terms of the authorizing law require full funding and funding may vary with program participation (and in some cases inflation). The largest mandatory programs include the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program) and the child nutrition programs (including the National School Lunch Program and School Breakfast Program). Though their funding levels are dictated by the authorizing law, in most cases, appropriations are needed to make funds available for obligation and expenditure. The three largest discretionary budget items are the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); the Commodity Supplemental Food Program (CSFP); and federal nutrition program administration. The domestic food assistance funding is, for the most part, administered by USDA's Food and Nutrition Service (FNS). The enacted FY2019 appropriation provides over $103 billion for domestic food assistance (Table 1). This is a decrease of approximately $1.7 billion from FY2018. Declining participation in SNAP is responsible for most of the difference. Approximately 94% of the FY2018 appropriations for domestic food assistance are for mandatory spending. Highlights of the associated appropriations accounts are summarized below. For SNAP and other programs authorized by the Food and Nutrition Act, such as The Emergency Food Assistance Program (TEFAP) commodities, the FY2019 appropriations law provides approximately $73.5 billion. Certain provisions of the law affect SNAP policies. For example, it continues a policy in the FY2017 and FY2018 appropriations laws that limited USDA's implementation of December 2016 regulations regarding SNAP retailers' inventory requirements. USDA must amend its final rule to define "variety" more expansively and must "apply the requirements regarding acceptable varieties and breadth of stock." For the child nutrition programs (the National School Lunch Program and others), the enacted law provides approximately $23.1 billion. This includes discretionary funding for school meals equipment grants ($30 million) and Summer Electronic Benefit Transfer (EBT) demonstration projects ($28 million), and a general provision that provides an additional $5 million for farm-to-school grants. The law includes policy provisions related to processed poultry from China, requirements for schools' paid lunch pricing, vegetables in school breakfasts, and the use of commodities in child nutrition programs. For the WIC program, the law provides nearly $6.1 billion while also rescinding $500 million in prior-year carryover funding. The law includes new funding for telehealth grants. For the Commodity Assistance Program account, which includes funding for the Commodity Supplemental Food Program (CSFP), TEFAP administrative and distribution costs, and other programs, the law provides over $322 million. The law increases discretionary funding for TEFAP administrative and distribution costs through the annual appropriation and through a $30 million transfer of prior-year CSFP funds. For Nutrition Programs Administration, the law provides nearly $165 million.

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<1. Overview> The outbreak of coronavirus disease (COVID-19), first in the People's Republic of China (PRC or China), and now globally, including in the United States, is drawing attention to the ways in which the United States and other ec onomies depend on critical manufacturing and global value chains that rely on production based in China. Congress is particularly concerned about these dependencies and has passed legislation to better understand and address them. An area of particular concern to Congress in the current environment is U.S. shortages of medical supplies including personal protective equipment (PPE) and pharmaceuticals as the United States steps up efforts to contain COVID-19 with limited domestic stockpiles and insufficient U.S. industrial capacity. Because of China's role as a global supplier of PPE, medical devices, antibiotics, and active pharmaceutical ingredients (API), reduced exports from China have led to shortages of critical medical supplies in the United States. Starting in early February 2020, U.S. health care experts began warning of a likely global spread of COVID-19, and early reports of U.S. medical supply shortages began to emerge. At the same time, the Chinese government nationalized control of the production and distribution of medical supplies in China, directing all production for domestic use. The Chinese government also directed the national bureaucracy, local governments, and Chinese industry to secure supplies from the global market. This effort likely exacerbated medical supply shortages in the United States and other countries, particularly in the absence of domestic emergency measures that might have locked in domestic contracts, facilitated an earlier start to alternative points of production, and restricted exports of key medical supplies. As China's manufacturing sector recovers while the United States and other countries are grappling with COVID-19, the Chinese government may selectively release some medical supplies for overseas delivery. Those decisions are likely to be driven, at least in part, by political calculations, as it has done recently with many countries around the world. COVID-19 was identified in China in December 2019 and peaked in late January 2020. In response, China shut down a large part of its economy in an effort to contain the outbreak. A key factor in the sharp economic slowdown in China was the dramatic downturn of both demand and supply after Chinese officials imposed restrictions in the third week of January on movement of people and goods in and out of localities across China. Since the COVID-19 outbreak in China has eased, the Chinese government's efforts to restart business activities has been slow and uneven across sectors and locations. Companies have sought to meet new government requirements for virus containment and faced worker and supply shortages as interregional logistics have remained constrained. Resumption of bilateral trade will likely be uneven due to bottlenecks in inputs, locations of containers, and logjams in current shipments. U.S. companies typically maintain anywhere from two to ten weeks of inventory, and transportation time for trans-Pacific container shipments is typically three weeks. With this timeframe in mind, initial shortages that U.S. firms faced of deliveries of microelectronics, auto parts, and health and medical products could intensify over the next few months. There could be additional shortages in a wide range of imports that transit via container ship (e.g., processed raw materials, intermediate industrial goods, and finished consumer products). As China's economic activities resume, other countries around the world are taking an economic hit. As in China, new restrictions around the world on the movement of people and business operations could trigger sharp new slowdowns in demand, transportation, and logistics worldwide, further dragging down prospects for global trade recovery. Suppressed global demand will likely further complicate efforts to orchestrate a rebound in China's (or global) economic activity. In sectors where China has extensive capacity (such as steel), some fear China could overwhelm overseas markets, as it ramps up export-led growth to compensate for the sharp economic downturn in the first quarter of 2020. Congress faces current choices that will influence the longer-range U.S. trade trajectory vis-a-vis China. Since the imposition of Section 301 tariffs on U.S. imports from China and China's retaliatory tariffs beginning in 2018, some Members have raised questions about the dependence of U.S. supply chains on China for critical products. There are also concerns about the potential ramifications of these dependencies, particularly in times of crisis or PRC nationalization of industry. Current demand pressures during the COVID-19 pandemic could increase U.S. reliance on medical supplies from China, at least in the short term (provided that the Chinese government is willing to export these supplies to the United States). At the same time, these pressures are also incentivizing diversification efforts. <2. U.S.-China Trade and the Impact of COVID-19> As the United States' third-largest trading partner in 2019, bilateral trade with China is important to the U.S. economy, and the recent sharp downturn in activity affects a wide range of U.S. industries. Total U.S. trade with the world (the sum of exports and imports of goods and services) was $5.6 trillion in 2019, equivalent to 26% of U.S. gross domestic product (GDP); China accounts for 11% of U.S. trade. Key facts about the relationship include the following: China's, total merchandise trade with the United States in 2019 amounted to $558.9 billion; China is the United States' third largest export market for goods. U.S. goods exports to China in 2019 were valued at $106.6 billion in 2019; China is the top source of U.S. imports. U.S. goods imports from China reached $452.2 billion in 2019; U.S. services exports to China in 2019 were valued at $56.7 billion (mostly travel and transport); U.S. services imports from China in 2019 were valued at $18 billion (about half of this amount was travel and transport); and U.S. foreign direct investment (FDI) stock in China in 2018 reached $116.5 billion while China's FDI stock in the United States reached $60.2 billion in 2018. Top U.S. exports to China include semiconductor chips, devices, parts and manufacturing machines; agriculture; aircraft, turbojets, turbo propellers, and gas turbines; optical and medical equipment; autos; plastics; and pharmaceutical products ( Figure 1 ). Top U.S. imports from China include microelectronics (computers and cell phones) and appliances, furniture, bedding and lighting; toys, games and sports equipment; plastics; knitted and non-knitted apparel, textile fabric, linens, and footwear; auto parts; articles of iron and steel; medical and surgical instruments; and, organic chemicals (including active pharmaceutical ingredients and antibiotics). <2.1. China First Quarter (Q1) 2020 Slowdown Effects on U.S. Industries> Since late January, the outbreak of COVID-19 in China has had a direct economic impact on U.S. firms that operate in China, export to or sell goods and services directly in China, or depend on Chinese goods and services for their operations in the United States and abroad. Some analysts estimate that China experienced a sharp drop in economic growth by as much as 9% in Q1 2020 and a 17.2% drop in exports in January-February 2020 compared to the same period in 2019. China's economy is globally connected through trade, investment, and tourism. The economic slowdown and global spread of COVID-19, combined with global travel and transportation restrictions and other effects, are now causing worldwide economic fallout. Indicators in key industries, include: China has recorded a sharp downturn in microelectronics production and sales and the United States could experience a similar drop due to a potential gap in availability. Almost half the value of U .S. imports from China in 2019 was mobile phones, computers and related parts . Foxconn, a Taiwan firm that produces the iPhone for Apple in China, received formal government permission to reopen its facilities in mid-February but has faced challenges because of quarantine and transportation restrictions. Foxconn's plan to offer $1,000 to each returning worker suggests potential lingering concerns about the risk of infection or other labor constraints. The company may also face supply constraints of key microelectronics inputs. Other companies that use Foxconn for contract manufacturing in China include Amazon, Cisco, Dell, Google, Hewlett Packard, Nintendo, and Sony, as well as Chinese firms Huawei and Xiaomi. The U.S. auto industry and manufacturers in South Korea, Japan, and Germany quickly faced manufacturing bottlenecks because of the lack of availability of auto parts supplies from China. The spread of COVID-19 to other major auto manufacturing markets, including the United States, Germany, Japan and South Korea may pose additional constraints. China exported $9.6 billion in auto part s to the United States in 2019 . U.S. manufacturing faces potential shortages of intermediate inputs for steelmaking and heavy manufacturing, such as refined manganese metal, ferrosilicon, and ferrovanadium. Manganese and ferrovanadium are steel strengtheners that depend on China-based processing. While manganese is mined around the world, China controls 97% of manganese processing. Ferrosilicon is used to extract oxygen from liquid steel, and is mostly produced in China. China exported al most $10 billion in iron and steel products to the United States in 2019 . U.S. retailers, tourism, and service providers that rely on the Chinese consumer base have also taken a hit in China. Many closed or significantly curtailed operations. U.S. retailers reduced operating hours or shuttered stores in response to COVID-19. For example, Starbucks closed about half its 4,200 retail outlets in China between late January and late February. Retailers and tourism service providers around the world have seen significantly reduced revenue as fewer Chinese citizens travel abroad China's outbound tourism spending in 2018 was $277 billion, of which an estimated $36 billion was in the United States . <2.2. Transportation, Logistics and Broader Considerations> Measures to contain the COVID-19 outbreak have significantly curtailed global transportation links. The consequence is the prevention of the transport of many products and manufacturing inputs. Passenger air traffic has slowed significantly, taking offline significant air cargo capacity for microelectronics and other products that ship by air. Container shipments are also constrained by the current backlog and dependence on domestic trucking and rail transportation, as well as on the ability of countries to staff port operations. U.S. airlines started suspending flights to China in late January 2020 and have suspended other routes as COVID-19 has spread globally. United Airlines announced steep flight cuts and said in early March 2020 that ticket bookings were down 70% for Asia-Pacific flights, noting that this downturn was magnified by a surge in flight cancellations. The company noted that revenue in April and May could drop as much as 70%. While Federal Express (FedEx) and United Parcel Service (UPS) announced in early March that they continued to run flights in and out of affected countries, they warned that limitations on travel could delay some shipments, although freight carriers are now starting to repurpose passenger flights for cargo which could help expand capacity. Quarantine of aircrew and restrictions on the ground in China with regard to labor, production, supply and logistics likely significantly curtailed shipments. On March 26, 2020, the Civil Aviation Administration of China (CAAC) restricted all airlines running passenger flights in and out of China to one flight per week, further constraining air freight capacity. Container shipping from China has faced serious constraints because of shortages of workers and trucking constraints. These constraints are affecting both U.S. imports to and exports from China. The Port of Los Angeles has announced that shipments scheduled from China between February and April 2020 have been cut by 25%. Los Angeles and Long Beach ports project a 15% to 17% drop in cargo volumes in Q1 2020. One in nine Southern California jobs is tied to the ports, including people who work on the docks, drive trucks, and move boxes in warehouses, according to the Executive Director of the Port of Los Angeles. The Port Authority of New York and New Jersey has requested $1.9 billion in federal aid to offset a forecasted 30% year-on-year drop in cargo volumes. In the immediate term, shipping and logistical constraints are slowing U.S. exports to Asia. U.S. exporters of meat, poultry, hay, oranges and other produce are reporting that refrigerated containers are in short supply and cold storage facilities are overflowing with inventory. U.S. and global manufacturing including production that recently shifted out of China to other parts of Asia and to Mexico is still recovering from disruptions in Chinese supply. Vietnam, Taiwan, Malaysia, South Korea, Japan, Thailand, and Singapore all have strong supply chain links with China and reported Q1 supply shortages. Even as China's production resumes, these Asian countries are now grappling with their own COVID-19 outbreaks, further complicating recovery. The situation is exacerbated by spread of COVID-19 in other important manufacturing markets such as South Korea, Italy, Germany, and Mexico. Disruptions in Chinese supply chains were initially expected to have a limited macroeconomic effect on developed markets in the short term, but as the outbreak has spread globally and Chinese firms and logistics operations have struggled to return to full capacity, a wide range of U.S. imports from China, including raw materials, intermediate industrial inputs, and consumer products, are likely to be in short supply. U.S. firms with operations in China or that depend on production in China may be prompted to diversify away from China and begin establishing new supply chains. The head of the EU Chamber of Commerce in China said in late February that the disruption from COVID-19 had driven home the need for foreign companies to diversify away from China. <2.3. Prospects for U.S. Exports> Within this context, U.S. firms may find some opportunities to increase exports to China, so long as global port operations resume and current logjams are resolved. Increased U.S. exports could be driven in part by recent tariff liberalization. As part of the phase one trade deal that the United States and China signed in mid-January 2020 to resolve some issues the United States raised under Section 301, the United States and China agreed, effective February 14, 2020, to cut by 50% the tariffs they imposed in September 2019. China announced a tariff exemption process for 700 tariff lines, including some agriculture, medical supplies, raw materials, and industrial inputs. With China's recovery, the U.S. government could press China to make up for lost time on U.S. purchases. COVID-19 may make it difficult for both sides to meet these targets, however, given the economic fallout in both countries. As part of the phase one trade deal, China committed to purchase at least $200 billion above a 2017 baseline amount of U.S. agriculture ($32 billion), energy ($52.4 billion), manufacturing goods ($77.7 billion), and services ($37.9 billion) between January 1, 2020 and December 31, 2021. Regarding agriculture, in November 2019, China's National Development and Reform Commission (NDRC) announced detailed rules for the application and allocation of grain and cotton import tariff-rate quotas for 2020 that specify imports for wheat (9.636 million tons, 90% state-owned trade), corn (7.2 million tons, 60% state-owned trade), rice (5.32 million tons, 50% state trade), and cotton (894,000 tons, 33% state-owned trade). NDRC included in these rules a requirement that companies applying for tariff-rate quotas must have a "positive record" in China's corporate social credit system. This requirement allows the Chinese government to restrict or impose terms on certain U.S. cotton exporters. China could use this requirement to create counter pressure in response to recent U.S. congressional action to block U.S. imports of textiles and apparel that contain cotton from China's Xinjiang region due to concerns over forced labor there. With falling oil prices, China would arguably have to buy a significant larger volume of goods to reach its purchase obligations that are benchmarked by dollar value. <2.3.1. Force Majeure Provisions> The crisis is also calling into question China's ability to implement the U.S.-China phase one trade deal signed in January 2020. The agreement has a force majeure provision which allows parties to opt out of contractual obligations without legal penalty because of developments beyond their control that could give China flexibility in implementing its commitments. The deal was finalized in December 2019 and signed in mid-January 2020, when Chinese officials reportedly knew about the severity of the COVID-19 outbreak in Wuhan, which raises questions about the rationale and timing of the decision to include the force majeure provision. A factor further complicating the potential for resumption and expansion of U.S. exports is Chinese companies' invocation of force majeure certifications. For example, China National Petroleum Company (CNPC) used the outbreak of COVID-19 to declare force majeure in cancelling some liquefied natural gas (LNG) imports, a move followed by a downturn in overall oil and gas demand. The Ministry of Commerce has since provided free certifications to Chinese companies that need to declare force majeure . Chinese companies and courts rely on an interpretation of force majeure that is different from the standard legal interpretation in the United States, which allows both parties to cancel contract terms and revert to a pre-contract baseline. In China, force majeure is used to cancel an obligation by the party invoking the provision while the other party may still be obligated to perform and honor contract terms. For example, if a payment is blocked or forgiven by the Chinese government, the other party may still be expected to perform according to the contract terms without the foreign party being reimbursed for any additional costs incurred. Moreover, Chinese courts are unlikely to allow foreign firms to prosecute Chinese firms that do not perform according to their contracts. <3. U.S. Reliance on China for Health Care and Medical Products> In the midst of the pandemic, Congress is expressing a strong interest in responding to U.S. shortages of medical supplies including PPE and pharmaceuticals as the United States steps up efforts to contain and counter COVID-19 with limited domestic stockpiles and constraints on U.S. industrial capacity. Because of China's role as a major U.S. and global supplier of medical PPE, medical devices, antibiotics, and active pharmaceutical ingredients ( Appendix B ), reduced exports from China have led to shortages of critical medical supplies in the United States. While some analysts and industry groups have pointed to tariffs as a disincentive to U.S. imports of health and medical products, supply shortages due to the sharp spike in demand, as well as the nationalization and diversion of supply to China, appear to be stronger drivers. According to China Customs data, in 2019 China exported $9.8 billion in medical supplies and $7.4 billion in organic chemicals a figure that includes active pharmaceutical ingredients and antibiotics to the United States. While there are no internationally-agreed guidelines and standards for classifying these products, U.S. imports of pharmaceuticals, medical equipment and products, and related supplies are estimated to have been approximately $20.7 billion (or 9.2% of U.S. imports), according to CRS calculations using official U.S. data ( Figure 2 and Table 1 ). <3.1. China Nationalizes Medical Production and Supply> In early February 2020, the Chinese government nationalized control of the production and dissemination of medical supplies in China. Concerned about shortages and its ability to contain the COVID-19, the Chinese government transferred authority over the production and distribution of medical supplies from the Ministry of Information Industry and Technology (MIIT) to the NDRC, China's powerful central economic planning ministry. NDRC commandeered medical manufacturing and logistics down to the factory level and has been directing the production and distribution of all medical-related production, including U.S. companies' production lines in China, for domestic use. In response to government directives, foreign firms with significant production capacity in China, including 3M, Foxconn, and General Motors, shifted significant elements of their operations to manufacturing medical PPE. By late February 2020, China had ramped up face mask production both basic surgical masks and N95 masks from a baseline of 20 million a day to over 100 million a day. China's nationalization efforts, while understandable as part of its efforts to address an internal health crisis, may have denied the United States and other countries that depend on open and free markets for their health care supply chains access to critical medical supplies ( Table 2 and Table 3 ). On February 3, 2020, China's Ministry of Commerce directed its bureaucracy, local governments and industry to secure critical technology medical supplies and medical-related raw material inputs from the global market, a situation that likely further exacerbated supply shortages in the United States and other markets. To ensure sufficient domestic supplies to counter COVID-19, China's Ministry of Commerce also called on its regional offices in China and overseas to work with PRC industry associations to prioritize securing supplies from global sources and importing these products. The Ministry of Commerce provided a list of 51 medical suppliers and distributors in 14 countries and regions to target in quickly assuring supply. The Ministry also prioritized food security and the need to increase meat imports. China's trade data shows that these policies led to steep increases in China's imports of essential PPE and medical supplies, including the raw materials needed to make products such as N95 masks. The policies also contributed to sharp decreases in China's exports of these critical medical products to the world. (See Table 2 .) On March 29, 2020, the Australian government imposed new temporary restrictions on all foreign investment proposals in Australia out of concern that strategic investors particularly those of Chinese origin might target distressed assets. This comes after authorities discovered two instances of Chinese property developers in Australia purchasing large volumes of medical supplies (and precious metals) for shipment to China. Risland a wholly-owned subsidiary of one of China's largest property developers, Country Garden Holdings reportedly shipped 82 tons of medical supplies from Australia to China on February 24, 2020. The shipment included 100,000 medical gowns and 900,000 pairs of gloves. Greenland Australia a subsidiary of another large Chinese property developer backed by the Chinese government, Greenland Group implemented instructions from the Chinese government to secure bulk supplies of medical items from the global market. Greenland reportedly sourced from Australia and other countries, 3 million protective masks, 700,000 hazmat suits, and 500,000 pairs of gloves for export to China over several weeks in January and February 2020. <3.2. Implications of China's Export Constraints: U.S. Shortages and Policy Response> As the United States ramps up efforts to contain the spread of COVID-19, reduced production and exports of pharmaceuticals and PPE from China are exacerbating shortages of critical medical supplies. Minnesota-based 3M, a large-scale manufacturer of N95 respirators, for example, told The New York Times that all masks manufactured at its Shanghai factory were sold to meet China's domestic demand; other mask manufacturers, such as Canada's Medicom, have stated that the Chinese government has not yet authorized them to export PPE. China's Ministry of Commerce has claimed it is not imposing export restrictions on medical supplies, but this statement may not apply to the current situation as all of China's domestic production is controlled by the government and geared toward domestic consumption. U.S. national and state-level health authorities have been reporting shortages of medical supplies including PPE such as gowns and face masks since February. On March 18, President Trump issued Executive Order 13909, Prioritizing and Allocating Health and Medical Resources to Respond to the Spread of COVID 19 , which announced the President's invocation of the Defense Production Act of 1950 (DPA) in response to the COVID-19 pandemic. The DPA confers broad presidential authorities to mobilize domestic industry in service of the national defense, defined in statute as various military activities and "homeland security, stockpiling, space, and any directly related activity" (50 U.S.C. 4552), including emergency preparedness activities under the Stafford Act, which has been used for public health emergencies. Among other authorities, Title I of the DPA allows the President to require persons (including businesses and corporations) to (1) prioritize and accept government contracts for materials and services, and (2) allocate or control the general distribution of materials, services, and facilities as necessary to promote the national defense. The Administration, however, is only publicly providing limited direction to the private sector under this authority. Any potential use of the DPA to respond to the COVID-19 pandemic may require some amount of time to produce adequate supplies, considering the large volumes of products, particularly PPE and ventilators, which are currently in urgent demand. Many U.S. firms are hesitant to invest in substantial increases in production, including obtaining the capital equipment and other inputs required, until they have a guaranteed buyer and price. Manufacturing firms, such as General Motors, Ford Motor Company, and Tesla are repurposing factory production for ventilators, but defense logistics experts expect this effort to take months. Additionally, in the United States, PPE and ventilators for use in the health care setting are considered medical devices and require marketing permission from the U.S. Food and Drug Administration (FDA). The Trump Administration's relatively late formal invocation and activation of the DPA, which could effectively serve as an export constraint on U.S.-produced medical supplies, arguably left discretion to U.S. companies to decide whether to fill export or domestic orders first. By contrast, governments in Taiwan, Thailand, France, and Germany boosted production but restricted exports, further curtailing U.S. supply options. In January and February 2020, organizers of U.S. private sector relief efforts reportedly purchased large amounts of U.S. PPE products for airlift to China, further depleting U.S. supplies. Some Members of Congress have called for broader tariff relief or at least new exclusions for existing tariffs and a moratorium on any new tariffs. Other Members and U.S. domestic producers argue that such liberalization could open the U.S. market to a flood of imports during an economic downturn. The Office of the United States Trade Representative (USTR) announced on March 6, 2020, that it would lift tariffs imposed under Section 301 authorities on 19 specific products and 8 10-digit subheadings of medical supply and equipment items from China ( Table 4 ). The Administration appears reluctant to liberalize non-health related tariffs, preferring to delay tariff payments instead. In late March 2020, the U.S. Customs and Border Protection sent notices to companies saying that officials will approve some delays in tariff payments to offer economic relief due to the severity of COVID-19; they may also be weighing a broader suspension of collecting duties. Separate from COVID-19, with regard to existing tariff exemptions, on March 20, USTR invited industry to submit public comments beginning on April 20, regarding whether USTR should extend certain tariff exclusions on other products already granted in June 2019 that expire in June 2020. A broader liberalization of U.S. tariffs on Chinese goods during the COVID-19 outbreak, could further expose the U.S. economy to Chinese excess industrial capacity at a point of economic downturn in the United States. Chinese firms also could capture market share and gain a unique foothold in the U.S. market through market softening and if the United States were to relax FDA and other product certifications. In an effort to quickly bring overseas medical supplies into the United States, the Federal Emergency Management Agency (FEMA), announced on March 29, 2020 that it was arranging airlift for 22 flights, most from Asia, over the subsequent two weeks. The airlift is for medical supplies that medical distributors already planned to import into the United States, but it accelerates their delivery arrival time by shipping by air instead of ocean freight. Separate from medical supplies specific to COVID-19, a longer-term disruption of China's pharmaceutical and medical exports could increase the cost of everyday drugs and routine medical procedures in the United States. This could happen as it becomes harder to import APIs for common drugs and components for medical devices. According to FDA officials, in 2018, China ranked second among countries that export drugs and biologics to the United States by import line (accounting for 13.4% of U.S. imports of those products). However, FDA states it is not able to determine the volume of APIs that China is manufacturing given the complexity of the supply chain and gaps in what pharmaceutical companies are required to disclose about their inputs. China is also a leading supplier of APIs in global supply chains for painkillers, diabetes medicines, and antibiotics, meaning a slowdown in API exports from China could increase cost pressures faced by U.S. drug manufacturers. For example, China accounts for 52% of U.S. imports of penicillin, 90% of tetracycline, and 93% of chloramphenicol. On February 27, FDA Commissioner Stephen Hahn announced that a manufacturer of an unspecified human drug informed FDA of a shortage the drug's supply related to a Chinese API manufacturer affected by COVID-19. Because information disclosed to FDA regarding drug shortages is considered proprietary, FDA did not disclose the name of the drug in question, but did note that alternatives exist for patient use. China's role as the primary supplier of APIs to global manufacturers of generic pharmaceuticals, particularly in India, is likely to increase overall costs of generic pharmaceuticals for consumers in the United States in the short-to-medium term. The outbreak of COVID-19 in India could also affect the availability of generic pharmaceuticals in the United States. India, which supplies approximately 40% of generic pharmaceuticals used in the United States, imports nearly 70% of its APIs from China. In March 2020, India imposed export restrictions on several drugs whose supply chains rely on China, leading to fears of potential global shortages of generic drugs that have since escalated after India announced a nationwide 21-day lockdown. <3.3. Global Trade Restrictions> Amid concerns about the availability of personal protective equipment (PPE), medical supplies, and pharmaceuticals, a growing number of nations have applied export controls and other restrictions on the overseas sales of these products. While export controls do not necessarily prohibit export activity, they make export licenses a requirement, which could lead to transactions being delayed and potentially denied or cancelled. As medical professionals around the world scramble to find gloves, face shields, protective garments, disinfectants, ventilators, and other equipment needed to fight COVID-19, these measures are highlighting the risks and exacerbating the challenges of relying on complex global supply chains and distribution channels. World Trade Organization (WTO) rules prohibit export bans except for rare instances in which a member invokes a measure citing national security concerns. In an effort to promote transparency, the WTO is publishing a list of temporary export bans that countries are enacting during COVID-19 and notifying to the WTO. On March 30, 2020, the G-20 issued a joint statement that emphasized the importance of keeping markets open and ensuring the adequate production and fair and equitable distribution of medical products to where they are most needed. The statement emphasized that any measures a country might adopt to protect health should be targeted, proportionate, transparent, and temporary. So far this year, China and more than 24 other economies, including India and, more recently, the European Union, have imposed either limits or formal or de facto bans on certain exports. Many of the existing and proposed measures could restrict access to markets on which the United States depends for certain imports. These include medical ventilators (for which Singapore and China accounted for 35% and 17%, respectively, of U.S. imports in 2019), breathing and gas masks (France, the United Kingdom, and Italy, 47% combined), CT scanners (Germany, 50%), medical protective equipment of textile materials (China, 72%), digital and infrared thermometers (China, 36%), pharmaceuticals (Ireland, Germany, Switzerland, and Italy, 53% combined), and tetracycline and penicillin (China, 90% and 52%, respectively). <4. China's Economic Recovery: Prospects and Implications> China's leaders are focusing on resuming manufacturing production to jumpstart economic growth. At an executive session of China's cabinet, the State Council, on March 17, Chinese officials emphasized the importance of stabilizing employment and announced that the government would streamline business approvals and fast-track approvals for large infrastructure projects. They also offered government support to alleviate shortages of labor, raw materials, funds, and protective gear. To facilitate economic activity, the Chinese government also appears to be liberalizing company health requirements and lifting intra-provincial and intra-city travel and transportation restrictions. NDRC spokesperson Meng Wei said on March 17, 2020 that transportation was operating normally. Zhejiang, Jiangsu, and Shanghai were operating at close to 100% of normal capacity; and over 90% of large-scale industrial companies outside of Hubei had resumed production. Company reports of opening and resumption of operations may not mean that these facilities are fully online or operating at pre-crisis levels, however. Several economic analysts and news outlets, including the Financial Times , have published alternative measures of business resumption rates using proxies for economic activity such as data on traffic congestion, air pollution levels, and container freight movement. Overall, many of these measures suggest that businesses across China are not returning to full capacity at the rates being reported by local and provincial governments. In Wuhan, the center of the original outbreak, the Hubei provincial government issued a notice in March that applies to Wuhan as Hubei's capital allowing certain companies to resume work ahead of other production. This included companies in the medical and health industry, as well as companies producing protective gear, disinfectant, daily necessities, agriculture, and products critical to national and global supply chains. <4.1. China Positioning to Export> China's economy depends on exports and the foreign exchange it earns through exports as well as on the large productive role that foreign firms play in the domestic market and as exporters. Seeking to stabilize drops in foreign investment and trade, on March 12, Commerce Vice Minister Wang Shouwen held a call with 400 members of the American Chamber of Commerce in China, and on March 13, he held a similar webinar with the European Chamber of Commerce in China's Advisory Council. Vice Minister Wang pressed companies to reopen operations and increase investments in China. Other Chinese agencies represented included NDRC, MIIT, the National Health Commission, the General Administration of Drug Supervision, the State Administration for Market Regulation, the General Administration of Customers, the Civil Aviation Administration of China, the Ministry of Transportation, and the State Taxation Administration. During past crises, such as the global financial crisis of 2008-09, China has pressed firms to idle facilities and keep them production-ready (instead of shuttering them) and retain workers (instead of laying them off) to maintain social stability and facilitate efforts to quickly ramp up production and exports later. These stimulus efforts are sometimes less visible than fiscal policies in other countries. Several market watchers have noted that, while a 17% drop in Chinese exports in January-February 2020 is significant, it is not as dramatic when considering China's economy was shuttered for much of February. This indicates that Chinese industry may have had sufficient stock already at ports for export when the crisis hit. This also signals the potential power of a resumed export push from China. China's economic recovery is important to the United States and the global economy, as it is an important center of demand and supply. At the same time, during this period of global economic downturn, the United States and other countries are now potentially vulnerable to a concerted PRC export push and any effort it makes to take additional market share in strategic sectors. <4.2. Steel Overcapacity> Chinese overcapacity in steel has been highly contentious for its global impacts, and China could potentially see exports as a quick way to reduce inventories and secure needed cash. Similar to what happened during the global financial crisis in 2008-09, China is poised to take additional global market share in 2020 because it did not dial back production during the COVID-19 outbreak. Chinese blast furnaces continued to run during the COVID-19 crisis, and China's steel production for January-February 2020 was up 3% over the same period in 2019. Meanwhile, due to collapsing domestic demand and logistics constraints, China's finished steel inventories rose by 45% in January-February 2020 over the same period in 2019. China's steel production at the end of 2019 was already at an all-time high of almost 1 billion tons, with China producing over 50% of global supply, according to the World Steel Association and China's State Statistical Bureau ( Figure 3 ). <4.3. Export VAT Rebate> On March 17, 2020, China's Ministry of Finance announced it was increasing the export value added tax (VAT) rebate for almost 1,500 Chinese products, effective March 20, 2020. Most of the products (1,084) are receiving a 13% rebate; a small number (380) are receiving a 9% rebate. The export VAT rebate is a focused policy tool with quick effects that China typically employs to boost targeted exports during times of slowdown. It typically reduces the export VAT on products down to or close to zero. (See Table 5 .) The rebates reflect a strong policy push for steel exports, as well as construction and building materials (e.g., insulation, wood products, glass and fiberglass). China is also promoting the export of a range of insecticides and industrial and organic chemicals. The rebates encourage the export of agricultural products in categories for which China promised to increase purchases from the United States such as live breeding animals, meat and dairy suggesting the government may be incentivizing exports for industries that might face additional U.S. imports. Absent in China's policy push are incentives to encourage the sale of pharmaceuticals, PPE, and other medical products overseas. The export VAT rebates also appear to be incentivizing China's export of wild animals and their byproducts overseas ( Table 5 ). With assessments that COVID-19 could have originated in wild animals and potentially passed to humans in open air markets that sell these animals, China's National People's Congress announced on February 24 a ban on the sale and consumption of wild animals in China. While the export incentive might help the government to eradicate domestic markets by providing an economic incentive to export, this move could spread the risk to global markets. <4.4. China Pushing Ahead in Strategic Sectors> Now apparently past its peak of the COVID-19 outbreak, China is prepared to capitalize on the investments it made during the past few months to push ahead on goals outlined in its Made in China 2025 (MIC 2025) industrial plan, which includes several strategic health sectors ( Figure 4 ). Introduced by China's State Council in May 2015, MIC 2025 is an ambitious state-led program that seeks to create competitive advantages for China in certain strategic industries. The plan aims to move China up the manufacturing value chain, expand its global market competitiveness, and reduce its reliance on foreign firms and their intellectual property (IP) over time. (See Figure 4 ). The program has been a major focus of the Trump Administration's Section 301 actions against China because of the distorting and predatory policies the initiative has set in motion related to technology transfer, intellectual property, and innovation. Biotechnology, pharmaceuticals, and medical devices are key components of MIC 2025 industrial plans that support Chinese firms in efforts to increase their global market share of generic drugs and medical equipment, and develop new innovative drugs. Toward this end, the Chinese government restricts market access for foreign pharmaceutical firms. It requires foreign firms to conduct clinical trials in China, disclose proprietary information for drug trials and sales, and enter into partnerships to secure a spot on reimbursable drug lists. Moreover, medical equipment subsidies require that 60% of a product's components be produced in China by a PRC firm. These policies continue despite amendments to the Drug Administration Act in 2019 which were designed to make it easier for foreign pharmaceutical companies to operate in China. China may have been serving its commercial ambitions in decisions it made during the COVID-19 outbreak in China: China has restricted access to medical information about COVID-19, including access for the U.S. Centers for Disease Control and Prevention (CDC), potentially putting U.S. science, research and development (R&D), and industry at a disadvantage. While some of these controls may be politically motivated, they also may be driven by China's market ambitions. The government's tight controls over biotechnology and pharmaceutical testing, treatment, and analysis in China could advantage its state firms. China ordered that all viral samples from the beginning of the COVID-19 outbreak be destroyed or sent to the Wuhan Institute of Virology, a national lab run by China's military. This move centralizes the government's knowledge about the potential origins of the virus and provides unique insights about its trajectory and treatment. The Wuhan Institute of Virology operates China's only biocontainment level 4 (P4) lab, a specialized facility for studies on highly contagious and fatal diseases. The Lab was developed by the Merieux Foundation under a government agreement between France and China. In another effort by the Chinese government to control access to important health information, the World Health Organization (WHO)'s visit to China came over a month after the outbreak of the virus. Only a subset of the WHO-China Joint Mission on COVID-19 delegation was allowed to visit Wuhan. China appears to have been slow to approve foreign drug patents potentially relevant to COVID-19 until it needed them at the height of the crisis. For example, Gilead Sciences a U.S. company based in California had several patents for its antiviral drug Remdesivir's use in coronaviruses that have been pending approval since 2016. The Chinese government has been requiring the company to conduct clinical trials in China and did not approve these patents until well into the crisis. The Chinese government may have benefitted from long-standing foreign patent application information that becomes public over time once a patent application is filed in China, even if the approval is still pending. The Chinese government also likely benefits from the insights gained through the clinical trials conducted in China and the viral samples that foreign companies share. Gilead, as well as other U.S. companies, sent the Chinese government samples of its drugs during the COVID-19 outbreak. The Chinese government cracked down on BrightGene BioMedical Technology Co. a PRC firm based in Suzhou, China for the company's premature announcement that it could compound a generic version of Remdesivir. The government's move may be less of an effort to protect foreign firms than to position China's national labs. The Wuhan Institute of Virology, for example, has applied to patent an adaptation of Remdesivir. This could potentially complicate Gilead's and other U.S. firms' way forward in China. China offered significant funding to Chinese biotech, pharmaceutical, and health logistics companies to expand capacity and capabilities to combat COVID-19. For example, Jointown a top Chinese medical supplier issued preferential bonds in February 2020, and the State Council's CITIC purchased private placement shares in the company. PRC official media is featuring stories about how the Chinese leadership is using its current control of medical production and supply chains to selectively help other countries, while promoting ties to China. State media is also highlighting China's interest in advancing its global medical leadership role. China's global health leadership was a key element of people-to-people exchanges envisioned in China's initial rollout of its "One Belt One Road" initiative in 2015. During a call to Italian Prime Minister Conte on March 17, 2020, Chinese Communist Party Chairman Xi Jinping referenced a new Chinese government initiative a Health Silk Road that appears designed to promote Chinese leadership and products in the health sector. Such efforts also aim to deflect criticism of China's alleged corralling and destruction of the initial virus samples and efforts to prevent sharing of information among medical practitioners and the global community. Some experts have highlighted how this suppression of health information violates the obligations of WHO members to immediately share information about outbreaks for the safety of the world. The Chinese government reportedly undertook extraordinary measures during the COVID-19 outbreak to sustain R&D and manufacturing for priority national projects and in strategic sectors such as telecommunications, microelectronics, and semiconductors including in Wuhan, the epicenter of China's outbreak. These efforts have potential ramifications for U.S. and foreign firms' relative competitive market position as companies compete in 5G and other emerging sectors. This is particularly the case if their China operations were closed or are now significantly curtailed in the United States and other markets. According to the Nikk ei Asia Review , in February and March 2020, the Chinese government operated special transportation and quarantined dormitories at Yangtze Memory Technology, Co., Ltd. (YMTC), China's national champion to develop memory chips. YMTC is located in eastern Wuhan. The government saw continued operations as an issue of national security and issued special local and central government dispensation to keep the facility operational amidst the outbreak. Separate reports indicate that HiSilicon the semiconductor subsidiary of China's leading telecommunications equipment company Huawei also sustained operations during the outbreak. Huawei's chairman and chief executive told T he Wall Street Journal on March 25, 2020 that the company plans to boost its research and development budget in 2020 by $5.8 billion to more than $20 billion. <5. Issues for Congress> Congress faces choices in the near-term that will affect not only the immediate situation, but also the longer-range U.S. trade and economic trajectory vis-a-vis China, with a potentially significant impact on the global economy as well. The outbreak of COVID-19 has prompted a sharp collapse of transportation, services, and manufacturing production including supply shortages of essential medical and health care products needed to contain COVID-19. The COVID-19 pandemic has also precipitated a sharp downturn in consumer demand, first in China and now globally. Questions already brewing since the imposition of U.S. Section 301 tariffs are intensifying congressional concerns and debates about potential short-term and long-term steps to address U.S. supply chain dependence on China for critical products, and the potential ramifications of these dependencies. These ramifications could be particularly marked in times of crisis or of PRC nationalization of industry. At the same time, some U.S. companies and Members of Congress are calling for lowering tariffs on goods from China. The urgent need for pharmaceutical and medical supplies is fueling systemic market pressures to increase U.S. reliance on China trade because China is an important source of many of these critical inputs and products. Whether and on what terms the Chinese government might be willing to export medical supplies to the United States remains uncertain. <5.1. Dependency of U.S. Health Care Supply Chains on China> The current shortages of critical medical supplies in the United States has exposed current U.S. health care dependencies on China. As China positions its industries to realize its MIC 2025 goals in biotechnology, pharmaceuticals, and medical equipment, the Chinese government is pursuing industrial polices to advance into higher positions in the global industrial value chain, raising longer-range questions about what this might portend for U.S. reliance on China as an increasingly competitive supplier. As China's manufacturing capacity comes back online while the United States and other major global markets continue to grapple with COVID-19, the Chinese government appears to be selectively releasing some medical supplies for overseas delivery. China appears to be selecting designated countries, at least to some extent (although the precise degree cannot be determined), according to political calculations and has been playing up its role in Chinese state propaganda, as evidenced with China's deliveries to Italy and Serbia. Most foreign governments appear to be paying for these supplies although a small subset of packages may be aid. There are also reports by other countries that some of China's medical supplies and testing kits are faulty. In a sign that China might be using the crisis to push substandard products or gain market share in developed markets over traditional U.S. suppliers based in China that produce for export, PRC state propaganda has blamed shortages on alleged FDA failures to certify Chinese products for import. This raises the question of why products made by U.S. firms in China that are already FDA certified are not first in line for export to the United States given that these firms also expanded capacity during the crisis in China. Several prominent U.S. companies, including 3M, have indicated they do not have PRC government authorization to export. In this environment, Congress faces choices about how best to incentivize production of health supplies in the United States, potentially in collaboration with other countries, to counter COVID-19 and future pandemics, and/or whether to impose any conditions on this production. With an eye to China's industrial policies, Congress may also consider the potential longer-term advantages and disadvantages of diversifying U.S. supply and on-shoring of certain capabilities. Congress may also want to consider potential collaboration with like-minded countries, and ways to counter the effects on lesser-developed economies that could be hit particularly hard by COVID-19. China is likely to seek to retain the medical market share and edge it gains through COVID-19, particularly as these gains help advance China's MIC 2025 industrial policy goals in biotechnology, pharmaceuticals, and medical equipment. At the same time, the United States and other countries may seek to diversify away from China because of vulnerabilities highlighted during the outbreak. Recent legislative action related to these issues includes: P.L. 116-136 , The Coronavirus Aid, Relief, and Economic Security (CARES) Act includes several provisions that expand drug shortage reporting requirements to include APIs and medical devices. The bill also requires certain drug manufacturers to draw up risk management plans and requires the FDA to maintain a public list of medical devices that are determined to be in shortage. Additionally, the bill directs the National Academies of Science, Engineering, and Medicine to conduct a study of pharmaceutical supply chain security. The CARES Act also waives certain congressional oversight and reporting requirements under the Defense Production Act of 1950's (DPA; 50 U.S.C. 4501 et seq.) Title III Expansion of Productive Capacity and Supply, which governs purchases and loans made by the federal government to expand productive capacity in promotion of national defense, broadly defined. S. 3538 would require companies to report on the sources of their APIs and would tighten laws encouraging the U.S. Department of Veteran Affairs to buy American pharmaceuticals. The bill calls for federal financing guarantees to U.S. medical supply companies with production in the United States and would increase the tax deduction temporarily for businesses investing in medical equipment and facilities related to COVID-19. S. 3343 , The Medical Supply Chain Security Act, calls for enhanced security of the medical supply chain and enhanced FDA authority to request information about the sources of drugs and medical devices. It would require medical device manufacturers to report expected shortages to the FDA. A companion bill, H.R. 6049 , was introduced in the House of Representatives on March 2, 2020. S. 3537 would require the FDA to establish a registry to track APIs and institute a country-of-origin label for imported drugs. The bill would provide economic incentives for producing pharmaceuticals and medical equipment in the United States. The bill also would prohibit federal agencies and health facilities from purchasing APIs and other pharmaceutical products manufactured in China without an FDA waiver certifying that China is the sole source. H.R. 5982 , The Safe Medicine Act, would direct HHS to assess vulnerabilities in the U.S. pharmaceutical supply chain by issuing a report that examines U.S. dependence on China for critical APIs and gaps in domestic pharmaceutical manufacturing capabilities. H.R. 6386 , The No Chinese Handouts In National Assistance (CHINA) Act, would prohibit any funds made available in Appropriations acts for FY2020 from being used to compensate any individual or business controlled by the Chinese government. The Act adopts the definition of government control established in Section 721(a) of the Defense Production Act of 1950 (U.S.C. 4565(a)). H.R. 4710 , The Pharmaceutical Independence Long-Term Readiness Act, would direct the Department of Defense to include a section in each national defense strategy that outlines steps to address gaps in the U.S. pharmaceutical manufacturing base and strengthen pharmaceutical supply chains with single points of failure. S. 3432 , The Securing America's Medicine Cabinet Act of 2020, would take steps to strengthen U.S. competitiveness in advanced pharmaceutical manufacturing by enhancing the advanced manufacturing programs of the FDA. It also would designate certain research universities as "National Centers of Excellence in Advanced Pharmaceutical Manufacturing." Several Members of Congress have introduced bills to amend certain provisions under the Defense Production Act of 1950 (DPA; 50 U.S.C. 4501 et seq.). Some Members have also introduced several resolutions in the House and Senate that call on the President to use DPA authorities to facilitate the production of medical supplies. Bills and resolutions related to DPA are compiled and summarized in Appendix B . In addition to recent legislation introduced by Members of Congress, the Trump Administration reportedly drafted an Executive Order in mid-March 2020 that seeks to increase U.S. production capacity while eliminating loopholes that have allowed the U.S. government to buy pharmaceuticals, PPE, and ventilators from overseas. <5.2. Other U.S. Supply Chain Dependencies> COVID-19 provides a direct learning experience potentially more compelling than any war game or natural disaster simulation about the direct effects and costs of a serious disruption or cutoff of critical supplies from China to the United States. Key broader questions facing the United States that have serious implications for future economic and trade relations include: What are the consequences for U.S. interests when China nationalizes production and distribution and hardens its borders as it did during the COVID-19 crisis? What happens if Chinese government planners corner global supply alternatives? What happens if the United States hardens its own borders? What happens if U.S. allies and partners are in crisis and turn to national tools and approaches? What supply lines are available to the United States? What is current baseline U.S. production capacity and what is U.S. production capacity in the event an Administration invokes the Defense Production Act (DPA)? What control do chief executive officers of U.S. companies or the U.S. government have over U.S. corporate facilities and operations that are nationalized in China? What are U.S. dependencies on China in other critical areas such as microelectronics? <5.3. U.S. Market Competitiveness and Tariff Policy> Congress faces a series of interrelated questions about whether and how to calibrate trade policy to best position the United States in the current crisis and beyond. In response to a U.S. investigation of China's unfair trading practices under Section 301, since 2018, the United States has imposed a series of tariffs and China has responded with a series of counter tariffs that now affect a majority of trade between the two countries. Temporary tariff relief for medical supplies and pharmaceuticals could incentivize imports for the United States and other markets, but tariff policy cannot address the deeper issues of supply shortages, export constraints imposed by a number of countries including China, and product certification requirements in the United States and other markets. Tariff liberalization has been insufficient to address industrial policies within borders such as regulatory standards, procurement terms, and local content requirements that China and others impose in a range of sectors including pharmaceuticals and medical equipment. Recent actions by countries around the world to impose export barriers highlight potential gaps and limits to the power of WTO rules prohibiting export bans during times of global crisis. These actions also raise questions about what new rules or protocols might be needed in the future. Liberalization of U.S. import requirements also created some of the challenges the United States is facing now, such as loosening requirements for U.S. pharmaceutical firms to report on shortages and how they classify imported content for finished products that qualify as U.S. products. New liberalization could reward Chinese industrial policies in medical equipment and pharmaceuticals that seek to win new ground for Chinese firms in overseas markets. The potential for China to overwhelm global markets as it leans on exports for economic recovery raise questions about whether additional policy measures might be needed. Rather than waiting until market injury has already occurred to seek damages, for example, Congress may want to be watching trade patterns for signs of import surges and oversee the Administration's potential use of safeguard measures. Similar to the Australian government's decision on March 29, 2020 to impose new temporary restrictions on all foreign investment proposals out of concern that strategic investors particularly those of Chinese origin might target distressed assets, Congress may want to carefully monitor or consider whether to impose requirements about potential predatory commercial activity in the United States. <5.4. Information and Data Gaps> The outbreak of COVID-19 has exposed gaps in U.S. understanding of U.S. domestic competencies and dependencies on China and other sources of global supply. Vulnerabilities regarding raw materials, such as APIs, are not well recorded in trade and industry data. They are particularly complicated to track when materials are shipped from China and processed in a third market such as India. In similar fashion, the United States has relaxed definitions of what qualifies as a U.S. product with imported content, masking the extent to which domestically-produced products may still rely on inputs from overseas. Pharmaceutical company stockpiles are proprietary, and companies do not have to report on reserves. They are only required to report when they have a shortfall, which does not leave enough time, particularly in times of emergency, for national and contingency planning. Under the International Investment Survey Act of 1976 (22 U.S.C. 3101 et. seq.), the President has wide authority over the collection of corporate activity abroad for statistical and analytic purposes. The Act also confers on the President the authority to request mandatory surveys of companies under specific deadlines with the ability to invoke civil and criminal penalties for noncompliance. The President has the authority to study the adequacy of current information and recommend improvements, and the Act requires him to report to Congress. To address these issues, Congress could consider whether to request the President to invoke his authority over the U.S. government's collection of data on corporate activity abroad. These corporate surveys could obtain specific supply chain information about the status of PPE and medical supply production, distribution, and export policy situation facing U.S. companies overseas, including in China. The surveys also could cover other sectors of potential congressional concern. This information could inform legislation that Congress has already passed or is considering with regard to overseas supply chains, including sourcing from China. <5.5. Unique Role of the U.S. Federal Government> At a time when U.S. health care systems, states, and countries overseas are seeking to secure limited medical supplies, the U.S. federal government has a unique role to play in ensuring adequate domestic and global production, contracting of supply (both domestically and globally), and distribution of these resources. Even as new capacity might be available in China, for example, who are the U.S. actors positioned to try to secure this supply and through what pathways? Lack of coordination at the federal level has led states to scramble and compete against each other for critical medical supplies in the current crisis. Among the key questions related to these issues, Congress may explore answers to such questions as: How does the U.S. federal government position itself vis-a-vis U.S. state and private actors? How does the U.S. federal government position itself vis-a-vis other foreign governments trying to secure similar supplies? What is the U.S. government's posture toward supplies needed in the developing world? How might expanded production capacity created in the United States not only help the U.S. market but also those of other countries, in the near term and over the longer term? <5.6. U.S. Leadership on Global Trade and Health Issues> The current COVID-19 pandemic provides a unique opportunity to reaffirm U.S. global leadership on trade and health issues and to counter China's nationalization and likely politicization of its domestic medical supply production capacity. China's export restraints and cornering of the global supply of medical products ahead of others in February 2020 have created serious strains on the open trade system, further incentivizing other countries to close borders and restrict any access to supplies they may have. These moves also have given China market power over other countries' procurement decisions as governments around the world grapple with how best to secure critical supplies. Early signs show that China is closely controlling and releasing supplies to other governments through contracts and some aid in ways that seek to improve China's global image and may come with other quid pro quo terms that are not yet visible. China's economic recovery ahead of others could further challenge and undermine key tenets of the open trade system, particularly if China exports pent up domestic capacity with a disregard for what the current state of the global economy is prepared to absorb on market terms. While some European countries have imposed export restraints on their health supplies, some politicians in Europe are concerned about how the Chinese government is manipulating the crisis and China's position in global supply chains for political gain. Some analysts have expressed concern that China is trying to position itself as a responsible global leader in health, while violating the core tenets of WHO membership in failing to share critical information and access in the critical first few weeks as the crisis emerged in Wuhan. Members concerned about maintaining U.S. global economic leadership during the COVID-19 pandemic may consider using hearings, legislation, and statements to communicate key issues to be addressed. Possible questions for Congress in the context of COVID-19 include: whether to prioritize economic openness and free flows of information; whether to prioritize diversifying sources of medical supplies, and if so, how; how best to overcome current and future bottlenecks in health care supply chains in the United States and partner nations; whether to respond to China's attempts to control the global narrative about key COVID-19 events, and if so, how; and whether to look to reform global health and trade governance in light of COVID-19 developments, and if so, how. Some Members are calling for hearings to address the role of the WHO during the COVID-19 outbreak and are raising questions about the need to reform global health governance. Other Members are looking at the chronology of events in the COVID-19 outbreak to maintain an accurate record that is not distorted by Chinese state propaganda. Some Members are also looking at the social media platforms that the Chinese government is using to convey state propaganda such as Twitter and raising questions about whether this access should be allowed. Several Members have expressed an interest in potential measures to hold China accountable for its slowness to acknowledge, address, and share information regarding the outbreak of COVID-19 as H.R. 6373 required by WHO members. Appendix A. Bills and Resolutions Related to the Defense Production Act of 1950 (DPA) 1. P.L. 116-136 - Coronavirus Aid, Relief, and Economic Security (CARES) Act P.L. 116-136 , Section 4017 waives certain congressional oversight and reporting requirements under the Defense Production Act of 1950's (DPA; 50 U.S.C. 4501 et seq.) Title III Expansion of Productive Capacity and Supply. Although the bulk of DPA authorities are made available at the President's discretion, Title III requires an Act of Congress for purchases or loans made to expand productive capacity in promotion of the national defense, broadly defined, for amounts greater than $50 million, and written notifications made to the relevant congressional committees of jurisdiction the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives at least 30 days in advance. Section 4017 waives these provisions for a period of two years upon enactment. Notably, Title III already included language allowing the President to waive these requirements in a national emergency or at the non-delegable determination of the President. 2. H.R. 6373 - To increase the amount available under the Defense Production Act of 1950 to respond to the coronavirus epidemic, and for other purposes. H.R. 6373 would increase the authorized funding amount for the Defense Production Act Fund (DPA Fund) to $3 billion for FY2020-2021 from the current level of $133 million annually in response to the COVID-19 emergency. The bill also would allow for enhanced public and congressional oversight regarding the use of those funds through mandatory quarterly reporting on the use of DPA funds to congressional committees of jurisdiction, and to be made available to the public. Incorporated as a provision of H.R. 6379 - Take Responsibility for Workers and Families Act (Section 119). 1. H.R. 6399 - To amend the Defense Production Act of 1950 to ensure the supply of certain medical articles essential to national defense, and for other purposes. H.R. 6399 would amend the DPA statute to fortify industry production of medical resources in response to the COVID-19 emergency. 1. S. 3568 - A bill to require the President to use authorities under the Defense Production Act of 1950 to require emergency production of medical equipment to address the COVID-19 outbreak. S. 3568 would seek to compel the President to exercise the Defense Production Act for the development of specific medical equipment, including: N95 respirators, medical ventilators, face shields, medical exam gloves, surgical gowns, and other medical equipment as needed to respond to the COVID-19 emergency. The bill would also compel the President to establish a price on those goods. This bill is the Senate companion bill to H.R. 6390 . 1. S.Res. 547 - A resolution encouraging the President to use authorities provided by the Defense Production Act of 1950 to scale up the national response to the coronavirus crisis. S.Res. 547 calls upon the President to exercise Defense Production Act authorities to increase production of medical supplies, including personal protective equipment, to respond to the COVID-19 emergency. It supports the use of such authorities to: (1) distribute medical materials, including by directing suppliers to prioritize and accept contracts to restock the Strategic National Stockpile; and (2) establish voluntary agreements and provide financial incentives to manufacturers and suppliers of critical medical equipment. 1. S. 3570 - A bill to provide for the expedited procurement of equipment needed to combat COVID-19 under the Defense Production Act of 1950. 2. S. 3570 would trigger the breadth of authorities under the DPA to effect: a major purchase order for 300 million N95 masks; requires the National Response Coordination Center to conduct a national assessment on current medical supply needs and a follow up major purchase order to fulfill the needs identified in the assessment; waive restrictions on dollar limitations for orders executed under DPA and a 30 day waiting period for orders that exceed $50 million; and authorize increased funding for DPA accounts that are being considered for supplemental COVID-19 spending packages. 3. H.Res. 906 - Calling on the President to invoke the Defense Production Act to respond to COVID-19. H.Res. 906 calls on the President to: (1) use all relevant authorities of the Defense Production Act to direct the domestic production of supplies to address COVID-19; and (2) share specified information regarding the use of such authorities with Congress. The resolution also states that Congress stands ready to make additional appropriations available for this effort. 1. H.R. 6398 - To provide for the expedited procurement of equipment needed to combat COVID-19 under the Defense Production Act of 1950. H.R. 6398 is the companion bill to S. 3570 , which would trigger the breadth of authorities under the DPA to effect: a major purchase order for 300 million N95 masks; requires the National Response Coordination Center to conduct a national assessment on current medical supply needs and a follow up major purchase order to fulfill the needs identified in the assessment; waive restrictions on dollar limitations for orders executed under DPA and a 30 day waiting period for orders that exceed $50 million; and authorize increased funding for DPA accounts that are being considered for supplemental COVID-19 spending packages. 1. H.R. 6390 - To require the President to use authorities under the Defense Production Act of 1950 to require emergency production of medical equipment to address the COVID-19 outbreak. H.R. 6390 would seek to compel the President to exercise the Defense Production Act for the development of specific medical equipment, including: N95 respirators, medical ventilators, face shields, medical exam gloves, surgical gowns, and other medical equipment as needed to respond to the COVID-19 emergency. The bill would also compel the President to establish a price on those goods. This bill is the House companion bill to S. 3568 . Appendix B. U.S. Imports of Select Medical Products

The outbreak of Coronavirus Disease 2019 (COVID-19), first in China, and then globally, including in the United States, is drawing attention to the ways in which the U.S. economy depends on manufacturing and supply chains based in China. This report aims to assess current developments and identify immediate and longer range China trade issues for Congress. An area of particular concern to Congress is U.S. shortages in medical supplies—including personal protective equipment (PPE) and pharmaceuticals—as the United States steps up efforts to contain COVID-19 with limited domestic stockpiles and insufficient U.S. industrial capacity. Because of China's role as a global supplier of PPE, medical devices, antibiotics, and active pharmaceutical ingredients, reduced export from China have led to shortages of critical medical supplies in the United States. Exacerbating the situation, in early February 2020, the Chinese government nationalized control of the production and distribution of medical supplies in China—directing all production for domestic use—and directed the bureaucracy and Chinese industry to secure supplies from the global market. Now apparently past the peak of its COVID-19 outbreak, the Chinese government may selectively release some medical supplies for overseas delivery, with designated countries selected, according to political calculations. Congress has enacted legislation to better understand and address U.S. medical supply chain dependencies, including P.L. 116-136 , The Coronavirus Aid, Relief, and Economic Security (CARES) Act, that includes several provisions to expand drug shortage reporting requirements; require certain drug manufacturers to draw up risk management plans; require the U.S. Food and Drug Administration (FDA) to maintain a public list of medical devices that are determined to be in shortage; and direct the National Academies of Science, Engineering, and Medicine to conduct a study of pharmaceutical supply chain security. Other potential considerations for Congress include whether and how to incentivize additional production of health supplies, diversify production, address other supply chain dependencies (e.g., microelectronics), fill information and data gaps, and promote U.S. leadership on global health and trade issues. The crisis that has emerged for the U.S. economy is defined, in large part, by a collapse of critical supply, as well as a sharp downturn in demand, first in China and now in the United States and globally. As China's manufacturing sector recovers, while the United States and other major global markets are grappling with COVID-19, some fear China could overwhelm overseas markets, as it ramps up export-led growth to compensate for the sharp downturn of exports in the first quarter of 2020, secure hard currency, and boost economic growth. China may also seek to make gains in strategic sectors—such as telecommunications, microelectronics, and semiconductors—in which the government undertook extraordinary measures to sustain research and development and manufacturing during the COVID-19 outbreak in China.

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<1. Introduction> The rules of the House of Representatives have included provisions related to preserving order and decorum in the chamber since the 1 st Congress (1789-1790). Under current House rules, Members may violate decorum if they engage in certain behaviors, such as using disorderly language. Members may be called to order by colleagues for the use of allegedly disorderly, or unparliamentary, language, which may include a formal demand that their words be taken down. This demand initiates a series of procedures to determine whether the words are, in fact, unparliamentary and to decide whether a Member who uses such language should be allowed to proceed in debate. This report covers these procedures, which are provided for in the standing rules of the House as a mechanism to maintain decorum in debate. The sections below present details about how and when a Member might invoke the demand that words be taken down, the procedural steps that may follow the demand, and an overview of the rule's history in the House. The report concludes with information about the practice of invoking this rule in the House in recent decades. <2. The "Words Taken Down" Rule> The standing rules of the House establish a parliamentary mechanism referred to as "words taken down" whereby a Member may call another Member to order for the use of disorderly language. Members may invoke this mechanism during debate on the House floor or in the Committee of the Whole. It may also be invoked in the standing and select committees of the House. A Member initiates the call to order by demanding that a colleague's "words be taken down." The phrase taken down , as described in the rule, refers to the writing down of the words objected to so they may be read back to the House by the Clerk. In current practice, all deba te in the House and in standing and select committees is transcribed by the official reporters of debate. Therefore, when a Member demands that the words of a colleague be taken down, the Clerk will consult with the transcriber to identify the words objected to, which the Clerk will then read out loud. Following the reading of the allegedly unparliamentary remarks, the Speaker of the House (or, if the words are spoken in a committee, the chair of the committee) will determine whether the words are in order. The standing rules of the House do not state explicitly what language is considered to be disorderly, although clause 1(b) of Rule XVII prohibits Members from engaging in "personalities" in debate. House precedents catalog words and phrases previously deemed to be in order and those that were ruled out of order, or unparliamentary. When ruling on the words objected to, the presiding officer considers the words themselves, as well as the context in which they were used, and bases the ruling on these precedents. On the floor, the Parliamentarian advises the Speaker based on recorded precedents. The Office of the Parliamentarian is not responsible for providing procedural assistance during committee meetings, although the chair could attempt to consult with the Parliamentarian in advance of or during such meetings. Rule XVII, clause 4, details the procedure for demanding that words be taken down: (a) If a Member, Delegate, or Resident Commissioner, in speaking or otherwise, transgresses the Rules of the House, the Speaker shall, or a Member, Delegate, or Resident Commissioner may, call to order the offending Member, Delegate, or Resident Commissioner, who shall immediately sit down unless permitted on motion of another Member, Delegate, or the Resident Commissioner to explain. If a Member, Delegate, or Resident Commissioner is called to order, the Member, Delegate, or Resident Commissioner making the call to order shall indicate the words excepted to, which shall be taken down in writing at the Clerk's desk and read aloud to the House. (b) The Speaker shall decide the validity of a call to order. The House, if appealed to, shall decide the question without debate. If the decision is in favor of the Member, Delegate, or Resident Commissioner called to order, the Member, Delegate, or Resident Commissioner shall be at liberty to proceed, but not otherwise. If the case requires it, an offending Member, Delegate, or Resident Commissioner shall be liable to censure or such other punishment as the House may consider proper. A Member, Delegate, or Resident Commissioner may not be held to answer a call to order, and may not be subject to the censure of the House therefor, if further debate or other business has intervened. <3. Demanding That a Member's Words Be Taken Down> According to clause 4(b) of Rule XVII, the demand for words to be taken down must be timely: It must generally occur before intervening business or debate. Therefore, immediately after the allegedly offensive words are spoken, the Member would state: Mr./Madam Speaker (or Chair), I demand that the gentleman's/gentlewoman's words be taken down. Debate is not in order at this point, but the Member demanding that the words be taken down may briefly state the reason for objecting to the language (e.g., the words include an improper personal reference to the President). A Member will be allowed to explain the remarks only if prompted by the presiding officer or if another Member makes a motion to allow an explanation and the motion is agreed to by the House. Usually, the presiding officer orders the Member who spoke the allegedly disorderly words to suspend and asks the Clerk to report the words. (On the House floor, the Member whose words were objected to may be asked by the Speaker to sit down.) The gentleman/gentlewoman from [state] will suspend. The Clerk will report the words. It may take several minutes for the Clerk to review the transcript and read the words out loud. During this pause in proceedings, the Member who spoke the allegedly offensive words may ask unanimous consent to withdraw the words: Mr./Madam Speaker (or Chair), I ask unanimous consent to withdraw my words. Alternatively, the Member who demanded that the words be taken down may withdraw the request, which does not require unanimous consent: Mr./Madam Speaker (or Chair), I withdraw my demand that the gentleman's/gentlewoman's words be taken down. If neither occurs, then the Clerk will read the words to the House, and the presiding officer will make a ruling on the remarks: In the opinion of the Chair, the words in question [were/were not] in order. The presiding officer's ruling is subject to appeal, and that appeal is subject to a motion to table. If the presiding officer rules that the words are not unparliamentary (and if this ruling is sustained following any appeal), then the House continues with the business pending prior to the demand that words be taken down. If the presiding officer rules that the words are out of order (and if this ruling is sustained following any appeal), the words are usually stricken from the Congressional Record by unanimous consent. The presiding officer might initiate this by stating: Without objection, the words are stricken from the Record . Alternatively, a Member (although not the Member whose words were taken down) may make a motion to remove the disorderly language from the Record , on which the House will vote: I move that the words of the gentleman/gentlewoman from [state] be stricken from the Record . In the event that a Member's words are ruled out of order, that Member may not be recognized to speak for the rest of the day (even on yielded time) or insert undelivered remarks into the Record unless the Member is allowed to proceed in order by the House. The Member may be permitted to proceed in order by unanimous consent, which is often initiated by the presiding officer: Without objection, the gentleman/gentlewoman from [state] will proceed in order. A Member may also make a motion to allow the Member whose words were ruled out of order to proceed in order, and the House will vote on the motion. I move that the gentleman/gentlewoman from [state] be allowed to proceed in order. If a Member is not allowed to proceed in order, the Member may vote and demand the yeas and the nays. <4. History of the "Words Taken Down" Rule> The concept of taking disorderly words down in writing is provided for in the principles of general parliamentary law. Although the rules of the House have, since its inception, included provisions related to preserving order and decorum in the chamber, the formal call for a Member's words to be taken down was not adopted as part of the standing rules of the House in the 1 st Congress (1789-1790). The rules of the House initially provided for the Speaker to call a Member to order for disorderly remarks or for a Member to make a point of order against a Member's language, on which the Speaker would rule. (These parliamentary mechanisms are still available today under clause 4 of Rule XVII.) The practice of taking down words began in 1808 when a Member called a colleague to order for disorderly language and the Speaker asked that Member to put the words objected to down in writing. This practice was formally adopted as part of the standing rules of the House in 1837. The original rule, which introduced the need for the demand to be timely, stated: If a member be called to order for words spoken in debate, the person calling him to order shall repeat the words excepted to, and they shall be taken down in writing at the Clerk's table; and no member shall be held to answer, or be subject to the censure of the House, for words spoken in debate, if any other member has spoken, or other business has intervened, after the words spoken, and before exception to them shall have been taken. An amendment to the rule in 1880 modified the procedure by which a Member demanded that words be taken down. The amended rule removed the provision that the Member calling another to order should repeat the objectionable words. This version, which is similar to the corresponding sentences of the rule in effect today, provided for the words to be taken down in writing and repeated by the Clerk. The 1880 version of the rule states: If a member is called to order for words spoken in debate, the member calling him to order shall indicate the words excepted to, and they shall be taken down in writing at the Clerk's desk and read aloud to the House; but he shall not be held to answer, nor be subject to the censure of the House therefor, if further debate or other business has intervened. The rule took its current form when the House comprehensively recodified its rules in the 106 th Congress, although the changes were largely technical. During the recodification, the previously separate clauses in the House rules for addressing unparliamentary language one providing for a Member to make a point of order against a colleague's remarks and the other providing for a demand that a Member's words be taken down were combined. The text of the rule was also amended to clarify that the rule applies to a "Member, Delegate, or Resident Commissioner" (both for calling someone to order and for being called to order). <5. Recent Practice> CRS conducted full-text searches of the Congressional Record to identify instances in which a Member demanded that another Member's words be taken down on the House floor (or in the Committee of the Whole) since January 1, 1971. Throughout this nearly 50-year period, the formal demand that words be taken down was invoked 170 times. These calls to order took place in the Committee of the Whole, as well as in the House proper, including during periods of time arranged for Members to speak on topics of their choice rather than on legislation, such as one-minute speeches and special order speeches. In contemporary practice, it is uncommon that the full procedure presented above in which the Speaker rules whether or not the words are in order occurs in the House. Of the 170 demands that words be taken down, 107, or more than half, were settled before the Speaker made a ruling, usually before the Clerk reported the words. In 75 of these instances, the Member whose words were taken down asked to withdraw or revise the words, and in another 32 cases, the Member who demanded that the words be taken down withdrew the request. There were an additional 13 occasions on which the Speaker ruled that a Member's call for words to be taken down was untimely. Throughout this time period the Speaker ruled on the words taken down 50 times. Twenty-seven, or more than half, of these rulings took place in the 1990s, with only nine rulings by the Speaker since 2000. In 25 of the 50 rulings following a demand that words be taken down, the Speaker ruled that the words were not disorderly. These occurrences are identified in Table 1 in reverse chronological order. When the Speaker provided a reason for the ruling, it was often that the Member's remarks did not constitute an improper personal reference toward another Member. For example, after words were taken down during debate on February 5, 1992, the Speaker, when ruling on the words, stated: "The Chair will rule that since the gentleman from Louisiana is generically speaking and not specifically alleging improper conduct by any individual Member, the words are in order." The Speaker ruled that the words were out of order 25 times during this time period. These 25 occurrences are presented in Table 2 in reverse chronological order. As the fourth column of the table indicates, in nearly every instance in which a rationale was given for the ruling, the Speaker stated that the Member was engaging in personalities toward an identifiable individual, often another Member. Following the determination that the remarks were out of order, the words were usually stricken from the Record by unanimous consent at the initiative of the Speaker. This happened in all but five instances presented in Table 2 . The words were ultimately stricken, either by unanimous consent or motion, in 17 of the 25 cases. It is also common for the Member whose words were ruled out of order to be allowed to proceed in order, usually by unanimous consent initiated by the Speaker. Indeed, the Speaker initiated such a request in 14 of the cases presented in Table 2 . Members whose words were ruled out of order were given permission to proceed in 17 of the 25 instances, either by unanimous consent or motion.

Rule XVII, clause 4, of the standing rules of the House of Representatives describes a parliamentary mechanism whereby a Member may call another Member to order for the use of disorderly language. Disorderly, or unparliamentary, remarks are a violation of House rules of decorum. This mechanism, which is referred to as "words taken down," may be invoked during debate on the House floor, in the Committee of the Whole, or in the standing and select committees of the House. To call a Member to order for allegedly disorderly remarks, a Member would state the following: "I demand that the gentleman's/gentlewoman's words be taken down." This call to order is to occur immediately after the words are spoken. If the demand comes after additional debate or business, the presiding officer may rule that it is untimely. (The presiding officer's decision on timeliness, however, may be appealed.) The phrase taken down refers to the writing down of the words objected to so they may be read out loud by the House Clerk. Following the reading, the presiding officer will rule on whether the remarks are in order. In the moments between the formal demand that words be taken down and the Clerk's reading of the words, the Member who made the allegedly disorderly remarks may seek unanimous consent to have them stricken from the Congressional Record . If the unanimous consent request is granted, the House may resume its business without the reading of the words or a ruling thereon. Alternatively, the Member who demanded that the words be taken down can withdraw the request. If neither occurs, then the Clerk will read the words and the Speaker or committee chair will rule on whether the words are in order, which is subject to an appeal. (If the demand for words taken down occurs in the Committee of the Whole, the committee will rise and report the words back to the House, so the Speaker can rule on the words.) When determining whether the words are unparliamentary, the Speaker will consider the words themselves, as well as the context in which they were used, and base the ruling on House rules and precedents. Rule XVII, clause 1(b), of the standing rules of the House prohibits Members from engaging in "personalities" in debate, but the text of the rule does not state explicitly what language is unparliamentary. Rather, House precedents include examples of words and phrases that were previously determined to be in order and those that were ruled out of order. On the House floor, the Parliamentarian advises the Speaker based on these precedents. The Office of the Parliamentarian is not responsible for providing procedural assistance during committee meetings, although the chair could attempt to consult with the Parliamentarian in advance of or during such meetings. If the Member's words are ruled out of order, the words may be stricken from the Congressional Record by unanimous consent on the initiative of the presiding officer. The words may also be stricken by a motion, which means the House will vote on whether to strike the remarks. In addition, Members whose words are determined to be unparliamentary may not be recognized to speak for the rest of the day (even on yielded time) unless the Member is allowed to proceed in order by unanimous consent or a motion. They may, however, vote and demand the yeas and the nays. The demand for words to be taken down was invoked 170 times on the House floor or Committee of the Whole between January 1, 1971, and July 24, 2019. In practice, when this demand occurs, the Member being called to order is usually permitted to revise the words or to strike them from the Congressional Record before the Clerk reads the words back to the House. Therefore, the Speaker does not rule on whether the remarks violate the rules of decorum. When there is a ruling, the Speaker often states that the basis for the ruling is whether the words include a personal criticism of an identifiable person (usually a Member or the President).

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The United States has experienced a series of high-profile violent crimes where the offenders' actions appeared to be motivated by their bias or animosity towards a particular race, ethnicity, or religion. For example, shootings at synagogues in Pittsburgh, PA, and Poway, CA; a driver speeding his car into protestors at a "Unite the Right" rally in Charlottesville, VA; a shooting at a Walmart in El Paso, TX, where the shooter allegedly said he was targeting "Mexicans" and espoused concerns about the "invasion" of the United States by immigrants; and reports of hate crimes against Asian-Americans during the Coronavirus pandemic contribute to a perception that hate crimes are on the rise in the United States. The salience of these events and how they are covered in the media might also contribute to the perception that there is a growing number of hate crimes (also known as bias crimes or bias-motivated offenses) being perpetrated in communities across the country. Policymakers might turn to hate crime data collected by the Department of Justice (DOJ) to understand if there has actually been an increase in hate crimes in the United States and, if so, the nature of the increase. Policymakers might also utilize these same data to craft a policy response to hate crimes that is grounded in the data and conduct oversight of the federal government's efforts to combat these crimes. This report begins with an overview of federal sources of data on hate crimes. This includes a brief overview of the Hate Crime Statistics Act (HCSA, P.L. 101-275 ), which requires DOJ to collect and report data on hate crimes, and the two systems DOJ employs to collect these data: the Federal Bureau of Investigation's (FBI's) Hate Crime Statistics Program and the Bureau of Justice Statistics' (BJS') National Crime Victimization Survey (NCVS). The report then discusses two salient issues regarding hate crime statistics: the large difference between the number of hate crimes reported by the FBI and the number of hate crime victimizations reported by BJS, and concerns about law enforcement agencies underreporting hate crimes to the FBI. The report concludes with a discussion of whether the wide-scale adoption of the FBI's National Incident Based Reporting System (NIBRS) might serve as a means of improving federal hate crime data. <1. The Hate Crime Statistics Act> The HCSA requires DOJ to collect and report data on crimes that "manifest evidence of prejudice based on race, gender and gender identity, religion, disability, sexual orientation, or ethnicity, including where appropriate the crimes of murder, non-negligent manslaughter; forcible rape; aggravated assault, simple assault, intimidation; arson; and destruction, damage or vandalism of property." Congress required DOJ to collect these data because, at the time, few states collected data on hate crimes and there were no national data. Policymakers believed that national data would reveal the scope of the problem and provide a basis for more effective law enforcement efforts to address hate crimes. Over the years since the HCSA was enacted, Congress has expanded the definition of what constitutes a hate crime for data collection purposes. The act initially required DOJ to collect data on hate crimes based on race, religion, sexual orientation, or ethnicity. In 2009, Congress amended the act to require DOJ to collect data on hate crimes based on the victims' gender or gender identity ( P.L. 111-84 ) or disability ( P.L. 103-322 ). P.L. 111-84 also required DOJ to collect and report data on hate crimes committed by and against juveniles. The HCSA initially included a sunset provision that would have ended the requirement for DOJ to collect hate crime data after 1994. However, the Church Arson Prevention Act ( P.L. 104-155 ) removed that provision. <2. Federal Hate Crime Data> To meet the requirements of the HCSA and subsequent amendments, DOJ collects and reports data on hate crimes that occur in the United States through two sources: the Hate Crime Statistics program and the NCVS. <2.1. Hate Crime Statistics Program> DOJ fulfills the HCSA's requirement by collecting supplemental data on hate crimes through the FBI's Uniform Crime Reporting (UCR) program. The Hate Crime Statistics Program collects data about hate crime offenders' bias motivations for the set of offenses already reported to the UCR program. Under the Hate Crime Statistics Program, the victim of a hate crime can be an individual, a business, an institution, or society as a whole. Hate Crime Statistics Program data is collected and reported to the FBI by law enforcement agencies across the country. Agency participation in the Hate Crime Statistics Program, like the UCR program, is voluntary but most agencies participate. In 2018, more than 16,100 law enforcement agencies in all 50 states and the District of Columbia participated in the Hate Crime Statistics Program. The agencies that participated represented jurisdictions that include nearly 307 million people. For a point of comparison, in 2008 there were a reported 17,985 state and local law enforcement agencies that employed at least one full-time officer or the equivalent in part-time officers. The FBI requires law enforcement agencies to use a two-step process for investigating hate crimes before reporting them to the Hate Crime Statistics Program. In the first step, the law enforcement officer that initially responds to a potential hate crime incident is responsible for determining whether there is any indication that the offense was motivated by bias against an individual's perceived membership in one of the groups specified in the HCSA. If there is an indication of a bias motivation, the incident is designated as a suspected bias-motivated crime and forwarded to an investigator. In the second step, the investigator is responsible for reviewing the facts of the incident and making the final determination as to whether the crime meets the HCSA definition of a hate crime. According to the FBI, an agency should only report an incident as a hate crime when a law enforcement investigation reveals sufficient evidence to lead a reasonable and prudent person to conclude that the offender's actions were motivated, in whole or in part, by his or her bias. Law enforcement agencies can submit data on single and multiple bias incidents. Single bias incidents are those in which one or more of the offenses committed during an incident are motivated by the same bias. Multiple bias incidents are those in which one or more of the offenses committed during an incident are motivated by two or more biases. Annual hate crime data published by the FBI differs from traditional UCR crime data published by the FBI in an important way. For most crimes, the FBI estimates full-year crime data for law enforcement agencies that submit less than 12 months of data to the UCR. In contrast, hate crime data published by the FBI only includes offenses reported by the police; no estimation for missing data is done by the FBI for the Hate Crime Statistics Program. <2.2. National Crime Victimization Survey> BJS has collected data on hate crime victimizations through the NCVS since 2003. The NCVS data is collected through annual interviews with residents of a nationally representative sample of households. All people age 12 or older in the sampled households are interviewed. The NCVS collects self-reported data on non-fatal personal crime victimizations (sexual assault, robbery, aggravated and simple assaults, and personal larceny) and property crime victimizations (burglary, motor vehicle theft, and other thefts) regardless of whether the crimes were reported to the police. The NCVS uses the same HCSA definition of a hate crime as the FBI. The NCVS collects data on crimes that victims perceive to be motivated by an offender's bias against them based on their race, gender and gender identity, religion, disability, sexual orientation, or ethnicity. Hate crime victimizations are counts of "a single victim or household that experienced a criminal incident believed by the victim to be motivated by hate." In the NCVS data, hate crime victimizations for personal crimes are counts of individual victims, while hate crime victimizations for property crimes are counts of victimized households. In order for a victimization to be classified as a hate crime in the NCVS, the victim has to report one of three types of evidence of the offender's bias: (1) the offender used hate language, (2) the offender left hate signs or symbols at the scene, or (3) police investigators confirmed that a hate crime occurred. Table 1 compares the methodologies of the UCR Hate Crime Statistics Program and the NCVS. <3. Differences in the Two National Measures of Hate Crimes> A perennial issue that can cause confusion for those unfamiliar with the FBI's and BJS's data collection goals and methodologies is the difference between the number of hate crime incidents reported by the FBI and the number of hate crime victimizations reported by BJS. For example, for 2018 (the most recent data available) the FBI reported that there were approximately 7,100 hate crime incidents that involved approximately 8,800 victims. In comparison, BJS reported that there were an estimated 198,000 hate crime victimizations in 2017. What might explain the difference in the two national measures of hate crimes? The answer lies partially in the fact that the data reported by the FBI and BJS reflect different goals for collecting data on hate crimes. The FBI data only reflect hate crime incidents that are reported to law enforcement, and where law enforcement concludes that a hate crime has occurred and reports it to the FBI's Hate Crime Statistics Program. In contrast, the goal of the NCVS hate crime data collection effort is to estimate the total number of hate crime victimizations that occur each year, including victimizations that are not reported to law enforcement agencies (i.e., a portion of the dark figure of crime). Because the NCVS collects data on reported and unreported hate crime victimizations, its totals will always be larger than the FBI's hate crime data. Another explanation for the difference between the two measures are the different standards needed to be met to be counted as a hate crime in the FBI's Hate Crime Statistics Program and the NCVS. For a hate crime to be counted by the FBI, law enforcement must have sufficient evidence that would lead a reasonable and prudent person to conclude that the offender's actions were motivated, in whole or in part, by his or her bias. In contrast, under the NCVS, an incident is counted as a hate crime if the victim believes that the offense was based on their race, ethnicity, religion, disability, sexual orientation, gender, or gender identity, and the offender used hate language, hate symbols, or a law enforcement investigation concluded that a hate crime had occurred. An independent investigation of the perceived bias is not necessary in every case for the NCVS interviewers to include the offense as a hate crime. The goals and methodologies described above help explain why the NCVS estimates of hate crime victimizations are higher than the number of hate crime incidents reported by the FBI. At the same time, the FBI's Hate Crime Statistics Program collects data on a larger number of victim types and crimes that may be motivated by the offender's bias than the NCVS. For example, the FBI collects data on bias motivated homicides and vandalisms, which are not be captured by the NCVS. Law enforcement agencies can also report data on hate crimes against individuals, businesses, religious institutions, other institutions, and society as a whole to the FBI, whereas the NCVS only collects data on hate crimes against individuals (i.e., personal crimes) and households (i.e., property crimes). <4. Are Hate Crimes Underreported to the FBI by Law Enforcement?> A common criticism of the FBI's hate crime data is that a large proportion of participating law enforcement agencies report zero hate crimes in a given year ( zero-reporting agencies ), leading some advocacy groups to accuse the zero-reporting agencies of underreporting hate crimes. The evidence presented to support these accusations are discrepancies between hate crime figures reported by the FBI and the self-reported hate crime figures tabulated by community organizations serving the communities that are often the targets of hate crime (e.g., organizations serving the LGBTQ, Jewish, Muslim, or Arab communities). Research suggests that some law enforcement agencies have underreported the number of hate crime incidents to the FBI. In one study, researchers reviewed a sample of assault incident reports from seven local law enforcement agencies across the country that were not classified as hate crimes to see if there was any indication that the offenses had a bias motivation. Incidents where there was a clear indication that bias was a predominant motivating factor in the assault were coded as bias- motivated , and other incidents were coded as ambiguous if there was an indication of bias but also evidence of some other identifiable triggering event or alternative motivation. The study found that for some of the incidents, there was evidence that they were motivated by the alleged perpetrator's bias, but that these misclassification errors were relatively infrequent and varied by law enforcement agency. The estimated proportion of misclassified cases for each agency ranged from zero to 8% of all assault incidents when both bias- motivated and ambiguous incidents were considered and from zero to 3% when only bias- motivated cases were considered. While the proportion of misclassified assault cases for any individual agency is relatively low, if the percentage of misclassified cases reported in this study was generalizable to the universe of all assaults, it would account for thousands of hate crimes that were not reported to the Hate Crime Statistics Program. Another study of the accuracy of hate crime reporting utilized incident-based crime data (see discussion of expanding the National Incident Based Reporting System, below) from four local law enforcement agencies to evaluate whether hate crimes were being misclassified. This study looked at all criminal incidents, not just assaults, reported to the four agencies in 2008 and examined not only whether hate crimes were misclassified as non-bias-motivated offenses, but also whether non-bias-motivated offenses were wrongly classified as hate crimes and how these errors compared to misclassification errors for other non-hate crimes. This study found that undercounting of hate crimes was the most common misclassification error in the records they examined. The researchers noted that "extending error rates to the population suggest that the estimated number of bias crimes that go unaccounted is noticeable." Even though the research described above did not focus on local law enforcement agencies who reported zero hate crimes, it is these agencies in particular that critics argue are likely to have underreported hate crimes. As shown in Figure 1 , the vast majority of agencies that participate in the Hate Crime Statistics Program are zero-reporting agencies, leading critics to assume that hate crimes are significantly underreported to the FBI. In order for a law enforcement agency to be considered a "participant," it has to submit data on the number of hate crimes for at least part of the year or a letter signed by the police chief certifying that no hate crimes occurred that year in its jurisdiction. From 1996 to 2017, at least 80% of Hate Crime Statistics Program participating law enforcement agencies in any given year reported zero hate crimes. The proportion of participating law enforcement agencies that were zero-reporting agencies generally increased from 2001 to 2014. There was a slight decrease in this proportion after 2014, but in 2018 nearly 9 out of 10 participating law enforcement agencies reported zero hate crimes. Aside from misclassification errors, there are several reasons that might explain why a law enforcement agency does not report any hate crimes in a given year. The first, and most straightforward, reason is because no hate crimes occurred. Given that law enforcement agency jurisdictions include communities with as little as a few hundred residents, it is not implausible that some residents, especially those that live in very small and homogeneous communities, did not experience any hate crimes. Second, in order for a law enforcement agency to report a hate crime to the FBI, it must be reported to the police. Data from the NCVS indicates that on average, half of hate crime victimizations were not reported to the police from 2013 to 2017. Hate crime victims might choose not to report the incident to the police for a variety of reasons, including fear of retaliation, embarrassment that they were victimized, a belief that the crime was not motivated by the perpetrator's bias, lack of familiarity with a state's hate crime laws, distrust of law enforcement, a belief that law enforcement will not investigate the case, fear of being exposed as a member of the LGBTQ community, or fear of being re-traumatized by the criminal justice system. Even when a hate crime is reported to state and local law enforcement, an investigation must be conducted into the perceived bias to determine if the offense was bias-motivated before reporting it to the FBI as a hate crime. This step can be challenging for law enforcement agencies, especially small agencies with relatively few resources. When there is evidence that a hate crime might have occurred, law enforcement agencies have to complete additional investigative steps to determine whether an offense meets the statutory definition of a hate crime, and in some cases law enforcement officers might not be trained sufficiently on recognizing biases in crimes to conduct such investigations. Few states provide mandatory training for law enforcement officers on investigating, identifying, and reporting hate crimes, and in the states that do, there is little oversight to confirm that law enforcement officers are receiving the training and applying it correctly. Ambiguity in the circumstances surrounding hate crimes can also lead to an undercounting. Under the Hate Crime Statistics Program, law enforcement agencies report the number of hate crimes that were "motivated in whole or in part by bias." Law enforcement officers might have difficulty applying this standard in cases where a bias motivation might not be obvious, especially when considering hate crimes that were motivated "in part" by an offender's bias. While a cross burning on the front yard of a black family's home is an unambiguous hate crime, in other cases the motivation of the alleged perpetrators might not be so clear. These ambiguous hate crimes can be classified into two categories: response/retaliation events and target-selection events. Response/retaliation events are those where the offense was first triggered by something other than bias, but at some point bias exacerbates the incident into a hate crime. For example, a white motorist and a black motorist get into a dispute because their cars were involved in an accident. However, after a few minutes, the white motorist assaults the black motorist while yelling racial slurs. In this case, the incident was not initiated because of the white motorist's bias against the black motorist, but the white motorist's bias eventually resulted in him assaulting the black motorist. Target-selection events are those where a target of a crime is selected because of the offender's bias against members of the group, but the offender's bias in not obvious. For example, someone might rob men leaving bars that are known to be frequented by same sex couples because the offender believes they will be less likely to report the offense because they might not want to be identified as being a member of the LGBTQ community. In addition to issues related to law enforcement officer training on identifying hate crimes for submission to the FBI, differences in how a hate crime is defined under state law and under the HCSA can create its own ambiguities. For example, gender identity is a protected class under the HCSA, but it might not be a recognized bias motivation under a state's laws. As such, if a law enforcement officer is more familiar with the state's hate crime definition, he or she might not identify an offense based on gender-bias as a potential hate crime. As one group of researchers noted: Even when potential bias crimes are reported to a participating agency, the agency must then recognize any indications of bias, determine whether the incident is bias motivated, document the motivation, and submit the incident to UCR. Empirical evidence suggests that the processing of bias-crime reporting across participating law enforcement agencies is variable and subject to much error and interpretation by local departments. <5. Improving Hate Crime Data: Considerations for Policymakers> Congress passed the HCSA with the intent of collecting national data on bias-motivated offenses that could be used to inform federal hate crime policy. While DOJ has taken steps to collect these data, the hate crime data reported by the FBI is incomplete and the NCVS self-reported hate crime victimization data likely includes incidents that would not meet the legal standard needed to be charged as hate crime. Hate crime data "missing" from the FBI's Hate Crime Statistics program results from a series of complications associated with collecting these data (e.g., victims might not report the offense to the police, law enforcement agencies might fail to correctly identify potential hate crimes, or law enforcement agencies might not routinely and systematically report hate crime data to the FBI). Policymakers may have an interest in what steps Congress could take to help improve the quality of the FBI's hate crime data. One option on the horizon might be the wide-scale adoption of the National Incident Based Reporting System (NIBRS). The FBI is in the process of phasing out the UCR summary reporting system and having all law enforcement agencies submit data through NIBRS. The FBI reports that it will begin collecting only NIBRS-compliant data from law enforcement agencies starting on January 1, 2021. To support state and local law enforcement agencies' transitions to NIBRS, state and local governments that are not certified as NIBRS compliant have been required since FY2018 to use 3% of their award under the Edward Byrne Memorial Justice Assistance Grant (JAG) program to achieve compliance. Compared to the UCR summary reporting system, NIBRS collects more data on a wider variety of offenses. NIBRS asks participating law enforcement agencies to collect and report incident-level data on offenders, victims, the relationship between victims and offenders, and the circumstances surrounding the incident for 52 different offenses. In comparison, the current summary reporting system is largely a tabulation of the number of eight Part I offenses reported to the police. As a part of NIBRS, reporting agencies can identify whether an offense was motivated by an offender's bias against the victim for each reported offense. Under the Hate Crime Statistics Program, law enforcement agencies that are not currently submitting NIBRS-compliant data submit a supplemental summary report to the FBI when there is evidence that one or more crimes in their jurisdiction involved a bias motivation. It has been argued that hate crime reporting will increase as more agencies adopt NIBRS because reporting the presence or absence of bias motivations is built into NIBRS. In addition to making it easier for law enforcement agencies to report hate crimes to the FBI, NIBRS provides data on a wider variety of offenses, including those that were motivated by offenders' bias against their victims, and data on the context of hate crimes (e.g., locations where hate crimes occur, the relationship between alleged perpetrators and victims of hate crimes, whether alleged offenders are residents of the community where they committed their offenses, the weapons used in the offenses (if any), and the types and seriousness of injuries sustained by hate crime victims). While the FBI might stop accepting crime data from non-NIBRS compliant law enforcement agencies next year, participation in the program is still voluntary. If a law enforcement agency does not believe it is worth the time and effort to adopt NIBRS and the state does not mandate that it participates in the program, there is no federal mandate or incentive for the agency to participate. Therefore, policymakers might have an interest in what steps Congress could take to promote wide-scale adoption of the program. Congress could consider placing a condition on a program such as JAG that would require law enforcement agencies to submit NIBRS data to the FBI or face a penalty under the program. However, the JAG program already provides a financial incentive to participate fully in the FBI's crime reporting program. Half of a state's allocation is based on its proportion of the average number of violent crimes reported in the United States over the past three years, and allocations for local governments are based on their proportion of the average number of violent crimes reported in the state over the past three years. The Bureau of Justice Assistance reports that NIBRS data will be used to calculate JAG awards once NIBRS replaces the summary reporting system. In addition, in order for local governments to be eligible for a direct award under the program, they have to have submitted violent crime data for 3 of the past 10 years. Yet, even with these incentives some law enforcement agencies in the United States do not participate in the UCR because compiling the data can be difficult and time consuming, and many small agencies might not have the resources needed to fully comply with the FBI's data collection and submission requirements. Thus, Congress could also consider authorizing a new grant program that would provide funding to state and local governments to cover expenses related to transitioning to NIBRS, such as purchasing new software and computers, or training officers on how to use NIBRS. While NIBRS might provide some administrative efficiency with regard to reporting hate crimes, it does not address some of the other issues law enforcement agencies currently have with reporting hate crimes through the UCR program. Implementing NIBRS does not address hate crime victims being reluctant to report an offense to the police, the need for training for law enforcement officers on how to identify potential hate crimes, or the need to improve law enforcement agencies processes for investigating potential hate crimes, nor will it resolve differences between the HCSA and state hate crime definitions.

A relatively recent series of high-profile crimes where the offenders' actions appeared to be motivated by their bias or animosity towards a particular race, ethnicity, or religion might contribute to a perception that hate crimes are on the rise in the United States. These incidents might also generate interest among policymakers about how the federal government collects data on hate crimes committed in the United States. The Federal Bureau of Investigation (FBI) started its Hate Crime Statistics program pursuant to the requirement in the Hate Crime Statistics Act (HSCA, P.L. 101-275 ) that the Department of Justice (DOJ) collect and report data on crimes that "manifest evidence of prejudice based on race, gender and gender identity, religion, disability, sexual orientation, or ethnicity, including where appropriate the crimes of murder, non-negligent manslaughter; forcible rape; aggravated assault, simple assault, intimidation; arson; and destruction, damage or vandalism of property." In addition to the FBI's Hate Crime Statistics program, DOJ also collects data on hate crime victimizations through the Bureau of Justice Statistics' (BJS') National Crime Victimization Survey (NCVS). The NCVS measures self-reported criminal victimizations including those perceived by victims to be motivated by an offender's bias against them for belonging to or being associated with a group largely identified by the characteristics outlined in the HSCA. Scholars, advocates, and members of the media have pointed out that there is a significant disparity between the number of hate crimes reported by the FBI each year and the number of hate crime victimizations reported by BJS. This has led some to criticize the hate crime data published by the FBI as an undercount of the number of hate crimes committed in the United States each year. However, this statistics gap can be partially explained by the different measures and methodologies utilized by the FBI and BJS to collect these data. For example, the FBI only reports on crimes that have been reported to the police, while BJS collects reports of criminal victimizations that may or may not meet the statutory definition of a hate crime and may or may not have been reported to the police. There are a number of reasons why some victims do not report their victimization to the police, including fear of reprisal, not wanting the offender to get in trouble, believing that police would not or could not do anything to help, and believing the crime to be a personal issue or too trivial to report. There are also several reasons why a hate crime that was reported to the police might not be subsequently reported to the FBI for their Hate Crime Statistics program. Deciding whether a crime meets the statutory definition of a hate crime requires law enforcement agencies to investigate allegations of hate crime motivations before making a final determination. Reporting by law enforcement agencies to the FBI might be hampered by the fact that some law enforcement agencies do not have the training necessary to investigate potential bias-motivated offenses effectively. In addition, differing definitions between the FBI and state statutes as to what constitutes a hate crime generate confusion as to which standard should be used to determine whether a hate crime occurred and should be reported. In 2021, the FBI plans to transition to the National Incident Based Reporting System (NIBRS) and will no longer accept non-NIBRS compliant data from law enforcement agencies. Policymakers might have an interest in how NIBRS differs from the FBI's current hate crime reporting program and whether full participation in NIBRS might improve the quality and completeness of federal hate crime data. However, like the FBI's current crime reporting program, participation in the NIBRS program is voluntary, and policymakers might consider steps Congress could take to promote wide-scale adoption of NIBRS.

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<1. Introduction> The Bureau of Reclamation (Reclamation), an agency within the Department of the Interior (DOI), is responsible for the management and development of many of the large federal dams and water diversion structures in the 17 conterminous U.S. states west of the Mississippi River. Reclamation and the U.S. Army Corps of Engineers (USACE) are the two principal federal agencies that own and operate water resources facilities. Reclamation is the country's largest wholesaler of water and the country's second-largest producer of hydropower (behind USACE). In addition to water supplies, Reclamation facilities provide flood control, recreation, and fish and wildlife benefits in many parts of the West. Congress has authorized more than 180 individual R eclamation projects . The goal of these projects was generally to "reclaim" arid western lands for irrigated agriculture and other types of development. Reclamation projects are unique in a number of ways. Among other things, these projects operate according to a beneficiary pays principle in which project beneficiaries must reimburse the government for their allocated share of project costs (some costs are considered federal in their nature, therefore no reimbursement is required). Most Reclamation projects also must obtain state water rights and operate in accordance with state law. Reclamation has evolved over time, and it remains an agency in transition. Its earliest projects were single-purpose irrigation projects; later projects were more complex and served multiple authorized purposes. The bureau has constructed few new projects since the 1970s, but it has been increasingly involved in other project types (e.g., water reuse and recycling, water conservation, Indian water rights settlements, and rural water, among others). The primary purpose of most of these projects is not reclaiming land for agricultural purposes. How to balance these priorities with the upkeep of existing Reclamation projects, and whether to facilitate new project development (and, if so, how), has been of interest to Congress. This report provides background on the Bureau of Reclamation, including its history and authorities. It also discusses selected issues before Congress, in particular those related to the bureau's most prominent areas of responsibility. <2. Background: The Bureau of Reclamation and the Era of Large Federal Water Projects> The Bureau of Reclamation has been an important entity in shaping federal development efforts in the western states and territories. Along with the USACE (whose founding dates to the Revolutionary War), it was one of two principal federal agencies involved in the majority of federally-sponsored water resources development in the 20 th century. The below sections discuss Reclamation's history and evolution as a federal agency. <2.1. Early History and the Reclamation Act of 1902> The legislative history of the Bureau of Reclamation dates to the mid-19 th century enactments of the Homestead Act (1862) and the Desert Land Act (1877). In the Homestead Act, Congress allowed settlers in western states and territories to receive up to 160 acres of land free if they lived on the land for five years and made improvements to it. In an effort to further encourage settlement in the West, Congress amended the Homestead Act in the Desert Land Act to offer more acreage than was previously offered, at a reduced price, to individuals that agreed to reclaim a tract of desert land with irrigated agriculture. These efforts initially took the form of direct diversion from streams and other water bodies, but it soon became clear to planners that widespread settlement could be facilitated only through the development of large-scale irrigation infrastructure (e.g., water storage, conveyance, and pumping infrastructure). This realization led to a number of private and state-sponsored ventures throughout the West. The Carey Act of 1894 put official responsibility for overseeing irrigation development on the states and territories. However, many of these efforts failed due to lack of funds, inadequate engineering skill, or other factors. Thus, supporters of irrigated agriculture in the West turned to the federal government for financing and technical support. In the Reclamation Act of 1902 (the Reclamation Act), Congress for the first time approved federal efforts in the large-scale planning and construction of irrigation works for the storage, diversion, and development of waters in arid and semiarid western states. Under the act, federal Reclamation projects were funded by a newly established Reclamation Fund in the United States Treasury. Initially, the fund received receipts from the sale of federal land in the western United States, along with repayments by beneficiaries for Reclamation's construction costs for water projects. Authorized activities under the Reclamation Act were limited to 16 designated Reclamation s tates on lands west of the Mississippi River: Arizona, California, Colorado, Idaho, Kansas, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Washington, and Wyoming. A seventeenth Reclamation state, Texas, was added in 1906. Under the Reclamation Act, Congress allotted settlers up to 160 acres of lands to be irrigated by a Reclamation project, provided the lands were reclaimed for agricultural purposes and water users repaid the federal government for project const ruction expenses and associated operations and maintenance (O&M) costs. Congress established a 10-year repayment period for Reclamation projects in the Reclamation Act and directed the payments into the Reclamation Fund for new and ongoing project investments by the bureau. Pursuant to r eclamation law (i.e., the body of federal law that informs the development and management of projects by the Bureau of Reclamation), interest payments were not required for the repayment of construction costs by agricultural beneficiaries. Another formative aspect of reclamation law under the 1902 act was a directive by Congress to defer to state law. Under Section 8 of the Reclamation Act, Congress stipulated: Nothing in this Act shall be construed as affecting or intended to affect or to in any way interfere with the laws of any State or Territory relating to the control, appropriation, use, or distribution of water used in irrigation, or any vested right acquired thereunder. This requirement means that most Reclamation project water rights must be appropriated under state law and are subject to state adjudication and administration. As a practical matter, project-specific requirements may differ from state to state, and state water laws and regulations play a significant role in the operations and management of many Reclamation projects. <2.2. The Reclamation Service and the Evolution of Reclamation Law> The United States Reclamation Service (the precursor to the Bureau of Reclamation) was established within the U.S. Geological Survey (USGS) in July 1902. Initially, the Secretary of the Interior had the ability to expend funds on Reclamation projects as the Secretary saw fit based on the relevant investigations. From 1902 to 1907, Reclamation built about 30 projects in western states. In 1907, the Secretary separated the Reclamation Service from the USGS to create an independent bureau within the Department of the Interior. The Reclamation Service was formally renamed the Bureau of Reclamation in 1923. The earliest Reclamation projects were single purpose and focused primarily on irrigation development. Many projects encountered problems ; as a result, Congress eventually made a number of changes to Reclamation, including infusion of additional federal funds and revenue sources to the Reclamation Fund. Congress provided additional funds from the Treasury on multiple occasions, including $20 million in 1910 and $5 million in 1938. In the Reclamation Extension Act, enacted in 1914, Congress sought to prevent overspending on future projects by making expenditures from the Reclamation Fund subject to annual discretionary appropriations. Later, in 1924, a Fact Finders Report detailed a number of problems with early Reclamation projects; Congress enacted legislation later that year (popularly known as the "Fact Finders Act") that added additional requirements of both the bureau and potential contractors and made major changes to the Reclamation project development process. Congress also authorized new incidental purposes and other revenue sources for Reclamation projects ( Table 1 ). To shore up Reclamation Fund balances, Congress authorized revenues from the sales of Reclamation project water to land owners outside of project boundaries (authorized under the Warren Act of 1911), 40% of onshore royalties from mineral and natural resource leasing on public lands (authorized in 1920), and the full amount of Reclamation project hydropower revenues (authorized in 1938). Over time, Congress also altered repayment terms and other associated requirements for Reclamation projects. The Reclamation Extension Act of 1914 extended the repayment period for Reclamation projects from 10 years to 20 years. Legislation enacted by Congress in 1926 further extended the repayment period to 40 years. Pursuant to the Reclamation Project Act of 1939, Congress authorized Reclamation to provide for relief of costs in excess of an irrigator's ability to pay (also known as irrigation assistance or aid to irrigation ) and provided that this assistance could be covered by a project's excess hydropower and/or M&I water sales revenues. That same act authorized water service contracts a second type of short- or long-term water contract in addition to repayment contracts for periods up to 40 years. Legislation enacted in 1946 and 1958 provided authorities for new projects to receive nonreimbursable federal credit for activities related to the preservation of fish and wildlife. In addition to these and other changes, in many cases Congress also has authorized unique project repayment terms or extensions applicable to specific Reclamation projects. Congress also passed legislation to support Reclamation project repairs and improvements. In 1949, Congress authorized rehabilitation and betterment improvements to be repaid in accordance with existing construction repayment schedules and authorized ability-to-pay adjustments for those improvements. Authorities enacted in 1955 and 1956 provided up to 50-year loans to irrigation districts for the construction of distribution systems on authorized Reclamation projects and projects similar to those of the reclamation program, respectively. Most individual Reclamation projects were authorized in specific acts of Congress. Reclamation constructed many of its largest projects beginning in the Great Depression, with Congress directing that project financing be provided through the General Fund of the Treasury in lieu of the Reclamation Fund. The 1928 Boulder Canyon Act authorized the construction of Hoover Dam and the All-American Canal, and the Rivers and Harbors Act of 1937 authorized construction of the Central Valley Project (CVP) in California. Congress authorized other large Reclamation projects during and after World War II, such as the Columbia Basin Project (1943), the Pick-Sloan Missouri Basin Program (1944), and the Colorado River Storage Project (1956). The last major new Reclamation project construction authorization was the Colorado River Basin Project Act of 1968; among other things, this act authorized the Animas-La Plata Project and the Central Arizona Project (CAP). <2.3. Reclamation in Transition> Numerous events precipitated a gradual slowdown of Reclamation's construction program in the 1970s and 1980s. Prior to this time, most Reclamation projects had been constructed with little or no environmental mitigation measures. New federal environmental requirements pursuant to the National Environmental Policy Act of 1969 and the Endangered Species Act of 1973 provided increased protections for the environment, while also increasing certain costs and administrative conditions associated with development of new Reclamation projects. At the same time, many of the prime project sites (in terms of development and storage capacity) throughout the West had been developed or designated for protection by that time. Where Reclamation pursued projects during this period, the projects were often rejected or significantly scaled back on economic and/or environmental grounds. The 1976 failure of Reclamation's Teton Dam in Idaho (which failed upon initial filling of the reservoir behind the dam) resulted in 11 fatalities and raised doubts among some as to the viability of large new federal dams and water storage projects. It also led to congressional enactment of the Reclamation Safety of Dams Act of 1978 ( P.L. 95-578 ), which authorized Reclamation to make dam safety modifications at its dams. The Carter and Reagan Administrations both critically assessed USACE and Reclamation water resources projects. In 1977, the Carter Administration transmitted to Congress a "Hit List" of 19 water resource construction projects to be defunded, several of which were Reclamation projects. Congress eventually agreed to eliminate funding for only a few of these projects, but the Administration's initiation of such a proposal was at the time viewed as significant. The Reagan Administration continued the trend of scaled-back construction requests. In 1988, it published a report, entitled Reclamation Faces the Future , which formally acknowledged a shift in the bureau's mission: The arid West essentially has been reclaimed. The major rivers have been harnessed and facilities are in place or are being completed to meet the most pressing current water demands and those of the immediate future. The Administration noted that no major project authorization legislation had been enacted since 1968 and that, "Reclamation's future role will entail a shift in emphasis an acknowledgment that past goals have been met even as new challenges are emerging." Reclamation stated that the focus of its program going forward would be operations and maintenance of existing projects, as well as other goals such as environmental enhancement and dam safety. Congress framed its directions for Reclamation in the 1980s and 1990s in two pieces of legislation. First, in Title II of P.L. 97-293 , Congress enacted the Reclamation Reform Act of 1982 (RRA), which made major changes to reclamation law. It altered the ownership limitation of 160 acres under the 1902 Reclamation Act, as amended, expanding it to 960 acres. At the same time, it expanded the applicability of the acreage limitation to all operator-owned lands (i.e., the acreage limitation was applied to leased lands, which previously were not subject to the limitation) and introduced the concept of full-cost pricing for water delivered to any lands owned in excess of the new limits. The RRA had the general effect of making major changes to most Reclamation contracts. In some cases, the RRA changes increased costs to reclamation contractors by making it more difficult to irrigate more than 960 acres with federally subsidized project water. In the Reclamation Projects Authorization and Adjustment Act of 1992 ( P.L. 102-575 ), Congress set a new course for Reclamation that realigned some of the bureau's priorities and attempted to further mitigate some projects' effects on the environment. Title XXXIV of that act, the Central Valley Project Improvement Act (CVPIA), made major changes to the management of Reclamation's largest project, the CVP in California. These changes generally benefited fish and wildlife, but they also resulted in less water delivered and higher water and power rates for CVP contractors; the changes were thus contentious. Congress included other significant changes in P.L. 102-575 , such as direction to operate Glen Canyon Dam (one of Reclamation's largest dams on the Colorado River) to protect and mitigate for adverse impacts to Grand Canyon National Park. In addition, Congress authorized a presidential review and report on federal activities in western states that directly or indirectly affect the use of surface or subsurface water resources. Although construction of new traditional Reclamation projects generally has not occurred in recent years, Congress has approved other new Reclamation construction efforts since the 1970s. For instance, Congress approved Reclamation involvement in rural water projects and the construction of some new water infrastructure pursuant to congressionally approved water rights settlements with Indian tribes. Congress also authorized Reclamation to provide financial assistance to nonfederal entities for water conservation-related activities, including assistance for site-specific nonfederal water reuse and recycling project study and construction under P.L. 102-575 , as amended, and grant assistance for water and energy conservation projects under P.L. 111-11 . Several of these authorities were consolidated via Secretarial Order in 2010 into Reclamation's WaterSMART (Sustain and Manage America's Resources for Tomorrow) Program. Most recently, in the Water Infrastructure Improvements for the Nation Act (WIIN Act; P.L. 114-322 ), Congress provided Reclamation with its first significant new authorization for water storage project construction in more than three decades. That act authorized an alternative financing structure and process for building new or augmented federal and nonfederal water storage projects. <2.4. Reclamation Today: Organizational Structure, Infrastructure Assets> Reclamation projects are spread out over six regions in the 17 western states ( Figure 1 ). The bureau is headed by the Commissioner of Reclamation, a Senate-confirmed presidential appointee that reports to the Assistant Secretary of the Interior for Water and Science. Reclamation's primary congressional authorizing committees are the House Natural Resources Committee and the Senate Energy and Natural Resources Committee. Congress typically funds Reclamation activities through discretionary appropriations to Reclamation in annual Energy and Water Development and Related Agencies appropriations bills. Reclamation estimated that the total replacement value of its water resource facilities was $99 billion as of 2015. These infrastructure assets include 491 dams (including 363 high and significant hazard dams), 338 reservoirs, and more than 8,000 miles of canals and other conveyance infrastructure, as well as 53 hydroelectric power plants. Reclamation's facilities have a collective storage capacity of 140 million acre-feet and serve one in every five farmers in the West. Several of Reclamation's dams and reservoirs are among the largest in the world. Grand Coulee Dam, on the Columbia River ( Figure 2 ), is the second largest concrete dam in the world (in terms of volume), and the largest hydropower producing dam in the United States; on the Colorado River, Hoover Dam and Glen Canyon Dam (the second and fourth tallest dams in the United States, respectively) impound Lake Mead and Lake Powell, the country's two largest reservoirs (in terms of storage capacity). In addition to the infrastructure it owns, Reclamation supports many nonfederally-owned and developed facilities, and it awards financial assistance for projects that provide benefits throughout the West. According to the Department of the Interior, in FY2017, Reclamation generated $63 billion in economic impacts, $45 billion of which was attributed to its role in irrigation production. In addition to the bureau's annual budget ($1.66 billion in enacted budget authority in FY2020), more than $800 million in activities is typically funded by water and power contractors for project operations, maintenance, and other related work. The remainder of this report discusses Reclamation's major project types and related issues for Congress. <3. Reclamation Projects and Programs> Reclamation's primary project types generally can be divided into the following areas: "traditional" single purpose or multipurpose water supply projects; federal or nonfederal water storage projects under Section 4007 of the WIIN Act; dam safety modification projects; rural water projects; Indian water rights settlements; and grants for nonfederal projects that encourage investment in alternative water supplies (e.g., water reuse and recycling [Title XVI Program], water and energy efficiency [WaterSMART grants], and desalination). Reclamation also possesses multiple other programmatic authorities that are beyond the scope of this report. Cost-share structures and authorities for some of these projects are summarized in Table 2 . <3.1. Traditional Reclamation Projects> Reclamation owns about 180 "traditional" Reclamation projects in the 17 western states. As discussed above, the congressional authorization of individual Reclamation projects generally has occurred pursuant to the Reclamation Act of 1902 and amendatory laws. Development of these Reclamation projects has been limited to geographically specific congressional authorizations for projects. Reclamation projects generally share several characteristics: Geographically Specific Congressional Authorization . Most Reclamation projects are first authorized for study by Congress. Subsequently, Reclamation completes its studies and recommends project designs for congressional construction authorization. Typically, these authorizations are approved by the authorizing committees (i.e., the House Natural Resources Committee and the Senate Energy and Natural Resources Committee), which reference study documents and recommendations that were transmitted to Congress. Beneficiaries Pay. The federal government initially funds 100% of construction costs, to be repaid by beneficiaries (e.g., irrigation contractors, municipal governments) for their estimated share of a project's costs, generally over a 40 to 50 year term (but, in some cases, other repayment periods). In most cases, the federal government is not repaid for its full investment in these projects. Beneficiaries also are responsible for paying their share of project-level O&M expenses. Projects A re Federally Owned , B ut Non-Fed eral Entities O ften P lay a R ole in O&M . Reclamation projects are initially owned and operated by the federal government (these projects are generally referred to as reserved works ). Once construction costs have been repaid in full, responsibility for O&M of the project may be transferred to project beneficiaries (these projects are commonly known as transferred works ), but projects remain federally owned (and subject to federal oversight and regulation) unless Congress explicitly authorizes transfer of ownership. The process of divesting (i.e., transferring ownership) of qualifying assets to nonfederal users is known as title transfer . Despite the overall drop-off in major construction project authorizations since the early 1970s, the approach of obtaining new or amended geographically specific congressional authorizations for Reclamation projects remained the norm as recently as 2010, when the Omnibus Lands Act of 2009 ( P.L. 111-11 ) was enacted. In part due to congressional earmark moratoriums dating to 2012, Congress has refrained from enacting site-specific authorization and appropriations for Reclamation projects since that time. However, Congress enacted a new process for approving and financing Reclamation water storage projects in Section 4007 of the WIIN Act. <3.1.1. New Authority for Water Storage Projects: WIIN Act Section 4007> Title II, Subtitle J of the WIIN Act included new authority under Section 4007 that authorizes federal support for new or expanded water storage projects, including projects constructed by nonfederal entities. In contrast to the traditional approach of 100% of costs funded up-front by the federal government (with beneficiaries responsible for repaying their share of project benefits), the WIIN Act authorized maximum federal support of 50% of total costs for certain approved federal water storage projects, as well as a maximum of 25% federal support for approved nonfederal surface and groundwater storage projects. Additionally, the act required the nonfederal shares for both types of financing to be provided up-front in order for federal support to be made available. Federal construction funding for these projects is contingent on a number of determinations, including that in return for the federal cost share, at least a proportionate share of the project benefits are found to be federal benefits. Thus, unlike traditional Reclamation projects, there is no expectation of repayment of the initial federal investment in these projects. The authorization process for Section 4007 projects also differs from that traditionally used for other Reclamation projects. For a project to qualify for funding under the WIIN Act, Reclamation must find that project feasible, and the project must have a cost-sharing partner. In addition, Reclamation must recommend that project to Congress, and Congress must mention the project by name in enacted appropriations legislation. As a result, the process of funding Section 4007 is typically carried out in three steps: 1. Congress appropriates funding for Section 4007 projects to Reclamation. 2. Reclamation recommends specific projects to receive this funding. 3. Congress decides whether to refer to these projects by name in subsequent appropriations legislation, thereby providing formal approval for allocations and enabling project-level expenditures. Following initial appropriations for this authority in FY2017, Reclamation recommended seven projects to receive $33 million in FY2017 funding for WIIN Act Section 4007 projects in early 2018. Congress agreed to these recommendations in the FY2018 Energy and Water Development appropriations bill ( P.L. 115-141 ). In February 2019, Reclamation recommended another round of project-level allocations to receive $75 million in FY2017 and FY2018 appropriated funds. In enacted appropriations for FY2020, Congress agreed with all of the Administration's recommendations, with the exception of $57 million proposed for the Shasta Dam and Reservoir Enhancement Project. Thus, as of early 2020, Congress had appropriated $469 million for Section 4007 projects, but only $51 million of this funding had been released to specific projects. The remainder was awaiting further action by Reclamation and/or Congress. <3.1.2. Dam Safety Modifications61> Reclamation's dam safety program, authorized by Reclamation Safety of Dams Act of 1978, as amended, provides for inspection and repairs to qualifying projects at Reclamation dams. Projects authorized under this authority have a different cost-share structure than that used for traditional Reclamation construction and rehabilitation projects (including initial construction of some dams). Reclamation first conducts dam safety inspections through the Safety Evaluation of Existing Dams program. Corrective actions, if necessary, are carried out through the Initiate Safety of Dams Corrective Action (ISCA) program. With ISCA appropriations, Reclamation funds modifications on priority structures based on an evolving identification of risks and needs. Based on amendments enacted in 1984 ( P.L. 98-404 ), Reclamation requires a 15% cost share from sponsors for dam safety modifications when modifications are based on new hydrologic or seismic data or changes in state-of-the-art design or construction criteria that are deemed necessary for safety purposes. In 2014, P.L. 114-113 amended the Reclamation Safety of Dams Act to increase Reclamation's authority, before needing congressional authorization to approve a modification project, from $1.25 million to $20 million. It also authorized the Secretary of the Interior to develop additional project benefits, through the construction of new or supplementary works on a project in conjunction with dam safety modifications, if such additional benefits are deemed necessary and in the interests of the United States and the project. Nonfederal and federal funding participants must agree to a cost share related to the additional project benefits. <3.2. Other Project Types> In addition to traditional Reclamation projects, Congress has authorized Reclamation to carry out other projects and programs. Some of these authorities are discussed below. <3.2.1. Rural Water Projects> Congress has authorized Reclamation to incorporate M&I water resource benefits into larger projects that serve various purposes (e.g., irrigation, power). Separate from these projects, Congress has expressly authorized Reclamation to undertake the design and construction of rural water supply projects intended to deliver potable water supplies to geographically specific rural areas and communities. From 1980 through 2009, Congress specifically authorized Reclamation to undertake the design and construction, and sometimes the O&M, of specific projects intended to deliver potable water supplies to rural communities located in Reclamation states. Primarily, these projects were in North Dakota, South Dakota, Montana, and New Mexico. The rural communities include tribal reservations and nontribal rural communities with nonexistent, substandard, or declining water supply or water quality. Many rural water projects are large in geographic scope taking water from one location, where it is available in quantity and quality, and moving it across large distances to tie to existing rural systems. Although M&I portions of Reclamation water supply facilities typically require 100% repayment with interest, Congress has authorized providing some or all federal funding for rural water projects on a nonreimbursable basis (i.e., a de facto grant). For example, the federal government pays up to 100% of the cost of tribal rural water supply projects, including O&M. For nontribal rural water supply projects, the federal cost share has averaged 75% to 80%. The Rural Water Supply Act of 2006 ( P.L. 109-451 ) created a structured program for developing and recommending rural water supply projects. This program was to replace the previous process of authorizing projects individually often without the level of analysis and review (e.g., feasibility studies) consistent with Reclamation's other projects. Under the Rural Water Supply Program, Congress authorized Reclamation to work with rural communities and tribes to identify M&I water needs and options to address such needs through appraisal investigations and feasibility studies. Congress would then consider feasibility studies recommended by the Administration before authorizing specific project construction in legislation. Ultimately, Reclamation did not recommend and Congress did not authorize any project through this process, and the authority for the program expired in 2016. Reclamation continues to construct rural water projects (and provide O&M assistance for some tribal components) that were initiated outside of the Rural Water Supply Program. In 2012, Reclamation developed prioritization criteria for budgeting these projects: inclusion of tribal components; amount of financial resources committed; urgency and severity of need; financial need and potential economic impact; regional and watershed approach; and meeting water, energy, and other priority objectives. Reclamation stated that the criteria are intended to reflect both the priorities identified in the statutes that authorized individual projects and the goals of the Rural Water Supply Act of 2006. As of early 2020, Reclamation reported that $1.3 billion was needed to complete construction of authorized, ongoing rural water projects. Enacted funding for rural water supply projects in FY2019 provided $132.7 million for six authorized rural water projects, which was $98.7 million above the FY2019 budget request. For FY2020, the Administration requested $27.8 million and Congress appropriated an additional $117.4 million above the request for Reclamation to allocate to ongoing rural water projects in a work plan for the enacted bill. <3.2.2. Indian Water Rights Settlements68> Indian water rights are vested property rights and resources for which the United States has a trust responsibility. The Supreme Court first recognized Indian water rights in Winters v. United States in 1908. Under the Winters doctrine, when Congress reserves land (i.e., for an Indian reservation), Congress implicitly reserves water sufficient to fulfill the purpose of the reservation. Since the Winters decision, disputes have arisen between Indians asserting their water rights and non-Indian water users, particularly in the western United States. In that region, the establishment of Indian reservations (and, therefore, of Indian water rights) generally predated settlement by non-Indians and the related large-scale development by the federal government of water resources for non-Indian users. In most western states, water allocation takes place under a system of prior appropriation in which water is allocated to users based on the order water rights were acquired. Under the Winters doctrine and the western system of prior appropriation, the water rights of tribes often are senior to those of non-Indian water rights holders because Indian water rights generally date to the creation of the reservation. However, despite the priority of Indian reserved water rights, non-Indian populations frequently have greater access to and allocations of water through infrastructure. This discrepancy leads to disputes that typically have been litigated or, since the late 1970s, resolved by negotiated settlements (commonly referred to as Indian w ater r ights s ettlements ). Negotiated settlements often involve tradeoffs for tribes, water users, and governmental entities. In several cases, Congress authorized Reclamation to construct infrastructure to help provide tribes with wet water (i.e., access to actual water, rather than just water rights) that was finalized by parties in the negotiation and settlement process. Since the first settlement was enacted in 1978 (the Ak-Chin Water Rights Settlement, enacted in P.L. 95-328 ), Congress has enacted 32 settlements into law. Overall, 36 settlements have been federally approved (including those which were administratively approved), with total estimated federal costs in excess of $5.8 billion. Individual settlements have varied widely in their costs to the federal government, from no federal funding required to hundreds of millions of dollars in federal support. In 2010, Congress also authorized a new fund for Reclamation, the Reclamation Water Settlements Fund, under Title X of P.L. 111-11 . The fund may provide up to $120 million per year for authorized Indian water rights settlements, without further appropriations (i.e., mandatory funding), from FY2020 to FY2029. <3.2.3. WaterSMART Program and Other Related Projects> Reclamation combines funding for multiple agency-wide programs promoting water conservation into a single program the WaterSMART (Sustain and Manage American Resources for Tomorrow) program. The program is part of the Department of the Interior's focus on water conservation, reuse, and planning, and it is notable for its departure from Reclamation's traditional model of project-based funding. Within Reclamation, WaterSMART includes funding for the following six sub-programs: WaterSMART Grants, which provide funding for water and energy efficiency projects, as well as water marketing strategy development; The Title XVI Water Reclamation and Reuse Program, which funds study and construction of authorized water recycling and reuse projects; The Drought Response Program, which provides assistance to water managers in developing and updating comprehensive drought plans, implementing drought resiliency projects, and undertaking emergency response actions; The Basin Studies Program, which evaluates water supply and demand in individual basins and identifies and implements strategies to address water supply and demand imbalances; The Cooperative Watershed Management Program, which funds projects by watershed groups that provide local solutions to address water management needs; and Water Conservation Field Services, which provides technical and financial assistance for the development of water conservation plans and design of water management improvements. Of these programs, the largest are WaterSMART Grants and the Title XVI Water Reclamation and Reuse Program, which received a total of $401 million and $579 million, respectively, in appropriations from FY2009 through FY2020. Congress authorized several of WaterSMART's sub-programs, including WaterSMART Grants, parts of the Drought Response Program, the Basin Studies Program, and the Cooperative Watershed Management Program, in Subtitle F of Title IX of the Omnibus Public Land Management Act of 2009 ( P.L. 111-11 ). Other WaterSMART sub-programs, such as Title XVI and the Water Conservation Field Services Program, were authorized prior to the 2010 establishment of WaterSMART. Most WaterSMART efforts require cost sharing of at least 50% to leverage nonfederal resources in addition to federal funding. Recent funding levels for the WaterSMART Program are shown below ( Figure 3 ). <3.2.3.1. Section 4009 of the WIIN Act> Section 4009 of the WIIN Act added new authorities for Reclamation to assist in the construction of desalination projects and made major changes to Reclamation's Title XVI Program. In Section 4009(a), Congress expanded Reclamation's role in desalination facilities (which had previously been limited to support for research and development) by authorizing the Secretary of the Interior to provide federal funding of up to 25% of the total cost of an eligible desalination project. The authority included public facilities for the desalination of seawater and/or brackish water. Prior to receiving this support, nonfederal parties must submit feasibility studies of individual projects to Reclamation for approval. For Title XVI projects, Congress authorized a similar process in Section 4009(c), whereby nonfederal studies of previously unauthorized Title XVI projects are submitted to Reclamation for review and potential approval for future federal funds (i.e., without project-specific authorization by Congress). Similar to the authorization and funding process for Section 4007 projects, Reclamation must recommend project-specific funding allocations for both categories of Section 4009 projects, and Congress provides final approval for these allocations by mentioning projects by name in enacted appropriations legislation. From FY2017 through FY2020, Congress appropriated a total of $42 million and $70 million for Section 4009(a) desalination and Section 4009(c) Title XVI projects, respectively. <4. Selected Issues for Congress> Congress regularly considers matters related to Reclamation. Persistent drought in parts of the West and the enactment of the WIIN Act's Sections 4007 and 4009 authorities, as well as other recent developments, such as the increasing surplus balances in the Reclamation Fund, have spurred broader congressional discussions of Reclamation's missions and its future role. In the 116 th Congress, two bills propose broad Reclamation policy changes: S. 1932 , the Drought Resiliency and Water Supply Infrastructure Act, and draft legislation (currently unnumbered) circulated for public comment by Representative Huffman. Numerous other bills target specific Reclamation programs, projects, or authorities for change. Some of the issues and legislation in this debate are discussed below. <4.1. Extension of WIIN Act Section 4007 Authority> One overarching question for Reclamation is how (or if) the bureau should support the construction of new water supply infrastructure, in particular new surface water storage infrastructure. The last major Reclamation water storage project constructed was the Animas La Plata Project on the Colorado/New Mexico border; it was originally authorized under the Colorado River Basin Project Act of 1968 (P.L. 84-485) and constructed from 2002 to 2009. Outside of Indian water rights settlements and rural water projects, Congress generally has not authorized Reclamation to construct major new water storage projects in the last 30-40 years. The status of the Section 4007 water storage authorities enacted in the WIIN Act could be important in determining the bureau's future direction. When enacted, Section 4007 was the first new major water storage project construction authority in years. It was notable for its deference to nonfederal project sponsors to lead or contribute to activities traditionally led by the federal government. The process set up under Section 4007 was also notable for its departure from the traditional congressional approval process for Reclamation projects, in which Congress enacts project-specific authorizations. Although the financing structure for WIIN Act projects requires less of an overall federal investment than was necessary for many past Reclamation projects, the lower relative up-front federal subsidy also appears likely to shrink the pool of projects using these authorities compared with those that benefited from traditional Reclamation projects. Six of the nine water storage projects that were funded through early 2020 were located in California; two were located in Washington, and one was located in Idaho. That is, 3 of the 17 reclamation states appear likely to benefit from Section 4007 funding in the near term. Some members of Congress have proposed extending and/or amending the Section 4007 authority in the 116 th Congress. For instance, S. 1932 would extend that part of the WIIN Act for five years (through FY2025) and authorize $670 million for new ground and surface water storage projects under this section. Separately, a draft bill introduced by Representative Huffman would set up a new annual reporting process to inform congressional authorization deliberations for "major" federal projects, as well as nonfederal water storage projects. Under this legislation, certain nonfederal water storage projects (specifically, nonfederally sponsored projects costing less than $250 million) would not be subject to this reporting process and would not require explicit authorization by Congress. The legislation would increase the authorization of appropriations for Section 4007 storage projects to $750 million and extend this authority through FY2025. Supporters have advocated for continuing Section 4007 authority for several reasons. They argue that new construction will increase water availability in the West and help to address the water resource effects of climate change, and thus it warrants federal prioritization. They also note that significantly more funding is required to complete the projects that have initially received WIIN Act funds. Some oppose the extension of the Section 4007 authority and believe there should be little or no federal role in projects that otherwise would be the responsibility of nonfederal entities. Some opponents would prefer that Congress focus on promoting alternatives that are more environmentally friendly, such as water conservation and water reuse. If Congress chooses to extend the WIIN Act Section 4007 authority, it would signal to some that Reclamation will continue to have an active role in new water development projects. At the same time, it might suggest that this role is likely to be more of a supporting capacity than has traditionally been the case. If Congress opts not to extend the authority, it may choose to focus on other Reclamation mission areas to reduce Reclamation involvement and continue to transition Reclamation projects and responsibilities to nonfederal users. Congress also might decide to complete some projects that have been initially funded through the WIIN Act on an ad hoc basis or to use other financing authorities to support new projects (see below section, " Financing Infrastructure "). <4.2. Support for New Title XVI, Desalination Projects> Title XVI has been a popular option for funding water reuse and recycling projects in the West since the first projects were authorized under that authority in 1992. In Section 4009 of the WIIN Act, Congress set up a process that allowed for the approval of the first large set of new Title XVI construction projects since 2010. In that same section, Congress also authorized federal support for nonfederal desalination projects at a similar level to that provided to Title XVI Projects (i.e., a 25% federal cost share), with projects to be approved through a similar reporting process. Reclamation published the first report under the Section 4009 authority in 2017, and Congress approved additional new projects via the WIIN Act reporting by Reclamation in 2018 and 2019. Similar to the authority for water storage projects under Section 4007, Section 4009 was notable for its deference to nonfederal interests; Section 4009 allows nonfederal entities to carry out studies and receive approval for federal support by Reclamation based on a limited set of criteria. Congress in turn may appropriate and approve the release of funding for individual projects after they have been recommended by Reclamation. In the 116 th Congress, several bills propose to extend Section 4009 of the WIIN Act. S. 1932 , for example, would authorize $160 million and $80 million in new funding for WIIN Act Title XVI and Desalination projects, respectively. Draft legislation introduced by Representative Huffman would authorize $500 million and $260 million for these projects, respectively. Both pieces of legislation would extend the Section 4009 authorities through 2024 and increase the per-project federal cap for newly funded Title XVI projects from $20 million to $30 million. Although some support Title XVI and/or desalination projects, others question whether they should be a priority of the bureau. Opponents sometimes point out that these projects largely benefit urban areas, in particular those in California. For their part, supporters note that by avoiding new consumptive uses of freshwater supplies, these projects have the potential to be more environmentally friendly than traditional water storage projects. They also add more relatively drought-resilient water supplies to many fast-growing areas of the West that also depend on water from traditional Reclamation projects. Although the cost-effectiveness of most water reuse and some desalination projects compares favorably with similarly located traditional water storage projects in terms of project yield per acre-foot, some projects may not be cost competitive. <4.3. Aging Infrastructure> Aging infrastructure represents a significant challenge for Reclamation. Most of the bureau's facilities are 60-100 years old, and the total replacement value of these facilities as of 2015 was estimated to be $99 billion. As these facilities age, the beneficiary-pays model poses a notable challenge for upkeep of Reclamation facilities. Most Reclamation contractors do not own the facilities from which they benefit and therefore may have difficulty financing their share of project repairs. Reclamation faces challenges not only in obtaining the requisite funding from Congress for aging infrastructure projects but also in structuring repayment requirements in a way that will not be overly burdensome for its contractors. Congress has expressed interest both in how Reclamation estimates and accounts for its infrastructure needs and in how it plans to address aging infrastructure in the future. Reclamation generally groups aging infrastructure and related needs into the overarching project category of m ajor r epair and r ehabilitation (MR&R). This category includes both dam safety needs and federal- and contractor-funded needs for upgrades to water and power infrastructure. In early 2020, Reclamation estimated that its five-year extraordinary maintenance and rehabilitation needs were $3.8 billion. This estimate includes dam safety appropriations and reserved works (both of which are funded via discretionary appropriations) and needs expected to be funded by water and power users and not by federal appropriations. Reclamation is also working on a broader strategy to estimate and account for its aging infrastructure needs, as required under the Reclamation Transparency Act, enacted in Subtitle G, Title VIII of P.L. 116-9 . It impossible to predict what portion of Reclamation's short- and long-term MR&R needs will go unmet. However, recent experience indicates that Reclamation will continue to request funding for a significant share of its MR&R needs, that unforeseen expenses are likely to arise, and that some contractors will have difficulty repaying their shares of some of these large rehabilitation expenses without federal aid. Some may question the prospect of additional federal spending for these projects and contractors. At the same time, infrastructure failures could pose a significant threat to the public in the form of physical and/or economic damages. Recent Congresses have introduced proposals that would attempt to address Reclamation's aging infrastructure. In the 116 th Congress, both S. 2044 and H.R. 4659 would create a new account in the Treasury, to be known as the Aging Infrastructure Account, to receive appropriations for non-dam safety related extraordinary operations and maintenance work on reserved or transferred Reclamation projects, as well as repayment by users for these costs. Congress first authorized federal assistance for these costs under Sections 9603-9605 of P.L. 111-11 , but to date the bureau has not provided such assistance, in part due to lack of requests from users. Earlier in the 116 th Congress, Title VIII, Subtitle A of P.L. 116-9 authorized a new programmatic title transfer process, whereby Reclamation is able to transfer ownership for certain facilities that have been repaid, without additional approvals from Congress. By facilitating transfer of ownership to nonfederal users, some hope this authority will aid these same users in obtaining financing for infrastructure upgrades. <4.4. Indian Water Rights Settlements> Indian water rights settlements have made up some of the largest new Reclamation project authorizations in recent years. Congress authorized nine new settlements from 2010 to 2016, and five of these settlements each authorized federal costs in excess of $100 million. The Reclamation Water Settlement Fund, a fund containing mandatory appropriations authorized by Congress in 2010, is expected to make available $120 million per year from FY2020 to FY2029 (to fund some of these costs). The remainder of funds needed to complete new and ongoing settlements is assumed to come from discretionary appropriations. In the 116 th Congress, H.R. 1904 and S. 886 both would extend the aforementioned $120 million per year in mandatory funds for the Reclamation Water Rights Settlement Fund. H.R. 1904 would make these amounts available in perpetuity, whereas S. 886 would extend deposits to the fund through FY2039 (i.e., a 10-year extension) and would provide that the Secretary of the Interior may not expend more than $90 million per year on a single settlement. Congress may weigh whether mandatory funding is the preferred long-term approach for funding these settlements and, if so, which settlements should be prioritized for funding. Although some might view this funding as a responsibility of the federal government that will continue in perpetuity, others may prefer that congressional oversight for these settlements be maintained through the annual discretionary appropriations process. In addition to the status of the Reclamation Water Settlements Fund, Congress continues to consider major new and amended Indian water rights settlements that the Administration has negotiated. S. 3019 , the Montana Water Rights Protection Action, would authorize one of the largest Indian water rights settlements to date, the Confederated Salish and Kootenai Water Compact in Montana. Other legislation under consideration in the 116 th Congress would authorize new settlements with the Navajo Utah ( S. 644 , S. 1207 ) and the Hualapai Tribe of Arizona ( H.R. 2459 , S. 1277 ), as well as amendments to the 2010 Aamodt Settlement Litigation Act ( H.R. 3292 , S. 1875 ). Congress may debate the merits of each of these individual settlements, as well as the overall approach to authorizing new settlements. <4.5. Financing Infrastructure Construction and Repairs> Some in Congress have expressed interest in proposals to finance various priority Reclamation activities. In addition to regular funding through the annual discretionary appropriations process, some have proposed using additional Reclamation Fund revenues and "alternative finance" loan programs that would promote public-private-partnerships at Reclamation projects. <4.5.1. Proposals to Use the Reclamation Fund> A number of Members have introduced proposals to use additional funding from the Reclamation Fund to fund priority Reclamation activities. The Reclamation Fund typically has had less than half of its incoming receipts appropriated as spending in recent years ( Figure 4 ), largely due to an increase in receipts from energy and natural resource royalties on western lands. Proposals for dedicated funding from the Reclamation Fund have taken the form of both mandatory and discretionary funding in several areas, including new water storage, aging infrastructure, and construction of new rural water and Indian water rights settlements. In the 116 th Congress, H.R. 2473 , the Securing Access for the Central Valley and Enhancing Water Resources Act (SAVE Act), proposes to annually redirect $300 million that otherwise would be credited to the Reclamation Fund, without further appropriation, from FY2030 to FY2060. This funding is to be made available for (1) authorized surface and groundwater storage projects, (2) authorized water reclamation and reuse projects, and (3) WaterSMART program water efficiency/conservation grants. Additionally, as noted, H.R. 1904 and S. 886 , both titled the Indian Water Rights Settlement Extension Act, would extend the $120 million per year in mandatory funding that was appropriated through FY2029 in P.L. 111-11 . Without this change, these funds accrue to the Reclamation Fund. <4.5.2. Reclamation Infrastructure Finance and Innovation Act Proposals> Members have put forward other proposals for financing water supply projects that do not involve the Reclamation Fund in recent years. Dating to the 113 th Congress, a number of bills have been proposed that would authorize Reclamation to provide financing and encourage public-private partnerships (sometimes referred to as alternative financing ) for western water resource infrastructure. These proposals which typically are referred to as Reclamation Infrastructure Finance and Innovation Act (RIFIA) proposals generally have been modeled after the Environmental Protection Agency's Water Infrastructure Finance and Innovation Act (WIFIA) authority, enacted in Section 5025 of the Water Resources Reform and Development Act of 2014 ( P.L. 113-121 ). They typically propose a cap on competitively awarded federal project financing (e.g., up to 49% of project costs may be financed) that must be repaid over time by project sponsors. The arrangement is seen as particularly advantageous in a federal legislative context, because WIFIA loans provide a large amount of credit assistance relative to the amount of budget authority required in annual discretionary appropriations. The current WIFIA authority authorizes a wide range of eligible projects, potentially including many of the water supply projects that would be most likely to pursue RIFIA financing. However, a separate RIFIA program would focus more exclusively on western water supply projects and thus potentially would avoid competition for financing with municipal water supply projects that have more established creditworthiness. In the 116 th Congress, both S. 1932 and H.R. 2473 would authorize pilot RIFIA programs for Reclamation. The bills would authorize $150 million for RIFIA expenses from FY2021 to FY2025. Depending on the credit subsidy cost assumed and assuming full appropriation and interest by borrowers, these funds could be leveraged into more than $1 billion in federal funding for projects.

The Bureau of Reclamation (Reclamation), an agency within the Department of the Interior (DOI), is responsible for the management and development of many of the large federal dams and water diversion structures in the 17 conterminous states west of the Mississippi River. Reclamation is the country's largest wholesaler of water and the country's second-largest producer of hydropower (behind the U.S. Army Corps of Engineers). Reclamation facilities store up to 140 million acre-feet of water, which serves more than 10 million acres of farmland and 31 million municipal and industrial customers. In addition to water supplies, Reclamation facilities provide flood control, recreation, and fish and wildlife benefits in many parts of the West. Congress created Reclamation in the Reclamation Act of 1902. The act authorized the Secretary of the Interior to construct irrigation works in western states to "reclaim" arid lands for agricultural purposes. Subsequent laws have built on and in some cases altered Reclamation's authorities, and Congress has authorized more than 180 individual R eclamation projects . Reclamation projects are unique in a number of ways. Among other things, these projects operate according to a beneficiary pays principle in which project beneficiaries must reimburse the government for their allocated share of project costs (some costs are considered federal in nature, with no reimbursement required). Reclamation projects also must obtain state water rights and operate according to state water law. As a result, state law and related considerations play a relatively large role in Reclamation project operations and management. The earliest Reclamation projects were single purpose and focused primarily on irrigation development. Later projects were larger and more complex, and they operated for multiple authorized purposes. Reclamation constructed its largest and most well-known projects (such as the California Central Valley Project, Hoover Dam, and Glen Canyon Dam on the Colorado River and Grand Coulee Dam and the Columbia River Basin Project in Washington) after the beginning of the Great Depression. Congress chose to fund most of these large projects through the General Fund of the Treasury rather than the Reclamation Fund, which Congress had established under the 1902 act to finance most Reclamation projects. A number of events precipitated the gradual slowdown of Reclamation's construction program beginning in the 1970s, and the bureau has constructed few new Reclamation projects (most of them smaller in scale) since that time. Reclamation has evolved considerably since its creation, and it remains an agency in transition. At Congress's direction, Reclamation has increasingly been involved in projects whose primary purpose is not reclaiming land for agricultural irrigation purposes. Some of Reclamation's new authorities include financial support for water reuse and recycling projects (i.e., the Title XVI Program), grants for water and energy conservation efforts (i.e., the WaterSMART Grants Program), and funding for rural water projects and water infrastructure associated with congressionally authorized Indian water rights settlements. How to balance new priorities with the upkeep of existing federal projects, and whether to facilitate new project development (and, if so, how), is a major consideration in discussions related to the bureau's future. These questions are particularly significant given Reclamation's nexus with state and local water resources development. Congress regularly considers legislation related to individual Reclamation projects, as well as broader questions related to Reclamation and its mission. Persistent and recurring drought in the West, along with the 2016 enactment of Reclamation's first significant new authority in decades for water storage project construction (Section 4007 of the Water Infrastructure Improvements for the Nation Act [WIIN Act; P.L. 114-322 ]), has increased attention on the bureau's future direction. Congress may consider a number of issues related to Reclamation, such as how (or if) the bureau should be involved in new water resource project construction, how to address aging federal water facilities, and the status of proposed and ongoing Indian water rights settlements, among other things.

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<1. Overview> Between 1969 and 1999, almost 3,500 people died as a result of political violence in Northern Ireland, which is a part of the United Kingdom (UK). The conflict, often referred to as "the Troubles," has its origins in the 1921 division of Ireland (see map in Figure 1 ). At its core, the conflict reflects a struggle between different national, cultural, and religious identities. Protestants in Northern Ireland (48% of the population) largely define themselves as British and support Northern Ireland's continued incorporation in the UK ( unionists ). Catholics in Northern Ireland (45% of the population) consider themselves Irish, and many Catholics desire a united Ireland ( nationalists ). In the past, more militant unionists ( loyalists ) and more militant nationalists ( republicans ) were willing to use force and resort to violence to achieve their goals. The Troubles were sparked in late 1968, when a civil rights movement was launched in Northern Ireland mostly by Catholics, who had long faced discrimination in areas such as electoral rights, housing, and employment. This civil rights movement was met with violence by some unionists, loyalists, and the police, which in turn prompted armed action by nationalists and republicans. Increasing chaos and escalating violence led the UK government to deploy the British Army on the streets of Northern Ireland in 1969 and to impose direct rule from London in 1972 (between 1920 and 1972, Northern Ireland had its own regional government at Stormont, outside Belfast). For years, the UK and Irish governments sought to facilitate a negotiated political settlement to the conflict in Northern Ireland. Multiparty talks began in June 1996, led by former Senate Majority Leader George Mitchell, who was serving as U.S. President Bill Clinton's special adviser on Ireland. After many ups and downs, the UK and Irish governments and the Northern Ireland political parties participating in the peace talks announced an agreement on April 10, 1998. This accord became known as the Good Friday Agreement (for the day on which it was concluded); it is also known as the Belfast Agreement. Despite the significant decrease in the levels of violence since the Good Friday Agreement, implementation of the peace accord has been challenging. Tensions persist among Northern Ireland's political parties and between the unionist and nationalist communities more broadly. Northern Ireland remains a largely divided society and continues to grapple with a number of issues in its search for peace and reconciliation. Sectarian differences flare periodically, and addressing Northern Ireland's legacy of violence (often termed dealing with the past ) is particularly controversial. Many analysts assess that peace and security in Northern Ireland is fragile. The UK's withdrawal from the European Union (EU) in January 2020 or Brexit has added to divisions within Northern Ireland. Brexit poses new challenges for Northern Ireland's peace process and economy and has renewed questions about Northern Ireland's constitutional status as part of the UK. Successive U.S. Administrations and many Members of Congress have actively supported the Northern Ireland peace process and encouraged the full implementation of the Good Friday Agreement, as well as subsequent accords and initiatives to further the peace process and promote long-term reconciliation. Some Members have been particularly interested in police reforms and human rights in Northern Ireland. Since 1986, the United States has provided development aid through the International Fund for Ireland (IFI) as a means to encourage economic development and foster reconciliation. Some Members of Congress also have demonstrated an interest in how Brexit might affect Northern Ireland in the years ahead. <2. The 1998 Peace Agreement> <2.1. Key Elements> The Good Friday Agreement is a multilayered and interlocking document, consisting of a political settlement reached by Northern Ireland's political parties and an international treaty between the UK and Irish governments. At the core of the Good Friday Agreement is the consent principle that is, a change in Northern Ireland's status can come about only with the consent of the majority of Northern Ireland's people, as well as with the consent of a majority in Ireland. Although the agreement acknowledged that a substantial section of Northern Ireland's population and a majority on the island desired a united Ireland, it recognized that the majority of people in Northern Ireland wished to remain part of the UK. If the preference of this majority were to change, the agreement asserted that the UK and Irish governments would have a binding obligation to bring about the wish of the people; thus, the agreement included provisions for future polls to be held in Northern Ireland on its constitutional status, should events warrant. The Good Friday Agreement set out a framework for devolved government the transfer of specified powers over local governance from London to Belfast and called for establishing a Northern Ireland Assembly and Executive in which unionist and nationalist parties would share power (known as Strand One ). The Good Friday Agreement also contained provisions on several issues viewed as central to the peace process: decommissioning (disarmament) of paramilitary weapons, policing, human rights, UK security normalization (demilitarization), and the status of prisoners. Negotiations on many of these areas had been extremely contentious. Experts assert that the final agreed text thus reflected some degree of "constructive ambiguity" on such issues. In addition, the Good Friday Agreement created new "North-South" and "East-West" institutions ( Strand Two and Strand Three , respectively). Among the key institutions called for in these two strands, a North-South Ministerial Council was established to allow leaders in the northern and southern parts of the island of Ireland to consult and cooperate on cross-border issues. A British-Irish Council also was formed to discuss matters of regional interest; the council comprises representatives of the two governments and the devolved administrations of Northern Ireland, Scotland, Wales, the Channel Islands, and the Isle of Man. <2.2. Implementation> Voters in Northern Ireland and the Republic of Ireland approved the Good Friday Agreement in separate referendums on May 22, 1998. Although considerable progress has been made in implementing the agreement, the process has been arduous. For years, decommissioning and police reforms were key sticking points that contributed to instability in Northern Ireland's devolved government. Sporadic violence from dissident republican and loyalist paramilitary groups that refused to accept the peace process and sectarian strife also helped to feed mistrust between the unionist and nationalist communities and their respective political parties. <2.2.1. Democratic Power-Sharing Institutions> As noted above, the Good Friday Agreement called for establishing a new Northern Ireland Assembly and Executive. To ensure that neither unionists nor nationalists could dominate the Assembly, the agreement specified that "key decisions" must receive cross-community support. The Executive would be composed of a first minister, deputy first minister, and other ministers with departmental responsibilities (e.g., health, education, jobs); positions would be allocated to political parties according to party strength in the Assembly. The first elections to the new 108-member Northern Ireland Assembly took place on June 25, 1998. The devolution of power from London to Belfast, however, did not follow promptly because of unionist concerns about decommissioning, or the paramilitaries' surrender of their weapons. Following 18 months of further negotiations, authority over local affairs was transferred to the Northern Ireland Assembly and Executive in December 1999. Over the next few years, the issue of decommissioning especially by the Irish Republican Army (IRA) contributed to the suspension of the devolved government and the reinstatement of direct rule from London several times between 2000 and 2002. (See " Decommissioning ," below.) In May 2007, after a nearly five-year suspension, Northern Ireland's devolved government was restored following a landmark deal between the Democratic Unionist Party (DUP) which strongly supports Northern Ireland's continued integration as part of the UK and Sinn Fein, the staunchly nationalist political party traditionally associated with the IRA. The DUP and Sinn Fein have been the largest unionist and nationalist parties, respectively, in Northern Ireland since 2003. The 2007 DUP-Sinn Fein deal paved the way for greater stability in Northern Ireland's devolved government over the next decade. Regularly scheduled Assembly elections in 2011 and 2016 produced successive power-sharing governments, also led by the DUP and Sinn Fein. At the same time, tensions persisted within the devolved government and between the unionist and nationalist communities. Various incidents including protests in 2012 and 2013 over the use of flags and emblems, a 2014 dispute over welfare reform, and the 2015 arrest of a Sinn Fein leader in connection with the murder of a former IRA member periodically threatened the devolved government's stability. Following the collapse of the devolved government and snap Assembly elections in 2017, heightened tensions due to Brexit and other contentious issues largely stalled negotiations on forming a new devolved government for almost three years. This long impasse renewed concerns about political stability and highlighted divisions in Northern Ireland politics and society. (See " 2017-2020 Crisis in the Devolved Government ," below.) <2.2.2. Decommissioning> For years, decommissioning of paramilitary weapons was a prominent challenge in the implementation of the Good Friday Agreement. The text of the agreement states, "those who hold office should use only democratic, non-violent means, and those who do not should be excluded or removed from office." Unionists were adamant that the IRA must fully decommission its weapons. The IRA had been observing a cease-fire since 1997, but it viewed decommissioning as tantamount to surrender and had long resisted such calls. Progress toward full IRA decommissioning was slow and incremental. A key milestone came in July 2005, when the IRA declared an end to its armed campaign and instructed all members to pursue objectives through "exclusively peaceful means." In September 2005, Northern Ireland's Independent International Commission on Decommissioning (IICD) announced that the IRA had put all of its arms "beyond use," asserting that the IRA weaponry dismantled or made inoperable matched estimates provided by the security forces. The IICD also confirmed decommissioning by other republican groups and loyalist organizations. The IICD concluded its work in 2011. <2.2.3. Policing> Although recognized as a central element in achieving a comprehensive peace in Northern Ireland, new policing structures and arrangements were a frequent point of contention between unionists and nationalists. In 2001, a new Police Service of Northern Ireland (PSNI) was established to replace the Royal Ulster Constabulary (RUC), Northern Ireland's former, 92% Protestant police force. Catholics viewed the RUC as an enforcer of Protestant domination, and human rights organizations accused the RUC of brutality and collusion with loyalist paramilitary groups. Defenders of the RUC pointed to its tradition of loyalty and discipline and its record in fighting terrorism. In accordance with policing recommendations made by an independent commission (known as the Patten Commission), increasing the proportion of Catholic officers (from 8% to 30% in 10 years) was a key goal for the new PSNI. To help fulfill this goal, the PSNI introduced a 50-50 Catholic/Protestant recruitment process. For several years, Sinn Fein refused to participate in the new Policing Board, a democratic oversight body. Many viewed Sinn Fein's stance as discouraging Catholics from joining the PSNI and preventing the nationalist community from fully accepting the new police force. In 2007, however, as part of the process to restore the devolved government, Sinn Fein members voted to support the police and join the Policing Board. Experts viewed Sinn Fein's decision as historic, given the IRA's traditional view of the police as a legitimate target. In 2010, the DUP and Sinn Fein reached an accord (the Hillsborough Agreement) to devolve policing and justice powers from London to Belfast (on which the parties had been unable to agree at the time of the Good Friday Agreement's signing). In 2011, the 50-50 recruitment process for Catholic and Protestant PSNI officers concluded. Officials asserted that the 50-50 process fulfilled the goals set out by the Patten Commission (including increasing the number of Catholic officers to 30%). In recent years, concerns resurfaced that not enough Catholics were seeking to join the PSNI; partly because of lingering suspicions about the police within the Catholic/nationalist community but also because of fears that Catholic police recruits were key targets of dissident republicans. In 2017, the PSNI introduced a number of procedural changes to help attract more Catholics (and more women). <2.2.4. Security Normalization> The Good Friday Agreement called for "as early a return as possible to normal security arrangements in Northern Ireland," including the removal of security installations. In February 2007, the last of more than 100 armored watchtowers in Northern Ireland was dismantled. In July 2007, the British Army ended its 38-year-long military operation in Northern Ireland. Although a regular garrison of 5,000 British troops remains based in Northern Ireland, British forces no longer have a role in policing and may be deployed worldwide. <2.2.5. Rights, Safeguards, and Equality of Opportunity> In accordance with the Good Friday Agreement's provisions related to human rights and equality, the UK government incorporated the European Convention on Human Rights into Northern Ireland law and established a new Human Rights Commission and a new Equality Commission for Northern Ireland. Some nationalists, however, continue to press for more progress in the area of human rights and equality. They argue that Northern Ireland needs its own Bill of Rights (consideration of which is provided for in the Good Friday Agreement) and a stand-alone Irish Language Act to give the Irish language the same official status as English in Northern Ireland. The Good Friday Agreement calls for tolerance of linguistic diversity in Northern Ireland and support for the Irish language. The subsequent St. Andrews Agreement of 2006 provided for an Irish Language Act, but this issue remains controversial. <3. Initiatives to Further the Peace Process> Many analysts view implementation of the most important aspects of the Good Friday Agreement as complete. Since 2013, however, the Northern Ireland political parties and the UK and Irish governments have made several attempts to reduce sectarian tensions and promote reconciliation. Major endeavors include the following: The 2013 Haass Initiative. In 2013, the Northern Ireland Executive appointed former U.S. diplomat and special envoy for Northern Ireland Richard Haass as the independent chair of interparty talks aimed at tackling some of the most divisive issues in Northern Ireland society. In particular, Haass was tasked with making recommendations on dealing with the past and the sectarian issues of parading, protests, and the use of flags and emblems. In December 2013, Haass released a draft proposal outlining the way forward in these areas, but he was unable to broker a final agreement among the Northern Ireland political parties. The 2014 Stormont House Agreement. In 2014, financial pressures and budgetary disputes related to UK-wide welfare reforms and austerity measures tested Northern Ireland's devolved government. The UK and Irish governments convened interparty talks to address government finances and governing structures, as well as the issues previously tackled by the Haass initiative. In the resulting December 2014 Stormont House Agreement, the Northern Ireland political parties agreed to support welfare reform (with certain mitigating measures), balance the budget, address Northern Ireland's heavy reliance on the public sector, and reduce the size of the Assembly and the number of Executive departments to improve efficiency and cut costs. The agreement also included measures on parading, flags, and dealing with the past. Continued disagreements over welfare reform between the DUP and Sinn Fein, however, stalled implementation of all aspects of the Stormont House Agreement. The 2015 Fresh Start Agreement. In November 2015, the UK and Irish governments, the DUP, and Sinn Fein reached a new Fresh Start Agreement. Like the Stormont House Agreement, the accord focused on implementing welfare reform and improving the stability and sustainability of Northern Ireland's budget and governing institutions. It confirmed a reduction in the size of the Assembly from 108 to 90 members (effective from the first Assembly election after the May 2016 election), decreased the number of Executive departments, and made provision for an official opposition in the Assembly. The Fresh Start Agreement also included provisions on parading and the use of flags, but the parties were unable to reach final agreement on establishing new institutions to deal with the past. In addition, the Fresh Start Agreement addressed ongoing concerns about paramilitary activity, sparked by the arrest of a senior Sinn Fein official in connection to the August 2015 murder of an ex-IRA member. <4. Recent Issues and Ongoing Challenges> Despite a much-improved security situation since the 1998 Good Friday Agreement, concerns linger about the stability of the devolved government and the fragility of community relations. As noted previously, the devolved government led by the DUP and Sinn Fein collapsed in January 2017 amid heightened tensions related to Brexit and other issues. It took nearly three years following the March 2017 snap Assembly elections to reestablish the devolved government. The search for peace and reconciliation remains challenging. Difficult issues include bridging sectarian divisions and managing key sticking points (especially parading, protests, and the use of flags and emblems); dealing with the past; addressing remaining paramilitary concerns and curbing dissident activity; and furthering economic development. The 2013 Haass initiative, the 2014 Stormont House Agreement, and the 2015 Fresh Start Agreement attempted to tackle some aspects of these long-standing challenges. Some measures agreed in these successive accords were delayed amid the absence of a devolved government between 2017 and 2020. <4.1. 2017-2020 Crisis in the Devolved Government> <4.1.1. March 2017 Snap Assembly Elections> The immediate impetus for the devolved government's January 2017 collapse was a renewable energy scandal involving DUP leader and Northern Ireland First Minister Arlene Foster. Then-Deputy First Minister Martin McGuiness of Sinn Fein called for Foster to stand aside as First Minister temporarily while an investigation was conducted into the energy scheme; Foster refused, and McGuinness resigned his position as Deputy First Minister in protest. McGuinness's resignation essentially forced new elections to be called for March 2, 2017. Tensions between Sinn Fein and the DUP on several issues other than the energy scandal contributed to Sinn Fein's decision to force snap Assembly elections. The elections were called in the wake of the June 2016 UK referendum on EU membership and amid deep unease over Brexit's implications for Northern Ireland. Other points of contention included the introduction of a potential Irish Language Act and the legalization of same-sex marriage; Sinn Fein supported both measures, whereas the DUP opposed them. Arlene Foster led the DUP's election campaign, but Michelle O'Neill succeeded McGuinness as Sinn Fein's leader in Northern Ireland and led Sinn Fein's campaign (McGuinness was suffering from ill health and passed away a few weeks after the election). As seen in Table 1 , the number of Assembly seats contested in 2017 was 90 rather than 108 because of a previously agreed reduction in the size of the Assembly. The DUP retained the largest number of seats in the 2017 elections, but Sinn Fein was widely regarded as the biggest winner, given its success in reducing the previous gap between the two parties from 10 seats to 1. A high voter turnout of almost 65% fueled by anger over the energy scandal and a perceived lack of concern from London about Brexit's impact on Northern Ireland appears to have favored Sinn Fein and the cross-community Alliance Party. For the first time in the Assembly, unionist parties do not have an overall majority (a largely symbolic status because of the power-sharing rules but highly emblematic for the unionist community). <4.1.2. Reestablishing the Devolved Government> Following the March 2017 snap Assembly elections, negotiations between the DUP, Sinn Fein, and the other main political parties (see text box ) on forming a new devolved government repeatedly stalled, primarily over a potential Irish Language Act. Divisions over Brexit exacerbated tensions. The DUP was the only major Northern Ireland political party to back Brexit, which Sinn Fein and the other main Northern Ireland parties strongly opposed. Some analysts suggest the DUP's support for the Conservative Party government in the UK Parliament following the UK's June 2017 snap general election further heightened distrust between Sinn Fein and the DUP and made reaching a new power-sharing agreement more difficult. In April 2019, journalist Lyra McKee was shot and killed while covering riots in Londonderry (also known as Derry). The New IRA, a dissident republican group opposed to the peace process, claimed responsibility (but also apologized, asserting that it had been aiming to shoot a police officer but hit McKee by accident). McKee's death sparked a significant public outcry and prompted the UK and Irish governments to intensify efforts to revive talks on forming a new devolved government. Negotiations remained largely deadlocked, however, throughout the summer and fall of 2019 amid ongoing uncertainty over Brexit. On December 16, 2019, the UK and Irish governments launched a new round of talks with the main political parties aimed at reestablishing the devolved government. These negotiations followed the UK's December 12, 2019, general election, in which Prime Minister Boris Johnson's Conservative Party won a convincing parliamentary majority, thereby negating the DUP's influence in the UK Parliament and improving the prospects for restoring Northern Ireland's devolved government. A functioning devolved government appeared to offer the DUP the best opportunity to ensure it has a voice in implementing the new post-Brexit border arrangements for Northern Ireland (discussed in " Possible Implications of Brexit ," below) and in the upcoming negotiations on the UK-EU future political and trade relationship. On January 10, 2020, the DUP, Sinn Fein, and the other parties agreed to a deal put forward by the UK and Irish governments to reestablish the devolved government. The new Assembly convened the following day and elected a new Executive. The DUP's Arlene Foster and Sinn Fein's Michelle O'Neill were elected as First Minister and Deputy First Minister, respectively. The new power-sharing deal, known as New Decade, New Approach, is wide-ranging and addresses a number of key issues, including health and education concerns and measures to improve the sustainability and transparency of Northern Ireland's political institutions. The power-sharing deal does not include a stand-alone Irish Language Act, as initially demanded by Sinn Fein, but essentially seeks to strike a compromise that promotes the use of the Irish (Gaelic) language while protecting the Ulster-Scots language (a regional language similar to English) that many unionists consider important to their heritage. The deal provides for the official recognition in Northern Ireland of both the Irish and the Ulster-Scots languages, allows for their wider use in government settings, and establishes two new "language commissioners" one for Irish and one for Ulster-Scots to enhance, protect, and develop each language and associated cultural traditions. Both the UK and Irish governments promised additional financial support for Northern Ireland as part of the deal to restore the devolved government. <4.2. Sectarian Divisions> Observers suggest that Northern Ireland remains a largely divided society, with Protestant and Catholic communities existing largely in parallel. Peace walls that separate Protestant and Catholic neighborhoods are perhaps the most tangible sign of such divisions. Estimates of the number of peace walls vary depending on the definition. Northern Ireland's Department of Justice recognizes around 50 peace walls for which it has responsibility; when other types of "interfaces" are included such as fences, gates, and closed roads the number of physical barriers separating Protestant and Catholic communities is over 100. Northern Ireland's Executive is working to remove the peace walls, but a 2015 survey of public attitudes found that 30% of those interviewed want the walls to remain in place; it also found that more than 4 in 10 people have never interacted with anyone from the community living on the other side of the nearest peace wall. Furthermore, experts note that schools and housing developments in Northern Ireland remain mostly single-identity communities. Some analysts contend that sectarian divisions are particularly evident during the annual summer marching season , when many unionist cultural and religious organizations hold parades commemorating Protestant history. Although the vast majority of these annual parades are not contentious, some are held through or close to areas populated mainly by Catholics (some of whom perceive such unionist parades as triumphalist and intimidating). During the Troubles, the marching season often provoked fierce violence. Many Protestant organizations view the existing Parades Commission, which arbitrates disputes over parade routes, as largely biased in favor of Catholics and have repeatedly argued for abolishing the commission. Efforts over the years to address the contentious issue of parading and related protests have stalled repeatedly. A series of protests in late 2012 and early 2013 highlighted frictions between the unionist and nationalist communities. Protests began following a decision to fly the union (UK) flag at Belfast City Hall only on designated days rather than year-round. The protests, mostly by unionists and loyalists, occurred in Belfast and elsewhere in Northern Ireland, and some turned violent. Northern Ireland leaders on both sides of the sectarian divide received death threats, and some political party offices were vandalized. In June 2016, a Commission on Flags, Identity, Culture, and Tradition was established to assess these contentious issues including the display of flags and emblems and to recommend policies and solutions to help address them. This commission consists of 15 members, with 7 appointed by Northern Ireland's political parties and 8 drawn from outside the government; it was originally proposed by the Haass initiative and subsequently endorsed in the Stormont House Agreement and the Fresh Start Agreement. Although this commission was supposed to produce a report with its recommendations within 18 months, it has so far failed to deliver its findings. Commission officials contend that the collapse of the devolved government in 2017 and the subsequent impasse in its reestablishment stymied the commission's work to some degree. <4.3. Dealing with the Past> Fully addressing the legacy of violence in Northern Ireland remains controversial. The Good Friday Agreement asserted that, "it is essential to acknowledge and address the suffering of the victims of violence as a necessary element of reconciliation." In 2008, the Northern Ireland Assembly established a Commission for Victims and Survivors aimed at supporting victims and their families. Several legal processes for examining crimes stemming from the Troubles also exist. These include police investigations into deaths related to the conflict; investigations by the Police Ombudsman for Northern Ireland of historical cases involving allegations of police misconduct; and public inquiries, such as the Saville inquiry (concluded in 2010) into the 1972 Bloody Sunday incident. Critics argue that these various legal processes represent a piecemeal approach and give some deaths or incidents priority over others. Some observers point out that more than 3,000 conflict-related deaths remain unsolved. In 2005, a Historical Enquiries Team (HET) was established within the PSNI to review over 3,200 deaths relating to the conflict between 1968 and 1998. Despite the HET's efforts, progress was slow and it wound down at the end of 2014. Other critics note the expense and time involved with some of these processes; for example, the Bloody Sunday inquiry cost 195 million (more than $300 million) and took 12 years to complete. Some analysts and human rights advocates argue that Northern Ireland needs a comprehensive mechanism for dealing with its past, both to meet the needs of all victims and survivors and to contain costs. At the same time, many commentators assert there is no consensus in Northern Ireland on the best way to deal with the past. This is in large part because many unionists and nationalists continue to view the conflict differently and retain competing narratives. The 2014 Stormont House Agreement called for establishing four new bodies to address "legacy issues" (based largely on proposals made during the 2013 Haass initiative): Historical Investigations Unit (HIU) . This body would take forward outstanding cases from the HET process and the historical unit of the Police Ombudsman dealing with past police misconduct cases. The UK government pledged full disclosure to the HIU. Independent Commission for Information Retrieval (ICIR). The ICIR would enable victims and survivors to seek and privately receive information about conflict-related violence. It would be established by the UK and Irish governments but would be entirely separate from the justice systems in each jurisdiction. Any information provided to the ICIR would be inadmissible in criminal and civil proceedings, but individuals who provided information would not be immune to prosecution for any crime committed should evidentiary requirements be met by other means. Oral History Archive. This archive would provide a central place for people from all backgrounds to share experiences and narratives related to the Troubles. Implementation and Reconciliation Group. This body would oversee work on themes, archives, and information recovery in an effort to promote reconciliation and reduce sectarianism. Efforts to establish these four new institutions in UK law, however, largely stalled due to divisions between the UK government, on the one hand, and some nationalists and human rights advocates, on the other, over proposed "national security caveats" related to the disclosure of certain information. Victims groups and nationalists were concerned that "national security" could be used to cover up criminal wrongdoing by state agents. At the same time, unionists voiced concern that the proposed HIU could unfairly target former soldiers and police officers, and many argued that any measures to deal with the past in Northern Ireland should contain a statute of limitations or amnesty to prosecutions. Successive government crises and the stalemate in reestablishing the devolved government between 2017 and early 2020 also impeded work on implementing these mechanisms to address Northern Ireland's legacy of violence. In the January 2020 New Decade, New Approach deal to reestablish the devolved government, the UK government pledged to introduce legislation in the UK Parliament to set up the legacy bodies proposed in the 2014 Stormont House Agreement. Experts suggest, however, that the issue of national security caveats could still pose an obstacle. Others note that some in the UK Parliament could demand legislation to protect military veterans from prosecution for past actions in Northern Ireland in exchange for their support for establishing the new legacy institutions. <4.4. Remaining Paramilitary Issues and Dissident Activity> <4.4.1. Paramilitary Concerns> Experts contend that the major paramilitary organizations active during the Troubles are now committed to the political process and remain on cease-fire. However, the apparent continued existence of some groups and their engagement in criminality worries many in both the unionist and nationalist communities. In response to heightened concerns about paramilitary activity in Northern Ireland in 2015, the UK government commissioned a study on the status of republican and loyalist paramilitary groups. This review found that all the main paramilitary groups operating during the Troubles still exist, but they are on cease-fire and the leadership of each group, "to different degrees," is "committed to peaceful means to achieve their political objectives." At the same time, the review concluded that individual members of paramilitary groups still represent a threat to national security, including through their involvement in organized crime, and "there is regular unsanctioned activity including behavior in direct contravention of leadership instruction." The 2015 Fresh Start Agreement sought to address concerns about the main paramilitary groups in Northern Ireland. Among other measures, it enumerated a new set of principles that calls upon members of the Assembly and the Executive to work toward disbanding all paramilitary organizations and to take no instructions from such groups. The agreement also called for establishing a new, four-member international body to monitor paramilitary activity and to report annually on progress toward ending such activity. The resulting Independent Reporting Commission (IRC) began work in 2017; the UK and Irish governments each named one representative to the IRC, and the Northern Ireland Executive named two. In its second annual report, released in November 2019, the IRC asserted that paramilitarism remains a "stark reality of life" in Northern Ireland and is an obstacle to peace and reconciliation; the IRC also noted that the recent impasse in the devolved government and uncertainty regarding Brexit have made the task of ending paramilitary activity more difficult. <4.4.2. The Dissident Threat> Security assessments indicate that dissident republican and loyalist groups not on cease-fire and opposed to the 1998 peace accord continue to present serious threats. The aforementioned 2015 review of paramilitary groups maintained that the most significant terrorist threat in Northern Ireland was posed not by the groups evaluated in that report but rather by dissident republicans. The review described dissident loyalist groups as posing another, albeit "smaller," threat. At the same time, experts note that dissident groups do not have the same capacity to mount a sustained terror campaign as the IRA did between the 1970s and the 1990s. Most of the dissident republican groups are small in comparison to the IRA during the height of the Troubles. According to UK security services, there are currently four main dissident republican groups: the Continuity IRA (CIRA); glaigh na h ireann ( NH); Arm na Poblachta (ANP), and the New IRA (which reportedly was formed in 2012 and brought together the Real IRA, the Republican Action Against Drugs, or RAAD, and a number of independent republicans). These groups have sought to target police officers, prison officers, and other members of the security services in particular. Between 2009 and 2017, dissident republicans were responsible for the deaths of two PSNI officers, two British soldiers, and two prison officers. In January 2018, NH declared itself on cease-fire. However, the other groups remain active, and authorities warn that the threat posed by the New IRA in particular is severe. Police suspect the New IRA was responsible for a January 2019 car bomb that exploded in Londonderry (or Derry). As noted above, the New IRA claimed responsibility for killing journalist Lyra McKee in April 2019. Many observers note a slight uptick in dissident republican activity over the last year, especially in border regions, as the New IRA and the Continuity IRA sought to exploit the stalemates over both Northern Ireland's devolved government and Brexit. <4.5. Economic Development and Equal Opportunity> Many assert that one of the best ways to ensure a lasting peace in Northern Ireland and deny dissident groups new recruits is to promote continued economic development and equal opportunity for Catholics and Protestants. Northern Ireland's economy has made considerable advances since the 1990s. Between 1997 and 2007, Northern Ireland's economy grew an average of 5.6% annually (marginally above the UK average of 5.4%). Unemployment decreased from over 17% in the 1980s to 4.3% by 2007. The 2008-2009 global recession significantly affected the region, however, and economic recovery has been slow and uneven. In the four quarters ending in September 2019, Northern Ireland's economic activity grew by 0.3%, as compared to 1.1% growth for the UK overall. Unemployment in Northern Ireland is currently 2.4%, lower than the UK average (3.8%) and that of the Republic of Ireland (4.8%) and the EU (6.3%). Income earned and living standards in Northern Ireland remain below the UK average. Of the UK's 12 economic regions, Northern Ireland had the fifth-lowest gross value added per capita in 2018 ( 25,981, or about $33,900), below the UK's average ( 32,216, or about $42,032). Northern Ireland also has both a high rate of economic inactivity (26%) and a high proportion of working-age individuals with no formal qualifications. Studies indicate that the historically poorest areas in Northern Ireland (many of which bore the brunt of the Troubles) remain so and that many of the areas considered to be the most deprived are predominantly Catholic. At the same time, Northern Ireland has made strides in promoting equality in its workforce. The gap in economic activity rates between Protestants and Catholics has shrunk considerably since 1992 (when there was a 10 percentage point difference) and has largely converged in recent years (in 2017, the economic activity rate was 70% for Protestants and 67% for Catholics). In addition, the percentage point gap in unemployment rates between the two communities has decreased from 9% in 1992 to 0% in 2017. To improve Northern Ireland's long-term economic performance, Northern Ireland leaders have sought to promote export-led growth, decrease Northern Ireland's economic dependency on the public sector by growing the private sector, and attract more foreign direct investment. Reducing Northern Ireland's economic dependency on the public sector (which accounts for about 70% of the region's gross domestic product and employs roughly 30% of its workforce) and devolving power over corporation tax from London to Belfast to help increase foreign investment were key issues addressed in the cross-party negotiations in both 2014 and 2015. The Fresh Start Agreement set April 2018 as the target date for introducing a devolved corporation tax rate of 12.5% in Northern Ireland (the same rate as in the Republic of Ireland). In the absence of devolved government between 2017 and early 2020, however, reducing Northern Ireland's corporation tax rate has been on hold. <5. Possible Implications of Brexit> The UK exited the EU on January 31, 2020. In the UK's June 2016 public referendum on EU membership, voters in Northern Ireland favored remaining in the EU, 56% to 44% (the UK overall voted in favor of leaving, 52% to 48%). Brexit has added to divisions within Northern Ireland and poses considerable challenges, with potential implications for Northern Ireland's peace process, economy, and, in the longer term, constitutional status. <5.1. The Irish Border, the Peace Process, and the Withdrawal Agreement> At the time of the 1998 Good Friday Agreement, the EU membership of both the UK and the Republic of Ireland was regarded as essential to underpinning the political settlement by providing a common European identity for unionists and nationalists in Northern Ireland. EU law also provided a supporting framework for guaranteeing the human rights, equality, and nondiscrimination provisions of the peace accord. Since 1998, as security checkpoints were dismantled in accordance with the peace agreement, and because both the UK and Ireland belonged to the EU's single market and customs union, the circuitous 300-mile land border between Northern Ireland and Ireland effectively disappeared. The open border served as an important political and psychological symbol on both sides of the sectarian divide and helped produce a dynamic cross-border economy. Preventing a hard border with customs checks and physical infrastructure on the island of Ireland was a key goal, and a major stumbling block, in negotiating the UK's withdrawal agreement with the EU. UK, Irish, and EU leaders asserted repeatedly that they did not desire a hard border post-Brexit. Security assessments suggested that if border or custom posts were reinstated, violent dissident groups opposed to the peace process would view such infrastructure as targets, endangering the lives of police and customs officers. Experts feared that such violence would threaten the region's security and stability and potentially put the entire peace process at risk. Many in Northern Ireland and Ireland also were eager to maintain an open border to ensure "frictionless" trade, safeguard the North-South economy, and protect community relations. People in border communities worried that any hardening of the border could affect daily travel across the border to work, shop, or visit family and friends. Estimates suggest there are upward of 300 public and private border crossing points along the border today; during the Troubles, only a fraction of crossing points were open, and hour-long delays due to security measures and bureaucratic hurdles were common. Devising a mechanism to maintain an open border, however, was complicated by the UK government's pursuit of a largely hard Brexit , which would keep the UK outside of the EU's single market and customs union. In early 2019, the UK Parliament rejected the initial UK-EU withdrawal agreement three times, in large part because of concerns about the backstop for the Irish border, which would have kept the UK inside the EU customs union until the UK and EU determined their future trade relationship. Some Brexit advocates contended that Ireland and the EU were exaggerating and exploiting the security concerns about the border to keep the UK close to the EU. Those of this view noted that although the Good Friday Agreement commits the UK to normalizing security arrangements, including the removal of security installations "consistent with the level of threat," it does not explicitly require an open border. The Irish government and many in Northern Ireland as well as most UK officials argued that an open border had become intrinsic to peace on the island of Ireland. In October 2019, EU and UK negotiators reached a revised withdrawal agreement with new provisions for Northern Ireland to ensure an open border on the island of Ireland post-Brexit while safeguarding the rules of the EU single market. Under the new withdrawal agreement, following the end of the 11-month transition period in December 2020, Northern Ireland is to remain legally in the UK customs territory but is to maintain regulatory alignment with the EU. In effect, this arrangement keeps Northern Ireland for all practical purposes in the EU customs union, thus eliminating the need for regulatory checks on trade in goods between Northern Ireland and the Republic of Ireland but essentially creating a customs border in the Irish Sea. Any physical checks necessary to ensure customs compliance are to be conducted at ports or points of entry away from the Northern Ireland-Ireland land border, with no checks or infrastructure at this border. At the end of the transition period, the entire UK, including Northern Ireland, will leave the EU customs union and conduct its own national trade policy. The DUP strongly opposed these "Northern Ireland-only" arrangements, contending the effective customs border in the Irish Sea will divide Northern Ireland from the rest of the UK and threaten the UK's constitutional integrity. In light of the large majority won by Prime Minister Johnson's Conservative Party in the December 2019 UK parliamentary elections, however, the DUP lost political influence and was unable to block approval of the renegotiated withdrawal agreement. Both the UK and the EU subsequently ratified the withdrawal agreement, thus enabling the UK to end its 47-year membership in the EU. With the UK-EU withdrawal agreement in place, concerns have largely receded about a hard border developing on the island of Ireland. At the same time, EU and UK negotiators still must flesh out many of the details related to how the post-Brexit regulatory and customs arrangements for Northern Ireland will work in practice, including where and how customs checks will take place. In accordance with the terms of the withdrawal agreement, a Joint Committee of UK and EU officials is to decide such issues during the transition period. Implementation is likely to remain a work in progress. Uncertainty also persists about what the overall UK-EU relationship including with respect to trade will look like post-Brexit and whether the two sides can reach an agreement by the end of the transition period. However, the provisions related to the Northern Ireland land border are not expected to change pending the outcome of negotiations on the future UK-EU relationship. Prolongation of the post-Brexit arrangements to keep Northern Ireland aligned with EU regulatory and customs rules will be subject to the consent of the Northern Ireland Assembly in 2024. Should the Assembly fail to renew these arrangements (an unlikely scenario, given that pro-EU parties are expected to continue to hold a majority in the Assembly), the UK and the EU would need to agree on a new set of provisions to keep the border open. Many analysts assert that Brexit has further exacerbated political and societal divisions in Northern Ireland. As noted previously, the DUP was the only main political party in Northern Ireland to support Brexit, but it opposed the Northern Ireland provisions in the renegotiated withdrawal agreement because it viewed them as treating Northern Ireland differently from the rest of the UK and undermining the union. Amid ongoing demographic, societal, and economic changes in Northern Ireland that predate Brexit, some in the unionist community perceive a loss in unionist traditions and dominance in Northern Ireland. Some experts suggest the new post-Brexit border and customs arrangements for Northern Ireland could enhance this sense of unionist disenfranchisement, especially if Northern Ireland is drawn closer to the Republic of Ireland's economic orbit post-Brexit. Such unionist unease in turn could intensify frictions and political instability in Northern Ireland; observers also worry that heightened unionist frustration could prompt a resurgence in loyalist violence post-Brexit. <5.2. Economic Concerns> Some experts contend that Brexit could have serious negative economic consequences for Northern Ireland. According to a UK parliamentary report, Northern Ireland depends more on the EU market (and especially that of Ireland) for its exports than does the rest of the UK. In 2017, approximately 57% of Northern Ireland's exports went to the EU, including 38% to Ireland, which was Northern Ireland's top single export and import partner. Many manufacturers in Northern Ireland and Ireland also depend on integrated supply chains north and south of the border; raw materials in products such as milk, cheese, butter, and alcoholic drinks often cross the border between Northern Ireland and Ireland several times for processing and packaging. Trade with Ireland is especially important for small- and medium-sized companies in Northern Ireland. Although sales in 2017 to other parts of the UK ( 11.3 billion, or about $14.8 billion) surpassed the value of all Northern Ireland exports ( 10.1 billion, or about $13.2 billion) and were nearly three times the value of exports to Ireland ( 3.9 billion, or about $5.1 billion), small- and medium-sized companies in Northern Ireland were responsible for the vast majority of the region's exports to Ireland. Large- and medium-sized Northern Ireland firms dominated in sales to the rest of the UK. UK and DUP leaders maintain that given the value of exports, the rest of the UK is overall more important economically to Northern Ireland than the EU. The DUP and others in Northern Ireland suggest the renegotiated withdrawal agreement could be detrimental to the economy. A UK government risk assessment released in October 2019 acknowledged that the lack of clarity about how the customs arrangements for Northern Ireland will operate in practice and possible regulatory divergence between Northern Ireland and the rest of the UK could lead to reduced business investment, consumer spending, and trade in Northern Ireland. The DUP also highlights the potential negative profit implications for Northern Ireland businesses engaged in trade with the rest of the UK. Northern Ireland firms that export goods to elsewhere in the UK would be required under EU customs rules to make exit declarations, which likely would increase costs and administrative burdens. Brexit could have other economic ramifications for Northern Ireland, as well. Some experts argue that access to the EU single market was one reason for Northern Ireland's success in attracting foreign direct investment since the end of the Troubles, and they express concern that Brexit could deter future investment. Post-Brexit, Northern Ireland will lose EU regional funding (roughly $1.3 billion between 2014 and 2020) and agricultural aid (direct EU farm subsidies to Northern Ireland are nearly $375 million annually). UK officials maintain that the government is determined to safeguard Northern Ireland's interests and "make a success of Brexit" for Northern Ireland. They insist that Brexit offers new economic opportunities for Northern Ireland outside the EU. Supporters of the renegotiated withdrawal agreement argue that it will help improve Northern Ireland's economic prospects. Northern Ireland will remain part of the UK customs union and thus will be able to participate in future UK trade deals, but it also will retain privileged access to the EU single market, which may make it a more attractive destination for foreign direct investment. <5.3. Constitutional Status and Border Poll Prospects> Brexit has revived questions about Northern Ireland's constitutional status. Sinn Fein argues that "Brexit changes everything" and could generate greater support for a united Ireland. Since the 2016 Brexit referendum, Sinn Fein has repeatedly called for a border poll (a referendum on whether Northern Ireland should remain part of the UK or join the Republic of Ireland) in the hopes of realizing its long-term goal of Irish unification. As noted previously, the Good Friday Agreement provides for the possibility of a border poll in Northern Ireland, in line with the consent principle. Any decision to hold a border poll in Northern Ireland on its constitutional status rests with the UK Secretary of State for Northern Ireland. In accordance with the Good Friday Agreement, the UK Secretary of State for Northern Ireland must call a border poll if it "appears likely" that "a majority of those voting would express a wish that Northern Ireland should cease to be part of the United Kingdom and form part of a united Ireland." At present, experts believe the conditions required to hold a border poll in Northern Ireland do not exist. Most opinion polls indicate that a majority of people in Northern Ireland continue to support the region's position as part of the UK. At the same time, some surveys suggest that views on Northern Ireland's status may be shifting and that a "damaging Brexit" in particular could increase support for a united Ireland. A September 2019 survey found that 46% of those polled in Northern Ireland favored unification with Ireland, versus 45% who preferred remaining part of the UK. Analysts note that Northern Ireland's changing demographics (in which the Catholic, largely Irish-identifying population is growing while the Protestant, British-identifying population is declining) combined with the post-Brexit arrangements for Northern Ireland that could lead to enhanced economic ties with the Republic of Ireland could boost support for a united Ireland in the long term. Irish unification also would be subject to Ireland's consent and approval. Some question the current extent of public and political support in the Republic of Ireland for unification, given potential economic costs and concerns that unification could spark renewed loyalist violence in Northern Ireland. According to Irish Prime Minister Leo Varadkar, a border poll in Northern Ireland in the near future would be divisive amid an already contentious Brexit process. In Ireland's February 8, 2020, parliamentary election, however, Sinn Fein (which also has a political presence in the Republic of Ireland) secured the largest percentage of the vote for the first time in Ireland's history, surpassing both Varadkar's Fine Gael party and the main opposition party, Fianna Fail. Although Sinn Fein's election platform included a pledge to begin examining and preparing for Irish unification, the party appeared to benefit mostly from the Irish electorate's desire for domestic political change and concerns about housing, health care, and economic policy, rather than from its stance on a united Ireland. Nevertheless, some commentators suggest that Sinn Fein's electoral success could add momentum to calls for a united Ireland. <6. U.S. Policy and Congressional Interests> <6.1. Support for the Peace Process> Successive U.S. Administrations have viewed the Good Friday Agreement as the best framework for a lasting peace in Northern Ireland. The Clinton Administration was instrumental in helping the parties forge the agreement, and the George W. Bush Administration strongly backed its full implementation. U.S. officials welcomed the end to the IRA's armed campaign in 2005 and the restoration of the devolved government in 2007. The Obama Administration remained engaged in the peace process. In October 2009, then-U.S. Secretary of State Hillary Clinton visited Northern Ireland, addressed the Assembly, and urged Northern Ireland's leaders to reach an agreement on devolving policing and justice powers. In February 2010, President Obama welcomed the resulting Hillsborough Agreement. In June 2013, President Obama visited Northern Ireland and noted that the United States would always "stand by" Northern Ireland. The Obama Administration welcomed the conclusion of both the December 2014 Stormont House Agreement and the November 2015 Fresh Start Agreement. Like its predecessors, the Trump Administration has offered support and encouragement to Northern Ireland. In March 2017, Vice President Mike Pence noted that, "the advance of peace and prosperity in Northern Ireland is one of the great success stories of the past 20 years." In November 2017, a U.S. State Department spokesperson expressed regret at the impasse in discussions to restore Northern Ireland's power-sharing institutions and asserted that the United States remained "ready to support efforts that ensure full implementation of the Good Friday Agreement and subsequent follow-on cross-party agreements." On March 6, 2020, President Trump appointed his former acting Chief of Staff Mick Mulvaney as U.S. special envoy to Northern Ireland; leaders in Northern Ireland and Ireland welcomed Mulvaney's appointment. Many Members of Congress have actively supported the Northern Ireland peace process for decades. Over the last several years, congressional hearings have focused on the implementation of the Good Friday Agreement, policing reforms, and human rights in Northern Ireland. Some Members have been interested in the status of public inquiries into several past murders in Northern Ireland in which collusion between the security forces and paramilitary groups is suspected including the 1989 slaying of Belfast attorney Patrick Finucane and the 1997 killing of Raymond McCord, Jr. Some Members also urged the Trump Administration to name a special envoy for Northern Ireland to signal continued U.S. commitment to the region. On the economic front, the United States is a key trading partner and an important source of investment for Northern Ireland. According to statistics from the Northern Ireland Executive, in 2017, exports to the United States accounted for 17% of total Northern Ireland exports, and imports from the United States accounted for 10% of total Northern Ireland imports. Foreign direct investment by U.S.-based companies totaled 1.8 billion (about $2.5 billion) between 2008 and 2018. Between 2009 and 2011, a special U.S. economic envoy to Northern Ireland worked to further economic ties between the United States and Northern Ireland and to underpin the peace process by promoting economic prosperity. <6.2. Views on Brexit> Since 2016, President Trump has repeatedly expressed his support for Brexit. The Trump Administration also backs a future U.S.-UK free trade agreement post-Brexit. In a September 2019 visit to Ireland, Vice President Pence reiterated the Administration's support for Brexit but asserted that the United States recognizes the "unique challenges" posed by the Irish border and "will continue to encourage the United Kingdom and Ireland to ensure that any Brexit respects the Good Friday Agreement." At the same time, Vice President Pence urged Ireland and the EU to reach a Brexit withdrawal agreement that "respects the United Kingdom's sovereignty," which many Irish commentators viewed as indicating a limited understanding of Brexit's potential implications for both Northern Ireland and Ireland. Some Members of Congress have demonstrated an interest in how Brexit might affect Northern Ireland and expressed continued support for the Good Friday Agreement. Although many Members back a future U.S.-UK free trade agreement post-Brexit, some Members also have tied their support to protecting the Northern Ireland peace process. In April 2019, House Speaker Nancy Pelosi said there would be "no chance whatsoever" for a U.S.-UK trade agreement if Brexit were to weaken the Northern Ireland peace process. On October 22, 2019, the House Foreign Affairs Committee's Subcommittee on Europe, Eurasia, Energy, and the Environment held a hearing titled "Protecting the Good Friday Agreement from Brexit." On December 3, 2020, the House passed H.Res. 585 , reaffirming support for the Good Friday Agreement in light of Brexit and asserting that any future U.S.-UK trade agreement and other U.S.-UK bilateral agreements must include conditions to uphold the peace accord. Other Members of Congress have not directly tied their support for a bilateral U.S.-UK free trade agreement to protecting Northern Ireland post-Brexit. <6.3. International Fund for Ireland> The United States has provided development aid to Northern Ireland primarily through the International Fund for Ireland (IFI), which was created in 1986. The UK and Irish governments established the IFI based on objectives in the Anglo-Irish Agreement of 1985, but the IFI is an independent entity. It supports economic regeneration and social development projects in areas most affected by the conflict in Northern Ireland and in the border areas of the Republic of Ireland; in doing so, the IFI has sought to foster dialogue and reconciliation. The United States has contributed more than $540 million since the IFI's establishment, roughly half of total IFI funding. The EU, Canada, Australia, and New Zealand have provided funding for the IFI as well. In the 1980s and 1990s, U.S. appropriations for the IFI averaged around $23 million annually; in the 2000s, U.S. appropriations averaged $18 million each year. According to the IFI, the vast majority of projects it has supported with seed funding have been located in disadvantaged areas that have suffered from high unemployment, a lack of facilities, and little private sector investment. In its first two decades, IFI projects in Northern Ireland and the southern border counties focused on economic and business development and sectors such as tourism, agriculture, and technology. In 2006, the IFI announced it would begin shifting its focus toward projects aimed at promoting community reconciliation and overcoming past divisions. Successive U.S. Administrations and many Members of Congress have backed the IFI as a means to promote economic development and encourage divided communities to work together. Support for paramilitary and dissident groups in Northern Ireland traditionally has been strongest in communities with high levels of unemployment and economic deprivation. Thus, many observers have long viewed the creation of jobs and economic opportunity as a key part of resolving the conflict in Northern Ireland and have supported the IFI as part of the peace process. Many U.S. officials and Members of Congress also encouraged the IFI to place greater focus on reconciliation activities and were pleased with the IFI's decision to do so in 2006. At the same time, some critics have questioned the IFI's effectiveness, viewing certain IFI projects as largely wasteful and unlikely to bridge community divides in any significant way. In FY2011, amid the U.S. economic and budget crisis, some Members of Congress began to call for an end to U.S. funding for the IFI as part of a raft of budget-cutting measures. Some Members asserted that U.S. contributions to the IFI were no longer necessary given Ireland and Northern Ireland's improved political and economic situation (relative to what it was in the 1980s). In the final FY2011 continuing budget resolution ( P.L. 112-10 ), Congress did not specify an allocation for the IFI (and has not done so in successive fiscal years). Since FY2011, however, the Obama and Trump Administrations have continued to allocate funds from Economic Support Fund (ESF) resources to the IFI in the form of a grant for specific IFI activities to support peace and reconciliation programs. The Obama Administration provided $2.5 million per year between FY2011 and FY2014 and $750,000 per year in FY2015 and FY2016 from ESF funding. The Trump Administration provided $750,000 per year from ESF funding to the IFI in FY2017 and FY2018.

Between 1969 and 1999, almost 3,500 people died as a result of political violence in Northern Ireland, which is one of four component "nations" of the United Kingdom (UK). The conflict, often referred to as "the Troubles," has its origins in the 1921 division of Ireland and has reflected a struggle between different national, cultural, and religious identities. Protestants in Northern Ireland (48% of the population) largely define themselves as British and support remaining part of the UK ( unionists ). Most Catholics in Northern Ireland (45% of the population) consider themselves Irish, and many desire a united Ireland ( nationalists ). Successive U.S. Administrations and many Members of Congress have actively supported the Northern Ireland peace process. For decades, the United States has provided development aid through the International Fund for Ireland (IFI). In recent years, congressional hearings have focused on the peace process, police reforms, human rights, and addressing Northern Ireland's legacy of violence (often termed dealing with the past ). Some Members also are concerned about how the UK's decision to withdraw from the European Union (EU)—known as Brexit —might affect Northern Ireland. The Peace Agreement: Progress to Date and Ongoing Challenges In 1998, the UK and Irish governments and key Northern Ireland political parties reached a negotiated political settlement. The resulting Good Friday Agreement, or Belfast Agreement, recognized that a change in Northern Ireland's constitutional status as part of the UK can come about only with the consent of a majority of the people in Northern Ireland (as well as with the consent of a majority in Ireland). The agreement called for devolved government—the transfer of specified powers from London to Belfast—with a Northern Ireland Assembly and Executive in which unionist and nationalist parties would share power. It also contained provisions on decommissioning (disarmament) of paramilitary weapons, policing, human rights, UK security normalization (demilitarization), and the status of prisoners. Despite a much-improved security situation since 1998, full implementation of the peace agreement has been difficult. For years, decommissioning and police reforms were key sticking points that generated instability in the devolved government. In 2007, the pro-British Democratic Unionist Party (DUP) and Sinn Fein, the nationalist political party traditionally associated with the Irish Republican Army (IRA), reached a landmark power-sharing deal. Tensions and distrust persisted, however, between the unionist and nationalist communities and their respective political parties. Ten years later, the devolved government led by the DUP and Sinn Fein collapsed, prompting snap Assembly elections in March 2017 amid several contentious regional issues and unease in Northern Ireland about Brexit. Negotiations to reestablish the devolved government repeatedly stalled. The DUP and Sinn Fein agreed to form a new devolved government in January 2020, but the long impasse renewed concerns about the stability of the power-sharing institutions and the fragility of community relations. Northern Ireland also faces a number of broad challenges in its search for peace and reconciliation, including reducing sectarian divisions, dealing with the past, addressing lingering concerns about paramilitary and dissident activity, and promoting further economic development. Brexit and Northern Ireland Brexit occurred on January 31, 2020, and may have significant political and economic repercussions for Northern Ireland. In the UK's 2016 public referendum on EU membership, voters in Northern Ireland favored remaining in the EU, 56% to 44% (the UK overall voted in favor of leaving, 52% to 48%). The future of the border between Northern Ireland and Ireland was a central issue in the UK's withdrawal negotiations with the EU. Since 1998, as security checkpoints were dismantled in accordance with the peace agreement and because both the UK and Ireland belonged to the EU single market and customs union, the circuitous 300-mile land border between Northern Ireland and Ireland effectively disappeared. Many on both sides of the sectarian divide viewed this open border as intrinsic to peace and crucial to fostering a dynamic cross-border economy. Preventing a hard border (with customs checks and physical infrastructure) post-Brexit was thus a key imperative and a major stumbling block in the UK-EU withdrawal negotiations. Although concerns about a hard border developing have receded in light of the solution found in the UK-EU withdrawal agreement, Brexit has added to divisions within Northern Ireland and revived questions about the region's constitutional status. Sinn Fein, for example, has called for a border poll , or referendum, on whether Northern Ireland should remain part of the UK. Also see CRS Report R45944, Brexit: Status and Outlook , coordinated by Derek E. Mix.

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Safe and affordable financial services are an important tool for most American households to avoid financial hardship, build assets, and achieve financial security over the course of their lives. In the United States, robust consumer credit markets allow most consumers to access financial services and credit products to meet their needs in traditional financial markets. The vast majority of consumers have, for example, a bank account, a credit score, a credit card, and other types of credit products. However, some consumers who tend to be younger adults, low- and moderate-income (LMI) consumers or possess imperfect credit repayment history can find gaining access to these prod ucts and services difficult. For those excluded, consumers may find managing their financial lives expensive and difficult. This report provides an overview on financial inclusion. It then focuses on three areas: (1) access to bank and other payment accounts; (2) inclusion in the credit reporting system; and (3) access to affordable short-term credit. These areas are generally considered foundational for households to successfully manage their financial affairs and graduate to wealth building activities in the future. Wealth building activities such as access to homeownership, education, and other financial investments are outside the scope of this report. <1. Financial Inclusion Overview> Financial inclusion refers to the idea that individuals "have access to useful and affordable financial products and services that meet their needs transactions, payments, savings, credit, and insurance delivered in a responsible and sustainable way." Access to financial products allows households to better manage their financial lives, such as storing funds safely, making payments in exchange for goods and services, and coping with unforeseen financial emergencies, such as medical expenses or car or home repairs. In the United States, most households rely on financial products found at traditional depository intuitions commercial banks or credit unions. Some households also use financial products and services outside of the banking system, either by choice or due to a lack of access to traditional institutions. While products outside the banking sector may better suit some households' needs, these products might also lack consumer protections or other benefits that traditional financial institutions tend to provide. Different barriers affect different populations. For some younger consumers, a lack of a co-signer might make it more difficult to build a credit report history or a lack of knowledge or familiarity with financial institutions may be a barrier to obtaining a bank account. For consumers living paycheck to paycheck, a bad credit history or a lack of money could serve as barriers to obtaining affordable credit or a bank account. For immigrants, the absence of a credit history in the United States or language differences could be critical access barriers. For consumers who do not have familiarity or access to the internet or mobile phones, a group in which older Americans may be overrepresented, technology can be a barrier to accessing financial products and services. <1.1. Financial Product Access and Financial Well-Being> Some consumers face barriers that make it more difficult for them to access traditional bank products, such as a bank account, enter the credit system, and gain access to financial product and service offerings in traditional financial markets. These barriers can be significant because they may disadvantage these consumers from effectively managing their financial lives and achieving financial well-being, which the Bureau of Consumer Financial Protection (CFPB) defines as 1. having control over day-to-day, month-to-month finances; 2. having the ability to absorb a financial shock; 3. being on track to meet financial goals; and 4. being able to make choices that allow a person to enjoy life. Research has examined the factors involved in achieving financial well-being. For example, a CFPB study found that after controlling for certain economic factors money management is strongly associated with financial well-being. In addition, the CFPB has found that not having a bank account and nonbank transaction product use (e.g., check cashing or money orders) is correlated with lower financial well-being. Although nonbank short-term credit is also correlated with lower financial well-being, the effect is not as large as the financial products previously mentioned. Lastly, holding liquid savings is highly correlated with the CFPB's financial well-being scale. Academic research conducted abroad also suggests the importance of access to financial products to improve financial well-being. For example, some studies suggest that access to bank accounts can lead to more savings. In particular, debit accounts seem to have strong effects, by helping consumers save more by reducing money spent on financial services and monitoring costs. Moreover, access to faster and more secure payment services has also been shown to provide significant benefits to consumers, including helping lower-income consumers better handle financial shocks. Likewise, inclusion in credit bureaus also have positive effects on consumers by reducing market information asymmetry and allowing some consumers to obtain better terms of credit. In contrast, the evidence on the effect of small-dollar short-term credit on individuals' financial well-being is mixed. Many Americans have low financial well-being and live paycheck to paycheck. National surveys suggest that about 40% of Americans find "covering expenses and bills in a typical month is somewhat or very difficult," and they could not pay all of their bills on time in the past year. In addition, more than 40% of households did not set aside any money in the past year for emergency expenses. Therefore, a sizable portion of the adult population report they would have difficulty meeting an unexpected expense. If faced with a $400 unexpected expense, 39% of adults say they would borrow, sell something, or not be able to cover the expense. These financial struggles lead to real impacts on the health and wellness of these families; those with low financial well-being are more likely to face material hardship. <2. Access to Checking and Other Banking Accounts> The banking sector provides valuable financial services for households that allow them to save, make payments, and access credit. Most U.S. consumers choose to open a bank account because it is a safe and secure way to store money. For example, the Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per depositor against an institution's failure. In addition, consumers gain access to payment services through checking accounts, such as bill pay and paper checks. Frequently, a checking account includes access to a debit card, which increases a consumer's ability to make payment transactions through the account. For most consumers, a checking or savings account is less expensive than alternative ways to access these types of services. Some studies suggest that affordable access to payment transactions may be particularly important for consumers to manage their financial lives. For most consumers, opening a bank account is relatively easy. Consumers undergo an account verification process and sometimes provide a small initial opening deposit of money into the account. Many consumers open their first depository account when they get their first job or start post-secondary education. Checking and savings accounts are often the first relationship that a consumer has with a financial institution, which can later progress into other types of financial products and services, such as loan products or financial investments. Safe and affordable financial services, especially for families with unpredictable income or expenses, have the potential to help households avoid financial hardship. However, many U.S. households often those with low incomes, lack of credit histories, or credit histories marked with missed debt payments do not use banking services. <2.1. The Unbanked and Underbanked> According to the FDIC's 2017 National Survey of Unbanked and Underbanked Households, 6.5% of households in the United States were unbanked , meaning that these households do not have a bank account (see Figure 1 ). In addition, another 18.7% of households were underbanked , meaning that although these households had a bank account, they still obtained one or more of certain financial products and services outside of the banking system in the past year. These specified nonbank financial products, called alternative financial services , include check cashing, money orders, payday loans, auto title loans, pawn shop loans, refund anticipation loans, and rent-to-own services. Unbanked consumers tend to be lower-income, younger, have less formal education, of a racial or ethnic minority, disabled, and have incomes that varied substantially from month to month compared with the general U.S. population. Unbanked persons may be electing not to open a bank account due to costs, a lack of trust, or other barriers. According to the survey, these households report that they do not have a bank account because they do not have enough money, do not trust banks, and to avoid high and unpredictable bank fees. In addition, for immigrants, the account verification process may be more challenging to complete, and the consumer's country of origin may influence their trust of banks. In the past decade or so, the availability of free or low-cost checking accounts has reportedly diminished, and fees associated with checking accounts have grown. Some bank accounts require minimum account balances to avoid certain maintenance or service fees. The most common fees that checking account consumers incur are overdraft and nonsufficient fund fees. Overdraft services can help consumers pay bills on time, but fees can be costly particularly if used repeatedly. For consumers living paycheck to paycheck, maintaining bank account minimums and avoiding account overdrafts might be difficult, leading to unaffordable account fees. In addition, unpaid fees can lead to involuntary account closures, making it more difficult to obtain a bank account in the future. <2.2. Checking and Savings Accounts: Banking Economics> Depository institutions incur expenses to provide checking and savings accounts to consumers. In addition to specific account maintenance costs, physical banking branches incur costs to hire staff and maintain retail locations. To recoup these costs, depository institutions make money from interest rate spreads (i.e., loaning out funds in checking and savings accounts) and account fees. Historically, some banks were willing to lose money on these types of accounts to begin a relationship with a client and later get more profitable business from the client, such as a credit card or mortgage loan. In fact, checking and savings accounts data might allow a bank to better underwrite and price loans to a consumer. In this way, banks with a checking account relationship with a consumer might be able to provide more attractive loan terms than other banks without this relationship. Given these dynamics, lower-balance or less credit-worthy consumers may generally be less profitable for banks to serve. Consumers with low checking or savings account balances provide banks minimal funds to lend out and make a profit with. Moreover, less credit-worthy consumers may be less likely to develop into a profitable relationship for the banks if the consumer is not in a position to obtain loans from the bank in the near future. Therefore, bank fees may be seen as the best way for banks to recoup their account costs for these consumers. Because of the way bank fees are structured, consumers with lower balances using checking and savings accounts tend to incur more fees than consumers with higher balances. Bank access may also have a geographic component, as some observers are concerned that banking des erts areas without a bank branch nearby exist in certain communities. Branch offices are still important to many consumers, even as mobile and online banking has become more popular. For example, most banked households visit a bank branch regularly, and one-third of banked households visit 10 or more times in a year. However, in the past 10 years, the number of bank branch offices has declined in the United States due to many causes, such as bank consolidations and the rise of online banking. Some argue that this has left some communities without any nearby bank branches, making it more difficult to access quality banking services, particularly in lower-income, non-urban areas. Yet others argue that banking deserts are not a major issue in the United States because they have been stable over time, and minority areas are less likely to be affected than other areas of the country. <2.3. Banking Account Alternatives> Unbanked households rely on nonbank alternative financial products and services. Both unbanked and underbanked households are more likely to use transaction alternative financial products than credit alternative financial products. Transaction alternative financial products include check cashing, money orders, and other nonbank transaction products. In a typical month, unbanked consumers are more likely to use cash, nonbank money orders, and prepaid cards to pay bills and receive income, in contrast to banked consumers, who are most likely to use direct deposit, electronic bank payments, personal checks, debit cards, and credit cards. Alternative financial products can sometimes be less expensive, faster, and more convenient for some consumers. For example, although check cashing, money orders, and other nonbank transaction products might charge high fees, some consumers may incur higher or less predictable fees with a checking account. In addition, such alternative financial products might allow consumers to access cash more quickly, which might be valuable for consumers with tight budgets and little liquid savings or credit to manage financial shocks or other expenses. Lastly, nonbank stores often are open longer hours including evenings and weekends than banks, which might be more convenient for working households. Moreover, these nonbank stores might also be more likely to cater to a local ethnic or racial community, for example, by hiring staff who speak a native language and live in the local community. Although consumers may find benefits in using alternative financial products substitutes, these products may not always have all of the benefits of bank accounts, such as FDIC insurance or other consumer protections. General-purpose prepaid cards are another popular alternative to a traditional checking account. Use of prepaid cards is more prevalent among unbanked households 26.9% of unbanked and 14.5% of underbanked households used a prepaid card in the past year. These cards can be obtained through a bank, at a retail store, or online, and they can be used in payment networks, such as Visa and MasterCard. General-purpose reloadable prepaid cards generally have features similar to debit and checking accounts, such as the ability to pay bills electronically, get cash at an ATM, make purchases at stores or online, and receive direct deposits. However, unlike checking accounts, prepaid card funds are not always federally insured against an institution's failure. Prepaid cards often have a monthly maintenance fee and other particular service fees, such as using an ATM or reloading cash. Some banks offer prepaid cards, yet unbanked consumers are much more likely to use a prepaid card from a store or website that is not a bank. Nonbank private-sector innovation could also provide more affordable financial products to unbanked and underbanked consumers. Whereas bank products may be expensive to provide to lower-income or less credit-worthy consumers, technology may be able to reduce the cost. For example, internet-based mobile wallets may provide access to payment services for unbanked consumers. Alternatives to a banking-based payment system have been proposed or pursued in other countries. For example, the M-pesa, a mobile payment system that does not use banks, has achieved a relatively high level of usage in parts of Africa. In addition, new mobile products aim to help consumers manage their money better and save by automating savings behavior. Yet, concerns continue to exist for internet-based products around data privacy and cybersecurity issues. Policymakers debate whether existing regulation can accommodate financial innovation or whether a new regulatory framework is needed. <2.4. Access to Emergency Savings and Savings Accounts> Some research suggests that emergency savings is crucial for a household's financial stability. The ability to meet unexpected expenses is particularly important, because within any given year, most households face an unexpected financial shock. For example, one study found that families with even a relatively small amount of non-retirement savings (e.g., $250-$750) are less likely in a financial shock to be evicted, miss a housing or utility payment, or receive means-tested public benefits. These findings are consistent throughout the income spectrum, not only for lower-income families. One barrier for building emergency savings may include not having a separate account dedicated to saving. For example, money in a transaction account intended for emergencies can be vulnerable to unintentional overspending. Although almost all banked households report having a checking account, roughly a quarter do not have a savings account. These households tend to be lower-income and living in rural areas and are more likely to be an ethnic or racial minority or working-age disabled compared with the U.S. population. Moreover, unbanked households are much less likely to report saving for unexpected expenses and emergencies (17.4%) than banked households (61.6%). Whereas most households save using a checking or savings account, most unbanked households save at home or with family or friends. In addition, saving with a prepaid card is much more common for unbanked households. Some recent research suggests that saving, not only through a savings account, but also through savings wallets on prepaid cards, can help consumers avoid high-cost credit and alternative financial services. <2.5. Possible Policy Responses> In regard to accessing financial products and services that help consumers manage their finances and achieve financial success, some research suggests that consumers may particularly benefit from (1) access to affordable electronic payment system services, for example, through a traditional bank account; and (2) a safe way to accumulate and hold emergency savings. The government, the private sector, and the nonprofit sector all may be in a position to help increase access to these types of financial products for the underserved. Some propose changes to bank regulation to try to increase access to bank accounts. For example, the Community Reinvestment Act (CRA) encourages banking institutions to meet the credit needs of the areas they serve, particularly in LMI neighborhoods. Banks receive "CRA credits" for qualifying activities, such as mortgage, consumer, and business loans. Currently, providing bank accounts to LMI consumers or neighborhoods is not included in the calculation. Bank regulators are considering updating the CRA, and they recently received public comments on reforming implementation of the law. The Federal Reserve indicated that it is considering, due to public feedback, expanding the list of products and services that are eligible for CRA credits, including "financial services and products aimed at helping consumers get on a healthier financial path," such as affordable checking and savings accounts for LMI consumers. Bank regulators may need to balance expanding CRA credit for these products with the CRA's statutory purpose, which was focused on encouraging bank lending activities to meet local communities' credit needs. Payment system improvements, either by the government or the private sector, may also have the potential to improve welfare for unbanked or underbanked consumers. Many of these consumers choose alternative financial payment products such as check cashers to access their funds quickly. These consumers might not require such alternative services if bank payment systems operated faster than they normally do. Both the private sector and the government are currently working on initiatives to make the bank payment system faster. For example, the Federal Reserve plans to introduce a real time payment system called FedNow in 2023 or 2024, which would allow consumers access to funds quickly after initiating the transfer. Faster payments may help some consumers avoid overdraft fees on checking accounts. However, some payments that households make would also be cleared faster debiting their accounts more quickly which could be disadvantageous to some of these households compared with the current system. Other policy proposals include the government directly providing accounts to retail customers. For example, offering banking services through postal offices or providing banking services online to the public through the Federal Reserve, which already provides accounts to banks. Opposition to these proposals often centers on the appropriate role for the government. Some argue that the government should not be competing with the private sector to provide these services to consumers, especially in the competitive banking market. Moreover, government bank accounts may not attract consumer demand. For example, the Treasury Department's myRA account program which provided workers without a work retirement account a vehicle for retirement savings closed after about three years, in part due to lack of participation. Financial education programs or outreach initiatives coordinated by the government, nonprofit organizations, and financial institutions could support financial inclusion as well. Given the importance of emergency savings, in 2019, CFPB Director Kraninger announced that the CFPB wants to focus on increasing consumer savings, through financial education initiatives and joint research projects with the financial industry. In addition, the "Bank On" movement a coalition between city, state, and federal government agencies, community organizations, financial institutions, and others aims to encourage unbanked consumers to open and use bank accounts. Bank accounts associated with the movement must have no overdraft fees, charge a minimal amount of monthly fees, have deposits that are federally insured, and offer traditional banking services, such as direct deposit, debit or prepaid cards, and online banking. Nearly 3 million accounts have been opened through the movement, generally to new bank customers, and consumers tend to actively use these accounts. This topic may continue to be the subject of congressional interest and legislative proposals. In the 116 th Congress, the House Financial Services Committee marked up and ordered reported H.R. 4067 , directing the CFPB to report to Congress on unbanked, underbanked, and underserved consumers. In addition, other legislation introduced proposes establishing an office within the CFPB to work on unbanked and underbanked issues ( H.R. 1285 ) and proposes developing short-term non-retirement savings accounts for consumers with their employers automatically deducting from their paychecks ( S. 1019 , H.R. 2120 , S. 1053 ) or using their tax refund to save ( H.R. 2112 , S. 1018 ). <3. Access to the Credit Reporting System> The credit reporting industry collects information on consumers and uses it to estimate the probability of future financial behaviors, such as successfully repaying a loan or defaulting on it. The information collected has largely related to consumers' past financial performance and repayment history on traditional credit products. Consumer files generally do not contain information on consumer income or assets or on alternative financial services. Credit bureaus collect and store payment data reported to them by financial firms, and they or other credit scoring companies use this data to estimate individual consumers' creditworthiness, generally expressed as a numerical "score." The three largest credit bureaus Equifax, Experian, and TransUnion provide credit reports nationwide that include repayment histories. Credit reports generally may not include information on items such as race or ethnicity, religious or political preference, or medical history. This industry significantly affects consumer access to financial products, because lenders and other financial firms use consumer data when deciding whether to provide credit or other products to an individual and under what terms. Consumers who find it challenging to enter the traditional credit reporting system face challenges accessing many consumer credit products, such as mortgages or credit cards, because creditors are unable to assess the consumer's credit worthiness. This section examines some consumer credit reporting issues and related developments and policy issues. <3.1. Credit Invisibles and Unscorables> According to the CFPB, credit scores cannot be generated for approximately 20% of the U.S. population due to their limited credit histories. The CFPB categorizes consumers with limited credit histories into several groups. One category of consumers, referred to as credit invisibles , have no credit record at the three nationwide credit reporting agencies and, thus, do not exist for the purposes of credit reporting. Credit invisibles represents 11% of the U.S. adult population, or 26 million consumers (see Figure 2 ). Another category of consumers have a credit record and thus exist, but they cannot be scored or are considered un scorable . Unscorable consumers either have insufficient (short) histories or stale (outdated) histories. The insufficient and stale unscored groups, each containing more than 9 million individuals, collectively represent 8.3% of the U.S. adult population, or approximately 19 million consumers. Limited credit history is correlated with age, income, race, and ethnicity. Many consumers that are credit invisible or unscorable are young. For example, 40% of credit invisibles are under 25 years old. Moreover, consumers who live in lower-income neighborhoods or are black or Hispanic are also disproportionately credit invisible or unscorable compared with the U.S. population. <3.2. Barriers to Entering the Credit System> Most young adults transition into the credit reporting system in their early twenties 80% of consumers transition out of credit invisibility before age 25 and 90% before age 30. For young consumers, the most common ways to become credit visible is through credit cards, student loans, and piggybacking (i.e., becoming a joint account holder or authorized user on another person's account, such as a parent's account). Young adults in LMI neighborhoods tend to make the transition to credit visibility at older ages than young adults in higher-income neighborhoods. In urban areas, consumers over 25 years old from LMI neighborhoods have higher rates of credit invisibility than those in middle and upper income areas. In addition, the highest rates of credit invisibility for consumers over 25 years old are in rural areas, and these rates do not vary much based on neighborhood income. Credit invisible consumers in LMI and rural areas are less likely to enter the credit bureaus through a credit card than credit invisible consumers in other parts of the country, possibly because piggybacking is notably less common in LMI communities. Moreover, using student loans to become credit visible is also less common in LMI areas. Recent immigrants also have trouble entering the credit system when they come to the United States. Existing credit history from other countries does not transfer to the U.S. system. In addition, immigrants' alternative forms of identification, such as the Individual Taxpayer Identification Numbers (ITINs) might not be accepted by some financial services providers. <3.3. Expanding Credit Visibility Policy Issues> Consumers without a credit record have trouble accessing credit, but without access to credit, a consumer cannot establish a credit record. In general, there are two ways that policymakers tend to approach this issue, either by (1) expanding uptake of financial products reported in the current system or (2) expanding the types of information in the credit reporting system using alternative data. <3.3.1. Expanding Use of Currently Reported Products> The first approach often focuses on financial education and entry-level products. Financial education and partnerships between financial services providers and nonprofit groups may help consumers learn how credit reporting works, develop a credit history, and become scorable. For example, financial wellness programs at workplaces are a growing way to deliver these types of programs. Yet financial education, coaching, and counseling can be expensive and difficult to provide to consumers. On the financial product side, tensions exist between expanding credit access to build a credit history and upholding consumer protection. For example, credit cards are the most common first product reported to credit bureaus, yet consumer protection regulations, such as the CARD Act of 2009, reduce young consumers' access to credit cards. Stakeholders believe that large financial services providers should develop entry-level credit products that are profitable and sustainable, without sacrificing consumer protections. For example, secured credit cards which are "secured" by a consumer deposit, so the issuer faces little risk of default can help establish a credit history, but currently, are less likely to move consumers to credit visibility than unsecured (regular) credit cards. Some consumer advocates believe that the security deposit is an obstacle for lower-income consumers. This issue epitomizes the difficulty in developing credit-building financial products for unscorable consumers that are safe, accessible, and prudent for the financial institution. <3.3.2. Using Alternative Data in Credit Reports> Alternative data generally refers to data that the national consumer reporting agencies do not traditionally use (e.g., information other than traditional financial institution credit repayments) to calculate a credit score. It can include both financial and nonfinancial data. In a 2017 Request for Information, the CFPB included examples of alternative data, such as payments on telecommunications; rent or utilities; checking account transaction information; educational or occupational attainment; how consumers shop, browse, or use devices; and social media information. Alternative data could potentially be used to expand access to credit for current credit invisible or unscorable consumers, but it also could create data security risks or consumer protection violations. Alternative data used in credit scoring could increase accuracy, visibility, and scorability in credit reporting by including additional information beyond that which is traditionally used. The ability to calculate scores for the credit invisible or unscoreable consumer groups could allow lenders using these scores to better determine the creditworthiness of people in these groups. Arguably, this would increase access to and lower the cost of credit for some credit invisible or unscorable individuals, as lenders using alternative data are able to find new creditworthy consumers. However, in cases where the alternative data includes negative or derogatory information, it has the potential to harm some consumers' existing credit scores. Some prospective borrowers may be unaware that alternative data has been used in credit decisions, raising privacy and consumer protection concerns. Moreover, alternative data may pose fair lending risks if the data used are correlated with characteristics, such as race or ethnicity. Using alternative data for credit reporting raises regulatory compliance questions, which may be why adaption of alternative data in the credit reporting system is currently limited. The main statute regulating the credit reporting industry is the Fair Credit Reporting Act (FCRA), which establishes consumers' rights in relation to their credit reports, as well as permissible uses of credit reports. It also imposes certain responsibilities on those who collect, furnish, and use the information contained in consumers' credit reports. Alternative data providers outside of the traditional consumer credit industry may find FCRA data furnishing requirements burdensome. Some alternative data may have accuracy issues, and managing consumer disputes requires time and resources. These regulations may discourage some organizations from furnishing alternative data, even if the data could help some consumers become scorable or increase their credit scores. In an effort to address such concerns, many consumer data industry firms use alternative data only when consumers' opt-in. Using alternative data for credit reporting may continue to be the subject of congressional interest and legislative proposals. In the 116 th Congress, the House Financial Services Committee marked up and ordered reported H.R. 3629 , which among other things directs the CFPB to report to Congress on the impact of using nontraditional data on credit scoring. In addition, other legislation introduced allows types of alternative data to be furnished to the credit bureaus ( S. 1828 , H.R. 4231 ). <4. Access to Affordable Small-Dollar Credit> Short-term, small-dollar loans are consumer loans with relatively low initial principal amounts, often less than $1,000, with relatively short repayment periods, generally for a small number of weeks or months. Small-dollar loans can be offered in various forms and by both traditional financial institutions (e.g., banks) and alternative financial services providers (e.g., payday lenders). Many U.S. consumers do not have access to affordable small-dollar credit; often for these consumers, small-dollar credit is either expensive or difficult to access. The extent to which borrowers' financial situations would be harmed by using expensive credit or having limited access to credit is widely debated. Credit is an important way households pay for unexpected expenses and compensate for emergencies, such as a car or home repair, a medical expense, or a pay cut. Credit that can be paid back flexibly is particularly valued by consumers, especially those living paycheck to paycheck. Research suggests that access to this type of short-term credit can help households during short-term emergencies, yet unsustainable debt can harm households. Consumer groups often raise concerns regarding the affordability of small-dollar loans. Some borrowers may fall into debt traps , situations where borrowers repeatedly roll over existing loans into new loans and find it difficult to repay outstanding balances. Regulations aimed at reducing costs for borrowers may result in higher costs for lenders, possibly limiting or reducing credit availability for financially distressed individuals. This section focuses on expanding access to affordable small-dollar credit. Policymakers continue to be interested in ways to increase access to affordable credit because it is an important step in achieving financial stability. <4.1. Access to Traditional Bank Credit Products> About 80% of U.S. households have access to bank or traditional financial institution credit products, such as a general or store credit card, a mortgage, an auto loan, a student loan, or a bank personal loan. Credit cards are the most common form of credit, and they are what most households use for small-dollar credit needs. In general, banks require a credit score or other information about the consumer to prudently underwrite a loan. Scorable and credit-worthy consumers are in a position to gain access to credit from traditional sources. Financial institutions also sometimes provide consumer loans to existing customers, even if the borrower lacks a credit score (e.g., a consumer with a checking account who is a student or young worker). Some institutions make these loans to build long-term relationships. The remaining 20% of households do not have access to any traditional bank credit products, generally because they are either unscorable or have a blemished credit history. They are more likely to be unbanked, low-income, and minority households. Not having access to traditional bank credit is also correlated with age, formal education, disability status, and being a foreign-born noncitizen. According to an FDIC estimate, 12.9% of households had unmet demand for bank small-dollar credit. Of these households interested in bank credit, over three-quarters were current on bills in the last year, suggesting these households might be creditworthy. Policymakers often face a trade-off between consumer protection and access to credit when regulating the banking sector. Consumer protection laws at the state and federal levels often limit the profitability of small-dollar, short-term loans. For example, legislation such as the CARD Act of 2009 placed restrictions on subprime credit card lending. Small-dollar, short-term loans can be expensive for banks to provide. Although many of the underwriting and servicing costs are somewhat fixed regardless of size, smaller loans earn less total interest income, making them more likely to be unprofitable. Moreover, excluded consumers often are either unscorable or have a blemished credit history, making it difficult for banks to prudently underwrite loans for these consumers. In addition, banks face various regulatory restrictions on their permissible activities, in contrast to nonbanks. For these reasons, many banks choose not to offer credit products to some consumers. Nevertheless, banks have demonstrated interest in providing certain small-dollar financial services such as direct deposit advances, subprime credit cards, and overdraft protection services. In these cases, banks may face regulatory disincentives to providing these services, because bank regulators and legislators have sometimes demonstrated concerns about banks providing these products. For example, before 2013, some banks offered deposit advance products to consumers with bank accounts, which were short-term loans paid back automatically out of the borrower's next qualifying electronic deposit. Research findings from the CFPB suggest that although deposit advance was designed to be a short-term product, many consumers used it intensively. In the CFPB's sample, the median user was in debt for 31% of the year. Because of this sustained use and concerns about consumer default risk, in 2013, the Office of the Comptroller of the Currency (OCC), FDIC, and Federal Reserve issued supervisory guidance, advising banks to make sure deposit advance products complied with consumer protection and safety and soundness regulations. Many banks subsequently discontinued offering deposit advances. At the same time, regulators and policymakers have implemented policies aimed at increasing credit availability. Regulation implemented pursuant to the CRA (the 1977 law discussed in the "Access to Checking and Other Banking Accounts" section above) encourages banking institutions to meet the credit needs of consumers in the areas they serve, particularly in LMI neighborhoods that tend to include these excluded consumers. However, the CRA applies only to individuals with an established relationship with a bank, excluding unbanked consumers in an area. Likewise, many small-dollar loan products may not be considered qualifying activities. Moreover, the CRA does not encourage banks from engaging in unprofitable activities, so the incentives it creates might be limited. <4.2. Credit Alternative Financial Products> Credit alternative financial products include payday loans, pawn shop loans, auto title loans, and other types of loan products from nonbank providers. According to the FDIC, 6.9% of American households used a credit alternative financial service in 2017. Households that rely on credit alternative financial services are more likely to be lower-income, younger, and a racial or ethnic minority compared with the general U.S. population. Some argue that credit alternative financial products are expensive and are more likely than bank products to lead to debt traps. Bank small-dollar credit may be less expensive for prime borrowers with credit histories or relationships with banks. For other consumers, credit alternative financial products might better serve their needs due to fee structure or less stringent underwriting. Yet, some of these consumers may not have access to bank products and thus rely on credit alternative financial products for their credit needs. <4.3. New Technology and Market Developments> New technology may have the potential to help expand access to affordable credit to underserved consumers. For example, new nonbank digital or mobile-based financial products may lower the cost to provide small-dollar loans, making it easier to expand credit access to the underserved. Other nonbank products try to reduce default risk, for example, through employer-based lending models, to expand access to credit for more consumers. In addition, some lenders choose not to rely solely on the credit reporting system, and instead use alternative data directly to make credit decisions. New products that use alternative data on prospective borrowers either publicly or with the borrower's permission may be able to better price lenders' default risk, which could expand credit access or make credit cheaper for some consumers. Recent findings suggest that some types of alternative data such as education, employment, and cash-flow information might be promising ways to expand access to credit. For example, initial results from the Upstart Network's credit model, which uses alternative data to make credit and pricing decisions, shows that the model expands the number of consumers approved for credit, lowers the rate consumers pay for credit on average, and does not increase disparities based on race, ethnicity, gender, or age. Moreover, another recent study suggests that cash-flow data may more accurately predict creditworthiness, and its use would expand credit access to more borrowers, while meeting fair lending rules. One market segment is particularly illustrative of this practice. With the proliferation of internet access and data availability, some new lenders often referred to as marketplace lenders or fintech lenders rely on online platforms and frequently underwrite loans using alternative data. Although fintech lending remains a small part of the consumer lending market, it has grown rapidly in recent years. According to the Government Accountability Office (GAO), "in 2017, personal loans provided by these lenders totaled about $17.7 billion, up from about $2.5 billion in 2013." In addition, incumbent bank and nonbank lenders have adopted certain of these technologies and practices to varying degrees, and in some cases have partnered or contracted with fintech companies to build or run online, algorithmic platforms. Yet, despite the potential of new technology in small-dollar lending markets, these technologies also create risks for consumers. For example, new digital technology exposes consumers to data security risks. In addition, lenders' alternative data used to make credit decisions could result in disparate impacts or other consumer protection violations. <4.4. Possible Policy Responses> Policymakers and observers will likely continue to explore ways to make affordable and safe credit accessible to a greater portion of the population (in addition to including more people in the credit reporting system, as discussed in a previous section of the report). Changes to bank regulation could encourage more banking institutions to increase access to credit to underserved consumers. For example, some question the effectiveness of how the CRA is currently implemented, particularly with regard to short-term, small-dollar loans. As bank regulators consider updating the CRA, the Federal Reserve said that another area they are considering changing, due to public feedback, is expanding CRA-eligible products and services, such as payday loan alternatives and other small-dollar short-term loans for LMI consumers. Yet, as stated earlier in the report, bank regulators need to balance new CRA criteria with federal prudential regulations for safety and soundness , which requires banks to prudently undertake CRA-qualified activities and not engage in activities that are likely unprofitable to the bank. Reducing regulatory barriers may also allow more banking institutions to increase access to credit to underserved consumers. Financial regulators have taken recent steps to encourage banks to re-enter the small-dollar lending market. In October 2017, the OCC rescinded the 2013 guidance, and in May 2018 issued a new bulletin to encourage their banks to enter this market. In November 2018, the FDIC solicited advice about how to encourage more banks to offer small-dollar credit products. It is unclear whether these efforts will encourage banks to enter the small-dollar market with a product similar to deposit advance. In terms of using new technology and alternative data in consumer lending, questions exist about how to comply with fair lending and other consumer protection regulations. Currently, the federal financial regulators are monitoring these new technologies, but they have not provided detailed guidance. In February 2017, the CFPB requested information from the public about the use of alternative data and modeling techniques in the credit process. Information from this request led the CFPB to outline principles for consumer-authorized financial data sharing and aggregation in October 2017. These nine principles include, among other things, consumer access and usability, consumer control and informed consent, and data security and accuracy. According to the GAO, both fintech lenders and federally regulated banks that work with fintech lenders reported that additional regulatory clarification would be helpful. Therefore, the GAO recommended "that the CFPB and the federal banking regulators communicate in writing to fintech lenders and banks that partner with fintech lenders, respectively, on the appropriate use of alternative data in the underwriting process." Lastly, some advocate for the federal government providing small-dollar short-term loans to consumers directly if the private sector leaves some underserved, for example, through postal offices. Yet, providing credit to consumers is more risky than providing bank accounts or other banking services because some consumers will default on their loans. Opponents of the government directly providing consumer loans often centers on concerns about the federal government managing the credit risks it would undertake. These opponents generally argue that the private sector is in a more appropriate position to take these risks. <5. Conclusion> Access to bank and other payment accounts, the credit reporting system, and affordable short-term small-dollar credit are generally considered foundational for households to manage their financial affairs, improve their financial well-being, and graduate to wealth building activities in the future. In the United States, robust consumer credit markets allow most consumers to access financial services and credit products to meet their needs in traditional financial markets. Yet currently, consumers tend to rely on family or community connections to get their first bank account, establish a credit history, and gain access to affordable and safe credit. Given the importance of financial inclusion to financial well-being, and the challenges facing certain segments of the population, this topic is likely to continue to be the subject of congressional interest and legislative proposals. As markets develop and technology continues to change, new financial products have the potential to lower costs and expand access. Yet, as this report described, relevant laws and regulations may need to be reconsidered or updated in response to these technological developments. Moreover, policymakers may consider whether other policy changes could help expand consumers' affordable access to these financial products and services. Disagreements will continue to exist around whether government programs or regulation should be used to directly support financial inclusion or whether laws and regulations make it more difficult for the private sector to create new or existing products targeted at underserved consumers.

Access to basic financial products and services is generally considered foundational for households to manage their financial affairs, improve their financial well-being, and graduate to wealth building activities in the future. Financial inclusion in three domains can be particularly important for households: access to bank and other payment accounts; access to the credit reporting system; and access to affordable short-term small-dollar credit. In the United States, robust consumer credit markets allow most consumers to access financial services and credit products to meet their needs in traditional financial markets. For example, the vast majority of consumers have a bank account, a credit score, a credit card, and other types of credit products. Some consumers—who tend to be younger adults, low- and moderate-income (LMI) or possess an imperfect credit repayment history—can find gaining access to these banking and credit products and services difficult. Currently, consumers tend to rely on family or community connections to get their first bank account, establish a credit history, and gain access to affordable and safe credit. For those excluded, consumers may find managing their financial lives expensive and difficult. Different barriers affect different populations. For some younger consumers, a lack of a co-signer might make it more difficult to build a credit report history or a lack of knowledge or familiarity with financial institutions may be a barrier to obtaining a bank account. For consumers living paycheck to paycheck, a bad credit history or a lack of money could serve as barriers to obtaining affordable credit or a bank account. For immigrants, the absence of a credit history in the United States or language differences could be critical access barriers. For consumers who do not have familiarity or access to the internet or mobile phones, a group in which older Americans may be overrepresented, technology can be a barrier to accessing financial products and services. Financial institutions may find serving these consumers expensive or difficult, given their business model and safety and soundness regulation requirements. For example, lower-balance or less credit-worthy consumers may generally be less profitable for banks to serve. Likewise, some consumers may lack a credit history, making it difficult for lenders to determine their credit risk on a future loan. New technology has the potential to lower the cost of financial products and expand access to underserved consumers. For example, alternative (nontraditional) data may be able to better price default risk for lenders, which could expand credit access or make credit less expensive for some consumers. In addition, internet-based mobile wallets may provide affordable access to payment services for unbanked consumers. Yet, relevant consumer protection and data security laws and regulations may need to be reconsidered or updated in response to these technological developments. Policymakers debate whether existing regulation can accommodate financial innovation or whether a new regulatory framework is needed. Given the importance of financial inclusion to financial well-being, and the challenges facing certain segments of the population, this topic may continue to be the subject of congressional interest and legislative proposals. In the 116 th Congress, the House Financial Services Committee marked up and ordered reported H.R. 4067 , directing the Bureau of Consumer Financial Protection (CFPB) to report to Congress on these issues. In general, political debates around how to best achieve financial inclusion for underserved consumers relate to whether policy changes could help expand consumers' affordable access to these financial products and services. Disagreements exist about whether government programs or regulation should be used to directly support financial inclusion or whether laws and regulations make it more difficult for the private sector to create new or existing products targeted at serving underserved consumers.

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The Constitution grants Congress enormous power and freedom to engage in what we now refer to as budgeting. First, the Constitution grants Congress the power of the purse but does not prescribe or require any specific budgetary legislation or budgetary outcomes. Further, the Constitution allows the House and Senate to determine the rules of their internal proceedings but does not prescribe or establish any budgetary rules or restrictions. Congress has thus developed certain types of budgetary legislation as well as rules and practices that govern the content and consideration of that budgetary legislation. This collection of budgetary legislation, rules, and practices is referred to as the congressional budget process. Some have criticized the current congressional budget process and the budget outcomes that it has produced and have suggested that Congress adopt a more long-term budget focus. There is no consensus on what is meant by long term . For example, advocates of biennial budgeting (i.e., two-year budget resolutions, two-year appropriations legislation) sometimes characterize a two-year cycle as long-term budgeting. Some view the current 10-year budget window (described below) as being a form of long-term budgeting, while others consider long-term budgeting to span a lengthier period, such as 30 years or 50 years. There is also no general consensus on what is required by long-term budgeting. Would it simply require Congress to stay informed of the long-term projections for spending, revenue, deficits, and debt? Would it require Congress to affirmatively vote annually on policies that are projected to continue year to year? Would it require Congress to adopt a long-term budget plan or long-term fiscal targets (e.g., debt-to-GDP ratio limits)? And if targets were agreed upon, would it require automatic triggers to enforce fiscal targets (e.g., automatic spending cuts or automatic tax increases)? <1. Rationale for Long-Term Budgeting> Members of Congress, the Administration, and outside groups have expressed concern over projected levels of deficits and debt. The Congressional Budget Office (CBO) recently stated that federal deficits and debt held by the public, which are higher than average, are projected to increase sharply over the next 30 years. CBO states that deficits would rise from 4.2% of gross domestic product (GDP) in 2019 to 8.7% in 2049. According to CBO, federal debt held by the public is currently 78% of GDP, significantly higher than the 50-year average of 42%. Under current law, budget deficits would cause the debt to be 92% of GDP by 2029 and 144% of GDP by 2049, which "would be the highest in the nation's history by far." If policymakers want debt in 2049 to equal its current share of GDP (78%), the deficit would need to be reduced by $400 billion every year until then, CBO has projected. Some have argued that the current congressional budget process has created, or at least exacerbated, the projected long-term deficit and debt challenges. One recurring criticism is that the process does not encourage or require the consideration of long-term budgetary outcomes. Some argue that the lack of a formal requirement for Congress to consider long-term budget outcomes discourages long-term planning and encourages policy outcomes that are desirable in the short term at the expense of the long-term budget situation. Further, they argue that the current process does not even deter or prohibit Congress from enacting legislation that worsens the long-term deficit and debt projections. They argue that Congress needs to adopt a long-term budget focus. This report provides information on existing resources and congressional rules related to a long-term budget focus. <2. Challenges Associated with Long-Term Budgeting> There are potential challenges or obstacles associated with the adoption of a long-term budget focus within the current congressional budget process. Many think of the budget as being decided annually, but most policies that dictate how much will be spent and collected are fixed. Mandatory spending makes up 70% of total spending, is generally set by laws enacted years or decades ago, and remains in effect without the need for annual congressional approval. (Mandatory spending includes Medicare, Social Security, Medicaid, and interest on the debt.) Likewise, the collection of revenue as prescribed by the tax code continues without the need for legislative action. These mandatory spending and revenue policies change only if Congress and the President enact legislation making such changes. Under current law, these fixed spending and revenue policies are projected to result in increasing deficits and debt. Many argue that addressing rising deficit and debt in the long term would require policy changes. Another challenge associated with long-term budgeting is that any projected levels of spending and revenue are inherently uncertain. The further out spending and revenue are projected, the more uncertain they become. For example, within CBO's long-term budget projections (referenced above), the agency notes that such projections are "very uncertain." CBO concludes that while debt as a percentage of GDP in 2049 would likely be much greater than it is today if current laws remain unchanged, many factors (e.g., labor force participation, productivity in the economy, interest rates on federal debt, and health care costs per person) may alter actual outcomes. Other challenges associated with long-term budgeting include the difficulty of budgeting for unforeseen events (such as military engagements, natural disasters, and downturns in the economy); underlying projection assumptions; and the problem of setting fiscal policy or establishing long-term goals that a future Congress may not support. <3. Information Available to Congress on the Long-Term Budget Outlook> Information and data are publicly available to assist Congress in understanding the projected long-term budget situation. Projections are available that show spending, revenue, deficits, and debt in the long term, and in some instances, data evaluating the long-term outlook of specific programs are available. Selected examples of that information are described below. <3.1. General Budgetary Projections for the Upcoming 10-Year Period> CBO regularly publishes budgetary and economic projections, which are formally known as the annual Budget and Economic Outlook but are often referred to in Congress as the annual baseline. These baseline projections cover a 10-year period, which is often referred to as the budget window. These projections are based on the assumption that current laws regarding federal spending and revenues will generally remain in place. The Budget and Economic Outlook includes information on projected spending, revenue, deficits, debt, economic growth, and alternative fiscal scenarios. Congress typically uses this baseline as a benchmark against which it measures legislative proposals. The Office of Management and Budget (OMB) also publishes budgetary and economic projections. As required by law, OMB includes information in the President's annual budget request on projected spending and revenue. Such projections typically span 10 years. In addition to the information provided on the 10-year budgetary outlook under current law, CBO provides Congress with cost estimates of certain proposed legislation. The Congressional Budget Act of 1974 (the Budget Act) requires that the CBO provide an estimate for any bill reported from committee. These cost estimates provide information on how the legislation would affect spending, revenues, and the deficit over the next 10 years relative to the baseline. Such cost estimates assist Congress in adhering to the budget resolution and other points of order, described below. <3.2. General Budgetary Projections for the Upcoming Decades> Each year, CBO provides Congress with its Long-Term Budget Outlook , which shows the effects of demographic trends, economic developments, and rising health care costs on federal spending, revenues, and deficits over the next 30 years. The report also shows the long-term budgetary and economic effects of some alternative policies. In addition, in its cost estimates, CBO is required to note whether the underlying legislation would increase deficits in future decades. To assist the Senate in complying with its "long-term deficit rule" (described below), CBO notes whether the legislation would increase on-budget deficits in any of the four consecutive 10-year periods beginning with 2030. OMB provides long-term projections in the President's annual budget request in a section titled, "Long Term Budget Outlook." These projections recently spanned a 25-year period and include projections under different fiscal scenarios. The Government Accountability Office also provides information and interactive tools on projected spending, revenue, deficits, and debt over the next 70 years. <3.3. Spending Projections for Individual Programs> Long-term information and projections are available for some individual programs. For example, the Social Security and Medicare Trustees issue respective actuarial estimates of each trust fund for the next 75 years. These reports contain both short- and long-range projections of annual program expenditures and payroll tax receipts. There are also estimates of the actuarial deficits over the next 75 years that represent the shortfall between the program's projected expenditures and income. In addition, the CBO provides long-term projections on specific programs. For example, CBO publishes recurring reports on the long-term projections for Social Security, the long-term implications of the Future Years Defense Program, and 10-year costs of U.S. nuclear forces. <4. Current Congressional Tools for Long-Term Budgeting> The Constitution grants Congress the power of the purse. In carrying out such duties, Congress has developed budget-related rules and legislation as well as committees to carry out this responsibility. Some of these tools might be used in long-term budgeting. <4.1. Congressional Committees> Congressional committees serve Congress by specializing in particular policy areas. They do this by gathering information, making policy recommendations, and performing oversight. In the course of this work, committees study and make recommendations related to the long-term implications of the specific programs within their jurisdiction. For example, the Senate Finance Committee and the House Ways and Means Committee may hold hearings on the long-term outlook for Social Security. In addition, the House and Senate each have a Budget Committee, established by the Budget Act. They enjoy jurisdiction over the budget resolution, the budget reconciliation process (described below), and the budget process generally. As stated by the Senate Budget Committee, "The [Budget] Committee, the budget resolution and reconciliation process, and enforcement authorities were created to enable Congress to create, enforce, and manage the annual Federal budget, including all types of Federal spending and revenues." The Budget Committees may impact the budget and the budget process in many ways. They are responsible for developing and drafting a budget plan in the form of a budget resolution. A budget resolution agreed to by the House and Senate may trigger the budget reconciliation process, which has been used to make legislative changes reducing future deficits (described below). During the development of the budget plan, the Budget Committees gather information on the budget from many sources. They review the President's budget submission, and the director of OMB typically testifies before each Budget Committee. Additionally, the committees closely review CBO's annual budget and economic outlook for the upcoming 10 years, and the director of CBO testifies before the Budget Committees to answer questions. The Budget Committees also hold hearings and consider legislation related to the budget process and the budget as a whole. This has included examining the long-term budget outlook and the potential for a more long-term budget process. Since the Budget Committees enjoy jurisdiction over the budget process generally, they would likely be involved in any efforts to alter the current process. <4.2. The Budget Resolution and the Budget Reconciliation Process> The budget resolution reflects an annual agreement between the House and Senate on spending and revenue levels for the upcoming fiscal year and at least four additional years. The budget resolution does not become law. Therefore, no money is spent or collected as a result of its adoption. Instead, it is an agreement between the House and Senate meant to assist Congress in considering an overall budget plan. Once agreed to by both chambers in the exact same form, the budget resolution creates parameters that may be enforced in two primary ways: (1) by points of order and (2) by using the budget reconciliation process. <4.2.1. Enforcement through Points of Order> Once the budget resolution has been agreed to by both chambers, certain levels contained in it are enforceable through points of order. This means that if legislation is being considered on the House or Senate floor that would violate certain levels contained in the budget resolution, a Member may raise a point of order against the consideration of that legislation. The Budget Act requires that the budget resolution include the following budgetary levels for the upcoming fiscal year and at least four additional years (often referred to as out years): total spending, total revenues, the surplus/deficit, new spending for each major functional category, the public debt, and (in the Senate only) Social Security spending and revenue levels. The Budget Act also requires that the aggregate amounts of spending recommended in the budget resolution be allocated among committees. <4.2.2. Enforcement through the Budget Reconciliation Process> While points of order can be effective in enforcing the budgetary goals outlined in the budget resolution, they can be raised against legislation only when it is pending on the House or Senate floor. Moreover, points of order cannot limit direct spending or revenue levels resulting from current law. Often, for the budgetary levels in the budget resolution to be achieved, Congress must pass legislation to alter the levels of revenue and/or direct spending resulting from existing law. In this situation, Congress seeks to reconcile the levels of direct spending and revenue under existing law with those budgetary levels expressed in the budget resolution. To assist in this process, the budget reconciliation process allows special consideration of legislation that would accomplish those budgetary levels expressed in the budget resolution. If Congress intends to use the reconciliation process, reconciliation directives must be included in the annual budget resolution. These directives instruct individual committees in the House and Senate to develop and report legislation that would change laws within their jurisdiction related to direct spending, revenue, or the debt limit. Such reconciliation legislation is then eligible to be considered under special expedited procedures in both the House and Senate. These procedures are especially important in the Senate as they include a limit on debate time. This means the legislation does not require the support of three-fifths of Senators to bring debate to a close. Since 1980, Congress has sent the President 25 reconciliation acts, 21 of which were signed into law. Reconciliation has most often been used to enact legislation that was projected to reduce deficits. For example, between 1981 and 1984, four reconciliation bills were enacted that were each projected to decrease the deficit. Reconciliation legislation can be used to make policy changes that are temporary or permanent, therefore affecting the long-term budget. For a brief description of each reconciliation bill enacted into law, see CRS Report R40480, Budget Reconciliation Measures Enacted Into Law: 1980-2017 , by Megan S. Lynch. While the reconciliation process has been used to enact legislation that was projected to increase the net deficit, a Senate rule (known as the Byrd rule) prohibits reconciliation legislation from increasing the net deficit outside the "budget window." (The budget window is the period covered by the underlying budget resolution and recently has spanned 10 years. ) <4.3. Additional Rules and Points of Order> The House and Senate have many additional budget-related points of order that seek to restrict or prohibit consideration of different types of budgetary legislation, some of which have long-term implications. These points of order are found in various places such as the Budget Act, House and Senate standing rules, and past budget resolutions. For example, the House and Senate have pay-as-you-go (PAYGO) rules that prohibit the consideration of direct spending or revenue legislation that is projected to increase the deficit in either of two time periods: (1) the period consisting of the current fiscal year, the budget year, and the four ensuing fiscal years following the budget year and (2) the period consisting of the current fiscal year, the budget year, and the ensuing nine fiscal years following the budget year. Additionally, in the Senate, a rule exists that is often referred to as the "long-term deficit point of order." It prohibits the consideration of legislation that would cause a net increase in deficits of more than $5 billion in any of the four consecutive 10-year periods beginning after the upcoming 10 years. Previously, the House had a similar rule that prohibited consideration of legislation that would cause a net increase in mandatory spending in excess of $5 billion during the same period. The House rule is no longer in effect. <4.4. Additional Budget Enforcement Mechanisms Currently in Effect> In addition to points of order, there are other types of budget enforcement mechanisms that seek to restrict or prohibit the enactment of budgetary legislation over the long term. <4.4.1. Legal Limits on Annual Discretionary Spending> The Budget Control Act of 2011 (BCA; P.L. 112-25 ) established statutory limits on discretionary spending for a 10-year period ( FY2012-FY2021 ) . (S imilar discretionary spending limits were in effect between FY1991 and FY2002.) The BCA sets separate annual limits for defense discretionary and nondefense discretionary spending. The defense category consists of discretionary spending in budget function 050 (national defense) only. The nondefense category includes discretionary spending in all other budget functions. If discretionary appropriations are enacted that exceed a statutory limit for a fiscal year, across-the-board reductions (i.e., sequestration) of nonexempt budgetary resources are triggered to eliminate the excess spending within the applicable category. <4.4.2. Statutory PAYGO> In February 2010, the Statutory Pay-As-You-Go Act of 2010 ( P.L. 111-139 ) was enacted establishing a budget enforcement mechanism commonly referred to as "Statutory PAYGO." Statutory PAYGO is generally intended to discourage enactment of legislation that is projected to increase the on-budget deficit over five and 10 years. To enforce Statutory PAYGO, OMB is required to record the budgetary effects of newly enacted revenue and direct spending legislation over the course of a year. After the end of a congressional session, OMB is required to issue an annual PAYGO report noting whether a debit has been recorded for the current budget year. If no such debit is found, no action occurs. If a debit is found, however, the President must issue a sequestration order, which automatically implements across-the-board cuts to non-exempt direct spending programs to compensate for the amount of the debit. <4.5. Selected Budget Enforcement Related Mechanisms No Longer in Effect> While the following budget related mechanisms are no longer in effect, they provide insight into Congress's past budget process reform efforts and the desire for long-term budgeting. <4.5.1. Statutory Deficit Limits> In 1985, the Balanced Budget and Emergency Deficit Control Act ( P.L. 99-177 ) referred to as the Gramm-Rudman-Hollings Act employed budget process mechanisms in an attempt to force Congress and the President to balance the budget within a six-year period by specifying annual deficit limits for each fiscal year (1986-1991). The act required that both the President and Congress adhere to the deficit limits when developing their budget plans. The act did not specify what policy changes should be made to achieve deficit reduction, leaving Congress and the President to negotiate over possible revenue increases and spending decreases. To enforce the specified deficit limits, the act set forth a specific process for the cancellation of spending by sequestration in the event that the deficit limits were breached. These deficit targets and related enforcement mechanism were amended by the Balanced Budget and Emergency Deficit Control Act of 1987 ( P.L. 100-119 ) and then were fundamentally revised by the Budget Enforcement Act of 1990 ( P.L. 101-508 ), which replaced the focus on deficit targets under Gramm-Rudman-Hollings with a two-pronged approach to budgetary enforcement: the implementation of PAYGO procedures to control new direct spending and revenue legislation and discretionary spending limits to control the level of discretionary spending. For more information, see CRS Report R41901, Statutory Budget Controls in Effect Between 1985 and 2002 , by Megan S. Lynch. <4.5.2. The Joint Select Committee on Deficit Reduction (111th Congress)> The BCA created a Joint Select Committee on Deficit Reduction. The committee comprised 12 Members from the House and Senate three chosen by each of the chambers' party leaders. The committee was instructed to develop legislation to reduce the budget deficit by at least $1.5 trillion over the 10-year period FY2012-FY2021. Legislation reported by the committee would then be eligible to be considered under special expedited procedures in both the House and Senate. These procedures are especially important in the Senate since they include a limit on debate time. This means the legislation does not require the support of three-fifths of Senators to bring debate to a close. The BCA stipulated that if a measure meeting specific requirements was not enacted by January 15, 2012, then an automatic process would be triggered to enforce the budgetary goal established for the committee. The committee did not reach agreement on such legislation, and while the committee is no longer in effect, the automatic process triggered by the lack of enactment still remains. This comprises annual downward adjustments of the discretionary spending limits (described above) and sequester of nonexempt mandatory spending programs through FY2027. <4.5.3. The Joint Select Committee on Budget and Appropriations Process Reform (115th Congress)> The Bipartisan Budget Act of 2018 ( P.L. 115-123 ) created the Joint Select Committee on Budget and Appropriations Process Reform. The committee comprised 16 Members from the House and Senate four chosen by each of the chambers' party leaders. The committee was tasked with formulating recommendations and legislative language to "significantly reform the budget and appropriations process." The committee held a markup on draft legislation that concluded on November 29, 2018. The principal recommendation in the draft provided that the budget resolution would be adopted for a two-year cycle rather than the current annual cycle. The committee ultimately did not vote to report the bill as amended, and it was never considered by the full house.

Members of Congress, the Administration, and outside groups have expressed concern over long-term projections of deficits and debt levels. The Congressional Budget Office (CBO) has stated that federal deficits and debt held by the public, which are higher than average, are projected to increase sharply over the next 30 years. Some have argued that the current congressional budget process has created, or at least exacerbated, the projected long-term deficit and debt challenges. It has been said that the current process does not encourage or require the consideration of long-term budgetary outcomes. Some argue that the lack of a formal requirement for Congress to consider long-term budget outcomes discourages long-term planning and encourages policy outcomes that are desirable in the short term at the expense of the long-term budget situation. It has therefore been suggested that Congress adopt a long-term budget focus. In considering budget or budget process reform, it may be useful to review current congressional tools that may be used for long-term budgeting. For example, information and data are publicly available that project spending, revenue, deficit, and debt levels in the long term, and in some instances, data evaluating the long-term outlook of specific programs are available. Congressional committees are useful resources for long-term budgeting as they gather information and make policy recommendations on individual programs, as well as the budget as a whole. In addition, Congress is able to develop and consider a multiyear budget plan in the form of a budget resolution. The budget resolution may also trigger the budget reconciliation process, which has been used to make legislative changes addressing long-term budgetary levels. Also, the House and Senate have internal rules that restrict or prohibit consideration of legislation that would have certain long-term budgetary effects (e.g., the PAYGO rule and the long-term deficit rule). And lastly, there are laws that restrict or prohibit the enactment of budgetary legislation that would have certain long-term budgetary effects (such as 10-year discretionary spending limits and statutory PAYGO).

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<1. Introduction> Funding for new border barrier construction became the focal point of a partial government shutdown that began on December 22, 2018, and lasted 34 days, the longest on record. Congress ultimately did not accept President Donald Trump's demand for $5.7 billion in new funding for the construction of a proposed border wall, providing instead $1.375 billion for additional pedestrian fencing as part of the Consolidated Appropriations Act of 2019 (CAA). Unsatisfied with the negotiated agreement, the Trump Administration issued a Presidential Proclamation on February 15, 2019, declaring a national emergency at the southern border of the United States, a move that, among other things, allowed the President to invoke special authorities for redirecting military construction appropriations. Concurrently, the White House released a plan for reprogramming or transferring $6.7 billion to southwest border barrier projects, of which $6.1 billion would come from unobligated Department of Defense (DOD or Department) appropriations. Congress, noting the President's attempt to secure more funding than provided in the CAA, and concerned over a potential violation of its constitutional prerogatives to manage appropriations, acted quickly in an attempt to terminate the national emergency declaration. A joint resolution, H.J.Res. 46 , Relating to a national emergency declared by the President on February 15, 2019 , was passed by both houses on March 14, 2019, but was subsequently vetoed by the President one day later. On March 26, 2019, an attempt to override the veto fell short of the required two-thirds majority in the House by a vote of 248-181. In September 2019, Congress again attempted to terminate the state of national emergency with a joint resolution ( S.J.Res. 54 ) passed by both chambers. The legislation has yet to be considered by the President. The national emergency remains in effect. This report outlines the Administration's FY2020 border barrier funding plans using defense funds, describes the various authorities involved, details the process for each budgetary action, indicates the status of appropriated funds, identifies recent congressional actions, and identifies potential issues for Congress. The report does not include a comprehensive overview of DHS funding for border barriers, or describe that agency's FY2020 request for related projects. It also does not address the deployment and concomitant expense of mobilizing active and reserve military personnel for service on the border. <2. The Trump Administration's FY2020 Funding Plan> On February 15, 2019, President Trump issued a proclamation declaring a national emergency at the southern border that required use of the Armed Forces. Concurrent with the announcement, the White House released a Fact Sheet entitled, President Donald J. Trump's Border Security Victory (hereafter referred to as the border security factsheet ) that described steps the Administration intended to take in order to provide $6.7 billion in appropriations outside of the regular legislative process for new border barrier projects. Drawing on both emergency and nonemergency authorities, the Administration outlined a number of steps it stated would be "used sequentially and as needed." In March 2019, the Administration delivered its annual budget to Congress. The FY2020 proposal included an additional $7.2 billion in Army Overseas Contingency Operations (OCO) military construction funding, half of which ($3.6 billion) would replenish accounts affected by the Administration's b order security factsheet plan. The remainder, $3.6 billion, would fund future border barrier projects. According to Deputy Under Secretary of Defense (Comptroller) Elaine McCusker: We have $3.6 billion -- up to $3.6 billion to backfill any MILCON projects that we end up having to fund in '20 instead of '19. And then we also have $3.6 billion for potential new construction for the border, and the reason we've done this is to reflect the fact that we have a presidential priority that has a macro funding level and we want to help get to that funding level. Overall, funding actions the Administration described between February and March 2019 included a complex mixture of realigned DOD program savings and unobligated military construction funds from past years ($6.1 billion), as well as a request for new defense appropriations in FY2020 ($7.2 billion). In its b order security factsheet plan, the Administration cited an additional $2 billion in non-DOD appropriations; $1.375 billion in previously enacted FY2019 Department of Homeland Security (DHS) appropriations (included in the CAA), and $601 million in contributions from a Treasury Forfeiture Fund (TFF) that manages seized assets. Altogether, these defense and non-defense funds would total $15.3 billion, of which 87% would be DOD funds. The Table 1 indicates all such actions. <2.1. Status of Funds> Of the $601 million in FY2019 Treasury Forfeiture Funds described in the Administration's plan, at least $242 million has been transferred for use by the U.S. Army Corps of Engineers (USACE). The Treasury Department has stated that it will transfer the remaining $359 million when additional funds become available. Of the $2.5 billion the Administration has designated for transfer through the defense Drug Interdiction and Counterdrug Activities account (hereafter referred to as the defense Drug Interdiction account), $1.9 billion has been obligated. A substantial portion of the total amount, previously frozen by court injunctions, became available on July 26, 2019 when the U.S. Supreme Court struck down lower court injunctions. Since then, DOD border barrier construction has been allowed to proceed, though the courts have made no final ruling. After an extended review process, on September 3, 2019, the Secretary of Defense invoked the emergency construction statute 10 U.S.C. 2808 and directed the Department to transfer appropriations from 127 previously authorized military construction projects to eleven barrier projects identified by DHS. The figure below illustrates the status of the Administration's border security factsheet plan as of September 2019. Of the $6.7 billion in newly introduced funds, approximately $2.1 billion has been obligated (or otherwise made available for obligation). For completeness, the figure also includes $1.375 billion in FY2019 DHS appropriations that were included in the President's Border security factsheet announcement, though these funds were previously enacted and do not represent a plan for future actions. <3. Overview of DOD funds Available for Securing the Border> Although the Secretary of the DHS is charged with preventing the entry of terrorists, securing the borders, and carrying out immigration enforcement functions, funding to carry out those missions may be supplemented in part by resources from other agencies. Within DHS, U.S. Customs and Border Protection (CBP), is chiefly responsible for securing the borders of the United States, preventing terrorists and their weapons from entering the country, and enforcing hundreds of U.S. trade and immigration laws. Because border security lies primarily within the jurisdiction of DHS, Congress has not generally provided DOD with significant funds to address that mission. Congress has instead authorized the military to support DHS (or local authorities) in certain situations, such as to assist with drug interdiction or with terrorist incidents involving weapons of mass destruction. According to DOD officials: Active-duty and National Guard personnel have supported Federal and State counterdrug activities (e.g., detection and monitoring of cross-border trafficking, aerial reconnaissance, transportation and communications support, and construction of fences and roads) beginning in the early 1990s. Most recently, U.S. Northern Command's Joint Task Force-North executed 53 counterdrug support missions in fiscal year (FY) 2017 and 23 missions in FY2018. When the Secretary of Defense approved the four border States' plans for drug interdiction and counterdrug activities, DoD committed $21 million in funds in FY2017 and $53 million in FY2018. Congress has also permitted DOD special flexibility for undertaking military construction projects during periods of national crisis, such as when the President declares a national emergency. (The National Emergencies Act, or NEA, establishes procedures for how a President may declare a national emergency but does not explicitly define that term. ) Historically, emergency military construction has been used to support troops engaged in contingency operations overseas at locations that include Iraq and Afghanistan. <3.1. DOD Funding Available Without a Declaration of a National Emergency> The Administration's plan would tap funds for border barriers using both statutory military construction authorities and non-statutory general transfer authorities. This section provides an overview of those available to the Administration (both invoked and not invoked). Later sections examine the Administration's use of specific authorities in depth. <3.1.1. Statutes Permitting Military Construction> Statutes that would authorize DOD to undertake military construction activities along the border but that would not require a Presidential declaration of a national emergency include the items below. The Administration has invoked: 10 U . S . C . 284 Support for counterdrug activities and activities to counter transnational organized crime . Upon request by qualifying entities, this statute authorizes DOD to reprogram funds to construct roads, fences, and lighting along international drug smuggling corridors in order to support law domestic (and foreign) law enforcement. The Department's activities are funded from a central transfer account called the Drug Interdiction and Counter-D rug Activities , which also receives direct annual appropriations. The Administration has not invoked: 10 U . S . C . 2803 Emergency construction . This statute authorizes the Secretary of Defense, under conditions the Secretary determines to be vital to the national security or the protection of health, safety, or environmental quality, to obligate $50 million for military construction projects not otherwise authorized by law. This authority was not included in the Administration's Border security factsheet plan for wall funding. <3.1.2. General and Special Transfer Authorities (Section 8005 and Section 9002)> The Administration's use of the statute 10 U.S.C. 284 is predicated on accessing DOD funds made available by General Transfer Authority (GTA) transfers. GTA (sometimes colloquially referred to as Section 8005 , though the provision number may change ) , refers to the recurring provision in annual defense appropriations acts that set the maximum amount permitted for DOD's base reprogramming actions (usually around $4 billion). Section 9002 is the equivalent designation for war-related, Title IX Overseas Contingency Operations , funds (usually around $2 billion). Congress typically requires that reprogramming be undertaken within a specified timeframe (less than year) and meet the following additional criteria: That such authority to transfer may not be used unless for higher priority items, based on unforeseen military requirements, than those for which originally appropriated and in no case where the item for which funds are requested has been denied by the Congress. Congress has generally considered reprogramming authority provided to Executive branch departments and agencies to be a privilege. Though the constitution invests Congress with the "powers of the purse," legislators typically provide executive branch agencies some limited flexibility to shift funds among various accounts in recognition of a complex budget execution process wherein estimated costs often vary based on unforeseen events. Such flexibility allows agencies to accommodate changing circumstances, while continuing to carry out the essential functions for the programs and activities for which funds have been provided. Congress can grant reprogramming and transfer authorities in a variety of forms. They may be statutory or non-statutory. Congress may establish a central transfer account for a special purpose, or alternately, apply a broader criteria that describe which funds may be exchanged, and in what specific circumstances. Historically, Congress has consistently provided some limit to the total amount of funds that may be used. <3.2. DOD Funding Available With a Declaration of a National Emergency> With the declaration of a national emergency, the President may invoke statutory authorities that allow DOD to fund military construction projects that support the national response. These authorities generally last only as long as the emergency is in effect (expiring immediately or within 180 days of termination). They include DOD military and civil works funds. In his February 2019 proclamation, the President invoked: 10 U.S.C. 2808 Construction authority in the event of a declaration of war or national emergency . This broad authority permits the Secretary of Defense to undertake military construction projects not otherwise authorized by law that may be necessary to support the use of the Armed Forces after the declaration of a national emergency . New projects are funded from the unobligated balances of existing ones, with no other upper limit on the overall total. In his February 2019 proclamation, the President did not invoke: 33 U.S.C . 2293 Reprogramming during national emergencies . This statute permits the Secretary of the Army in the event of a declaration of war or a declaration of a national emergency that requires or may require use of the Armed Forces to terminate or defer Army civil works projects that the Secretary deems are nonessential to national defense, and apply the resources of the Department's civil works program to, "authorized civil works, military construction, and civil defense projects that are essential to the national defense." Figure 2 summarizes the main points of each of the statutes listed above as they pertain to the use of military construction. <4. Use of Authorities to Fund Border Barrier Construction> The following two subsections contain a detailed examination of DOD's proposed use of statutory and non-statutory authorities espoused in the Trump Administration border security factsheet . These include: 10 U.S.C. 2808, which would make $3.6 billion available, and; 10 U.S.C. 284, which would transfer $2.5 billion of defense program savings in concert with the non-statutory authority Section 8005 (General Transfer Authority). The final subsection addresses the use of Treasury Forfeiture Funds, which would provide $601 million for the Administration's border funding plan. <4.1. 10 U.S.C. 2808: Military Projects Deferred by Emergency Statute> <4.1.1. Overview> When the President declares a national emergency requiring the use of the Armed Forces and invokes the emergency statute 10 U.S.C. 2808, the Secretary of Defense is permitted to undertake military construction projects "not otherwise authorized by law that are necessary to support such use of the armed forces." Such projects are funded using the unobligated appropriations of construction projects currently underway effectively deferring them until Congress provides replenishing appropriations. On February 15, 2019, President Trump issued Proclamation 9844, Declaring a National Emergency Concerning the Southern Border of the United States , to address what he described as a long-standing and worsening problem of large-scale, unlawful migration through the southern border. The Proclamation asserted that the severity of the crisis justified use of the Armed Forces, and invoked 10 U.S.C. 2808, thus unlocking emergency construction authority. On September 3, 2019, the Secretary of Defense determined that 11 construction projects requested by DHS were necessary to support the use of the Armed Forces along the southern border, pursuant to 10 U.S.C. 2808. In a memorandum to the Department, the Secretary directed the DOD Comptroller to transfer $3.6 billion in unobligated military construction appropriations for the new construction, and urged the Secretary of Army to begin work expeditiously. The transfers indefinitely deferred 127 previously authorized military construction projects, roughly half of which were at overseas locations ($1.8 billion for 64 non-U.S. projects). Of the deferred military construction projects outside the United States, approximately 42% ($772 million; 21 projects) would have supported the European Deterrence Initiative (EDI), a program intended to increase the capability of U.S. forces in Europe against non-NATO regional adversaries. In public remarks to the media on September 5, 2019, Secretary of Defense Mark Esper suggested allies reimburse the United States for the funding shortfalls. Of deferred military construction projects within the United States (and associated territories), the largest share of funds would come from Puerto Rico ($403 million, or 23% of total) and, to a lesser extent, Guam ($257 million, or 15% of the total). The Table 2 summarizes the total amount of deferred funds, grouped by U.S. State or affiliated territory. DOD has stated that it would make funds available to the Department of the Army for border barrier projects by prioritizing the deferral of $1.8 billion in non-U.S. projects . Funds associated with projects in the United States ($1.8 billion) would be made available at some later date. DOD's action has attracted warnings from Members of Congress concerned over military construction projects that may be affected in their states and districts. Critics have also expressed concerns that the President's use of emergency powers could circumvent (or be perceived as circumventing) the congressional appropriations process. <4.1.2. DOD Imposed Non-Statutory Selection Criteria to Identify Project Funds as Sources for Potential Reprogramming> DOD developed internal criteria not required by 10 U.S.C. 2808 that narrowed the pool of military construction projects eligible for deferment under the Administration's use of that statute. In testimony before the Subcommittee on Military Construction, Veterans Affairs, and Related Agencies in February 2019, Assistant Secretary of Defense for Sustainment Robert McMahon explained the Department's reasoning for the additional guidelines: In order to protect military readiness, the projects that are most likely to be temporarily delayed include those that pose no or minimal operational or readiness risks if deferred, projects that were already scheduled to be awarded in the last six months of the fiscal year, and recapitalization projects of existing facilities that can be temporarily deferred for a period of months. The Department's internal criteria narrowed the scope of the project funding pool by applying the following selection criteria: No military construction projects would be considered that have already received a contract award; No military construction projects with FY2019 award dates would be considered; and No military housing, barracks, or dormitory projects would be considered. In official statements, DOD has said that if its FY2020 budget request for military construction is approved by Congress, it will use the funds provided to replenish funding for projects deferred in favor of newly funded border barrier construction. If the Department's FY2020 budget is enacted on time as requested, no military construction project used to source section 2808 projects would be delayed or cancelled. Nevertheless, projects deferred by use of the statute effectively remain underfunded (or unfunded) unless Congress enacts additional amounts to replenish the original appropriations. DOD has requested $3.6 billion in additional Army military construction funds as part of its FY2020 budget submission for this purpose. Congressional opponents have argued against replenishment and asserted that DOD transfers would be tantamount to cancelling not deferring affected projects. <4.1.3. DOD's Emergency Decision-making May Have Deviated from Precedent> The current DOD decisionmaking process for construction in the event of a declaration national emergency appears to differ from the one described in the Department's Financial Management Regulation (FMR) and associated internal directives. The current process appears to have been driven by DHS requests, not generated internally by Military Departments in conjunction with Combatant Commanders (COCOMs). <4.1.3.1. DOD's Internal Process on Use of 10 U.S.C. 2808 Remains Unclear> Though DOD has not fully disclosed internal deliberations related to its 10 U.S.C. 2808 funding decisions, an approximate chronology of events has emerged from court records, media reporting and official briefings. (See Appendix A for detailed chronology.) On February 18, 2019, then-Acting Secretary of Defense Patrick Shanahan requested DHS provide a prioritized list of construction projects that, according to its assessment, would improve the operational effectiveness of troops deployed to the border. DHS responded on March 20, 2019 with a prioritized list that included $5 billion in projects along 220 miles of both public and private U.S.-Mexico borderland. On April 11, 2019, then-Acting Secretary of Defense Shanahan directed the Chairman of the Joint Chiefs of Staff to provide a detailed evaluation of the DHS proposal by May 10th, 2019 and assess how the DHS-requested projects might support the mobilization of the Armed Forces to the southern border. Concurrently, the Acting Secretary instructed the DOD Comptroller and others to identify $3.6 billion in unobligated balances from existing military construction projects that might serve as a source of funding for border barriers. On May 6, 2019, the Chairman of the Joint Chiefs of Staff submitted his final report, Assessment of Whether the Construction of Barriers at the Southern Border is Necessary to Support the Use of Armed Forces in Securing the Border , which concluded that all DHS-identified construction projects were necessary to support the use of the Armed Forces. The report's methodology was based, in part, on the assumption that any construction along the border would provide necessary support, wherever troops may (or may not) be deployed: In general, construction projects in one sector of the border have ripple effects across all other sectors. This recognition drives our conclusion that any border barrier construction supports the use of the armed forces on the border to some extent, regardless of where the construction occurs relative to the current location of DoD operations. On August 21, 2019, Kenneth Rapuano, Assistant Secretary of Defense, Homeland Defense & Global Security (ASD/HDGS), recommended the Secretary of Defense adopt an action plan that would execute 11 DHS identified projects and defer $3.6 billion in existing military construction. The Secretary of Defense approved all these recommendations on September 3, 2019. <4.1.3.2. DOD Directives on Use of 10 U.S.C. 2808 Describe a Process that Originates with Combatant Commanders> Historically, DOD has used 10 U.S.C. 2808 to fund projects at overseas locations for war related infrastructure. Requests for emergency construction projects originate with the Secretaries of the Military Departments and COCOMs, who together make a preliminary assessment on whether use of 10 U.S.C. 2808 authorities is warranted. For each emergency project, officials must provide detailed justification materials that analyze possible alternatives to use of the emergency authority, give a history of the request and rationale for why the project may not be deferred, and submit a cost estimate and timeline for completion. The Chairman of the Joint Chiefs of Staff (CJCS) is then required to certify any proposed projects are consistent with current theater basing plans and do not conflict with other operational priorities. Having made these determinations, the Secretaries then forward their list of proposed emergency projects and detailed justification materials to the Under Secretary of Defense for Acquisition and Sustainment, or ASD (Sustainment). That office, in turn, provides the Secretary of Defense with its recommendations. The Secretary makes a final decision on projects to be undertaken and notifies all appropriate defense committees of the pending action, as required by statute. Following this notification, the Office of the Under Secretary of Defense (Comptroller) (OUSD(C)) is permitted to issue funds for execution. <4.2. 10 U.S.C. 284: DOD Transferred Funds Over Congressional Objections in Contravention of DOD Directives> <4.2.1. Overview> To execute the plan described by the Administration's border security factsheet, DOD reprogrammed $2.5 billion from a variety of nondrug defense programs, through the Department's Drug Interdiction and Counterdrug Activities, and on to the U.S. Army Corps of Engineers, the federal agency that both DHS and DOD have asked to manage border barrier construction activities. This two-stage process transferring funds into and out of the defense Drug Interdiction account was permitted by multiple authorities: first by Section 8005 General Transfer Authority and Section 9002 Special Transfer Authority, and in the final stage by the statute 10 U.S.C. 284. By transferring funds from nondrug programs into the defense Drug Interdiction account, DOD was able to tap a larger pool of appropriations than might otherwise have been available by using the account's own funds. At the same time, the Drug Interdiction account's ongoing programs were safeguarded from diminishing transfers. DOD officials have stated they would not tap the account's own appropriations for wall-related projects: DOD will not use any DoD counter-narcotics funding for the drug-demand-reduction program, the National Guard counter-drug program, or the National Guard counter-drug schools program to provided support to DHS under 10 U.S.C. 284(b)(7). To accomplish the first stage of the $2.5 billion transfer process transferring savings from nondrug programs to the defense Drug Interdiction account DOD did not comply with internal regulations that require the Department to first seek congressional prior approval for general transfer authority (Section 8005) actions. DOD's process for submitting prior-approval requests to congressional defense committees is a non-statutory requirement intended to preserve comity with legislators who set the Department's reprogramming thresholds each year. Disapproval by any one of the four committees terminates further action, according to DOD regulations, though the Department may request reconsideration or submit a modified request. On March 25, 2019, the Department notified the four congressional defense committees of its plan to transfer $1 billion, the first of several reprogramming actions. The House Armed Services and House Committee on Appropriations immediately denied the request. DOD nevertheless completed its transfer on March 26, 2019, for the first time overriding congressional disapprovals. The Department followed up with an additional reprogramming action of $1.5 billion, which it completed on May 9, 2019. How DOD Transferred $2.5 billion in Two Reprogramming Actions DOD's first reprogramming action occurred on March 25, 2019, and included $1 billion for construction of high priority projects in Yuma Sector Arizona (Projects 1 and 2) and El Paso Sector Texas (Project 1). All projects were to be managed by the U.S. Army Corps of Engineers. The transfer of funds took place in two stages. In the first stage, the Department used General Transfer Authority (also known as Section 8005 authority) to shift $1 billion in Army military personnel program savings into the defense Drug Interdiction account. The funds consisted of: $812 million (81%) in excess appropriations due to a shortfall of 9,500 personnel from the Army's targeted end strength, and $188 million (19%) in program savings from several military benefits programs. In the second stage of the transfer action, the Department invoked 10 U.S.C. 284 to authorize moving the $1 billion into an Army Operation and Maintenance appropriation for use by the Army Corps of Engineers, which is responsible for managing all DOD approved border barrier projects. On May 9, 2019, DOD notified congressional defense committees of a second reprogramming action of $1.5 billion for four additional border barrier projects (El Centro California Project 1 and Tucson Sector Arizona Projects 1-3; see Appendix Table B-2 for complete list). Unlike the first action, the Department transferred both base and OCO funds: Base: $818.5 million (55%) drawn from a variety of accounts, including research and development technologies to reduce the U.S. chemical stockpile ($252 million), recovered savings related to lower than expected contributions to the Thrift Savings Plan retirement ($224 million), and the cancellation of a National Security Space Launch mission ($210 million). Overseas Contingency Operations: $681.5 million (approximately 45%) drawn from funding for training of Afghan security forces and reimbursement to Pakistan for logistics support. Base and OCO reprogramming authorities are derived from separate provisions with nearly identical legislative language; for base Section 8005 of P.L. 115-245 and Section 1001 of P.L. 115-232 ; and for OCO Section 9002 of PL. 115-245 and Section 1512 of P.L. 115-232. <4.3. DOD Has Undertaken Six Border Barrier Projects Requested by DHS Under 10 U.S.C. 284> On February 25, 2019, DHS requested that DOD undertake 11 construction projects on the U.S.-Mexico southwest border in California, Arizona, and New Mexico. The projects involved construction or replacement of roads, lighting, and vehicle and pedestrian fencing along drug smuggling corridors that were also areas of high illegal entry. DHS stated the purpose: To support DHS's action under Section 102 of IIRIRA, DHS is requesting that DoD, pursuant to its authority under 10 U.S.C. 284(b)(7), assist with the construction of fences roads, and lighting within the Project Areas to block drug-smuggling corridors across the international boundary between the United States and Mexico. DOD initially agreed to fund seven of the 11 projects in multiple funding tranches (described above). The Defense Department subsequently cancelled one of these projects (Yuma Sector Project 2), which was later funded using the emergency authority 10 U.S.C. 2808. All the projects were to be managed by the U.S. Army Corps of Engineers (USACE). DOD's first reprogramming funding tranche of $1 billion supported: Yuma Sector Arizona Projects 1 and 2, and El Paso Sector Texas Project 1. DOD's second funding tranche of $1.5 billion supported: El Centro California Project 1 and Tucson Sector Arizona Projects 1-3. <4.3.1. Court Challenges Delayed Project Execution While Funds Expire September 30, 2019> As of September 2019, DOD has obligated $1.9 billion of the $2.5 billion it reprogrammed for wall related construction under 10 U.S.C. 284. Until recently, operations were suspended due to multiple court injunctions in a legal case challenging DOD's reprogramming actions, Sierra Club v. Trump . The delays incurred additional costs as contractors that had received contract awards were compelled to idle their equipment and put laborers on standby. On July 26, 2019, the U.S. Supreme Court lifted all injunctions in the case, allowing construction to once again proceed. Nevertheless, the litigation remains unresolved. In the case of an unfavorable ruling, the government has suggested that it may be required to take down the new construction. DOD is under some pressure to complete the obligation of reprogrammed appropriations before funds are no longer available. Due to legislative language regarding the period of availability of transferred appropriations, all unobligated amounts expire at the end of the current fiscal year, on September 30, 2019, thus incentivizing quick action. Additionally, due to the complex funding structure of contracts under consideration, USACE requires some actions be taken within 100 days of the award date, according to Army officials: contracts require definitization not later than 100 days from the date of contract award If the Corps does not have sufficient time available prior to September 30, 2019, to definitize these contracts and thereby obligate the balance of the contract price, the remaining unobligated funds will become unavailable for obligation As a consequence, the Corps will be unable to complete the projects as planned, and the contracts will have to be significantly de-scoped or terminated. <4.4. Treasury Forfeiture Funds (TFF) Available> Established in 1992 for the purpose of managing cash and other resources seized as the result of civil or criminal asset forfeiture, the Treasury Forfeiture Funds (TFF) functions as a multi-Departmental source of funding for law enforcement interests of the Departments of the Treasury and Homeland Security. With executive authority to define what fits within this broadly defined purpose, the Administration determined that it could be a source of wall funding. The TFF is managed by the Treasury Executive Office of Asset Forfeiture (TEOAF), which makes budget authority available to other federal agencies or bureaus via interagency agreements, reimbursing them upon the receipt of spending invoices. Payments are limited by the total value of seized property. TEOAF's mission statement is: To affirmatively influence the consistent and strategic use of asset forfeiture by law enforcement bureaus that participate in the Treasury Forfeiture Fund (the Fund) to disrupt and dismantle criminal enterprises. On February 15, 2019, the Treasury Department notified congressional appropriators that it had approved a DHS request (submitted in December 2018) to provide a total of $601 million in TFF to the CBP for border security purposes. The first tranche of $242 million was made available to CBP for obligation on March 14, 2019. The second tranche of $359 million is expected to be made available at a later date, upon Treasury's receipt of additional anticipated forfeitures. All funds the TFF provides to U.S. Customs and Border Protection (CBP) may be used for various aspects of border security not only the construction of a physical wall. <5. Congressional Actions> Congressional response to the Administration's b order security factsheet plan has generally split by chamber, with the House Armed Services and Appropriations committees moving swiftly to pass legislative language that would block the President's actions and the Senate Armed Services and Appropriations committees expressing some support. In late July 2019, news outlets reported congressional leadership had come to an informal understanding as part of a settlement of the annual budget caps for FY2020 and FY2021 that might exclude legislative language restricting the use of federal funds for border barriers from annual appropriations measures. The deal would specifically prohibit legislative provisions limiting the use of transfer authority a key part of the President's Border security factsheet plan unless such language was adopted on a bipartisan basis. The effect of such language is still unclear as is how it may otherwise be used to modify ongoing legislative activity. <5.1. House Authorization> The House-passed version of the FY2020 National Defense Authorization Act ( H.R. 2500 ) contains a number of provisions that if enacted would limit or prohibit the use of DOD funds for construction of border barriers. Furthermore, it provides no funding for the Administration's request for replenishment of defunded projects or for related future projects. The bill targets each stage of the Administration's funding plan: Transfer Authority . Section 1001 would sharply curtail the total amount of base funds that may be used for reprogrammed, reducing the limit to $1 billion (from $4.5 billion in FY2019). Section 151 2, the equivalent transfer authority used for war-related funds, would be reduced to $500 million (from $3.5 billion in FY2019). 10 U.S.C. 284 . Section 1011 would remove fence construction as a permitted type of support authorized under 10 U.S.C. 284 and would impose additional congressional notification requirements associated with use of the statutory authority. 10 U.S.C. 2808 . Section 2802 would limit the total amount of funds that could be used under 10 U.S.C. 2808 emergency authorities to $500 million if used for construction "outside the United States," or $100 million if used for domestic construction projects. (Currently, transfers are only limited to the total amount of all unobligated military construction appropriations.) These changes would apply only to projects pursuant to a declared emergency and would not impact projects that support a declared war. General Prohibition . Section 1046 would prohibit the use of national defense funds appropriated between FY2015-FY2020 for the construction of any type of physical border barrier along the southern border. Section 2801 contains identical language that applies to military construction funds. On May 15, 2019, a group of legislators led by House Armed Services Committee members introduced H.R. 2762 , a bill that would modify 10 U.S.C. 2808 by imposing a $250 million cap on the total amount that could be used for emergency military construction projects in the event of a national emergency. Additionally, "The bill would only allow money that cannot be spent for its intended purpose to be used for an emergency, would require additional information in a congressional notification, and delay the start of construction until after a waiting period following the notification going to Congress." <5.2. Senate Authorizations> The Senate passed version of the FY2020 National Defense Authorization Act ( S. 1790 ) would support the actions described in the President's Border security factsheet plan by providing $3.6 billion in military construction funds to replenish projects deferred by the Administration's use of 10 U.S.C. 2808 and avoiding large cuts to DOD reprogramming thresholds. However, the Senate bill would not authorize the additional $3.6 billion requested by the Administration for future border barrier projects. Transfer Authority . Section 1001 and Section 1522 provide $4 billion in general transfer authority a decrease of $0.5 billion from FY2019 authorized amounts and $2.5 billion in special transfer authority a decrease of $1 billion from FY2019 authorized amounts, respectively. 10 U.S.C. 2808 Replenishment funding. Section 2906 would provide $3.6 billion to replenish military construction projects affected by the use of 10 U.S.C. 2808 transfers, fulfilling the Administration's entire request for that purpose. Authorization for the transfer of these funds into the depleted accounts would terminate at the end of FY2020 (September 30, 2020). <5.3. House Appropriations> The House has generally sought to limit the Administration's funding actions across multiple appropriations bills. In the first of two FY2020 appropriations minibus measures, the Labor, Health and Human Services, Education, Defense, State, Foreign Operations, and Energy and Water Development Appropriations Act, 2020 ( H.R. 2740 ), Division C (Department of Defense Appropriations, H.R. 2968 ) and Division E (Energy And Water Development And Related Agencies Appropriations Act, 2020, H.R. 2960 ) contained the following provisions that would affect the Administration's plan for funding border barrier construction: Transfer Authority. Section 8005 would limit general transfer authority of base funds to $1 billion (a reduction from $4 billion in FY2019 ) and require the Secretary of Defense and others to certify the transferred funds will be used for higher priority items. The Section 9002 special transfer authority for war funds would provide authority to transfer up to $500 million (a reduction from $2 billion in FY2019). 10 U.S.C. 284 . Though the legislation would provide $816.8 million for Drug Interdiction and Counterdrug Activities transfer account (for use under 10 U.S.C. 284), the bill prohibits use of any of those funds for construction of border barrier fencing, and further prohibits any transfer of these funds. General Prohibition. Section 8127 would broadly prohibit defense appropriations from being used for construction of a wall, fence, border barrier, or border security infrastructure along the southern border. U.S. Army Corps of Engineers. Section 108 of Division E would broadly prohibit USACE from using any civil works funds for border barrier construction: Notwithstanding any other provision of law, none of the funds made available by this Act or any other prior appropriations Acts for the Civil Works Program of the United States Corps of Engineers may be committed, obligated, expended, or otherwise used to design or construct a wall, fence, border barriers, or border security infrastructure along the southern border of the United States. The House passed the second of two FY2019 appropriations mini-buses, H.R. 3055 on June 25, 2019. It contains a number of limiting restrictions in Division D (Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2020) that would interrupt the Administration's plans for funding border barriers. Reprogramming Guidelines. Section 122 would require DOD to follow its own guidelines when reprogramming military construction funds, a directive that would make significant transfers contingent on congressional prior-approval. In committee language, the House cautioned DOD that "reprogramming is a courtesy provided to DOD and can be taken away if the authority is abused" and urged the Department to adhere to its own directives when seeking to reprogram funds. General Prohibition on Transfers. In committee language, the House underscored the absence of wall funding in the current appropriations language and its efforts to preserve previously appropriated projects from becoming a pool of funds for the Administration's efforts to construct border barriers. The Committee recommendation does not provide these requested funds. Also, the accompanying bill includes language that protects previously appropriated projects, as well as fiscal year 2020 projects included in this bill from being used as a source for wall funding. Prohibition on Design and Construction. Section 612 would prohibit the use of military construction appropriations provided in any act from FY2015-FY2020 to be used for the purpose of designing or constructing border barriers or access roads along the southern border. The provision uses the strongest possible legislative language by stating it would apply, "notwithstanding any other provision of law." The House-passed Financial Services and General Government Appropriations Act, 2020 ( H.R. 3351 ) contains a provision (Section 126) that would bar the Administration's use of Treasury Forfeiture Funds for planning, designing, or executing any kind of barrier or road along the southwest border. If enacted, this language would likely prevent the use of $601 million funds approved by the Treasury Department for these purposes. <5.4. Senate Appropriations> On September 12, 2019, the Senate Committee on Appropriations reported the Defense Appropriations Act, 2020 ( S. 2474 , S.Rept. 116-103 ), which would retain transfer authorities at FY2019 levels ($4 billion for General Transfer Authority, or Section 8005; $2 billion for OCO related transfers) and contained no additional wall-related provisions. <6. Issues for Congress> <6.1. Separation of Powers> At the highest level, the President's statements regarding the use of emergency powers to supplement the congressional appropriations process have raised questions for some about the reach of the executive branch's lawful authority. "I could do the wall over a longer period of time. I didn't need to do this [national emergency]. But I would rather do it much faster." President Trump, February 15, 2019 Critics also assert the President's actions risk violating the constitutional separation of powers. Article I, Section 9 of the U.S. Constitution states, "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by law." Supporters have argued the President has lawfully reallocated funds to address a national crisis. On June 3, 2019, in a lawsuit brought by the House of Representatives that argued the Administration's actions to fund a border wall represented a breach of the Appropriations Clause of the Constitution, a federal judge ruled the legislature had no standing to sue. In the 116 th Congress, House authorizers and appropriators have inserted provisions into annual legislation that would broadly prohibit the use of defense funds for construction of a wall, fence, border barrier, or other security infrastructure along the southern border. Some of these prohibitions would appear to apply retroactively to all appropriations since FY2015. <6.2. Section 8005 (and Related) Reprogramming Guidelines> DOD's recent decision to undertake general and special reprogramming transfers (in conjunction with 10 U.S.C. 284), "without regard to comity-based DOD policies that prescribe prior approval from congressional committees" has introduced uncertainty into a historically uncontroversial process. For some, DOD's disregard for long-standing reprogramming agreements with congressional defense committees has signaled a challenge to the legislative branch's ability to conduct oversight of approximately $6 billion in annual defense appropriations. Consequently, the Department's actions have generated new congressional interest and actions (particularly in the House) that would sharply limit the annual budget flexibility provided to the Department in authorizations and appropriations acts. Others view DOD's recent reprogramming notifications in support of border wall construction as a justifiable anomaly in an otherwise unbroken agreement supported by the Department's own internal directives. In cases where DOD reprogramming actions do not reflect congressional intent (or adhere to DOD directives), Congress may consider what legislative recourse might be available to prohibit future violations. In some cases, decreasing the Department's budgetary flexibility may potentially undermine DOD's ability to effectively execute congressionally directed policies and programs. <6.3. DOD's Emergency Military Construction Selection Criteria> The emergency Military Construction statute (10 U.S.C. 2808) does not limit the types of military construction projects that may be deferred based on a set of criteria, including, for example, whether such delays will affect military readiness. Nevertheless, DOD has stated it will apply its own criteria to the 10 U.S.C. 2808 pool of eligible projects in order to preserve readiness. Congress may evaluate whether DOD's guidelines are sufficient and whether they serve as a sound basis for governing future decisions. Appendix A. Selected Communications and Documents The tables below contains a chronology of selected communications, correspondence, and documents relevant to the use of 10 U.S.C. Section 2808 and Section 284, drawn primarily from court records. This section is intended to identify milestones in the decision-making process. Appendix B. 10 U.S.C. 284 Reprogramming Requests DOD has submitted two reprogramming notifications to defense committees transferring a total of $2.5 billion to the Drug Interdiction and Counterdrug Activities account. The Department's first action, on March 25, 2019, used general transfer authority to reallocate $1 billion. Approximately 82% of this total was taken from the active duty army pay and allowances (for officers and enlisted personnel), savings realized from service recruiting shortfalls. DOD's second action, on May 9, 2019, used a mix of $818.465 million in general transfer authority (base) and $881.535 in special transfer authority (OCO); a total of $2.5 billion. In the table below, reprogramming actions that use special transfer authority are indicated parenthetically with the (OCO) designation. Together, both reprograming actions reallocated $1.8 billion from base and $.7 billion from OCO defense funds. The majority of these funds were derived from Army personnel accounts and programs supporting the Afghanistan Security Forces. The Department's two actions were sourced exclusively from appropriations that began in FY2019 and had a one- to three-year lifespan, or period of availability . When these program savings were transferred to the Drug Interdiction and Counter-drug activities FY2019 appropriations, they became one-year appropriations. Following additional transfer actions, all appropriations were merged with an FY2019 Army Operations and Maintenance appropriations account, another one-year account. Appendix C. Wall Projects Requested by DHS Pursuant to 10 U.S.C. 284 On February 25, 2019, DHS formally requested DOD support its ability to impede and deny illegal entry and drug smuggling activities along the southwest U.S.-Mexico border by assisting with the construction (or replacement) of fences, roads, and lighting. DHS summarized the work required: The new pedestrian fencing includes a Linear Ground Detection System, which is intended to, among other functions, alert Border Patrol agents when individuals attempt to damage, destroy or otherwise harm the barrier. The road construction includes the construction of new roads and the improvement of existing roads. The lighting that is requested has an imbedded camera that works in conjunction with the pedestrian fence. The lighting must be supported by grid power . DHS will provide DoD with more precise technical specifications as contract and project planning moves forward. DHS requested DOD undertake a total of 11 projects on federal lands, which the agency identified by geographic location and unique numeric id. The Border Patrol divides responsibility for its operations along the Southwest border into nine geographic sectors. Four of these were included as part of the DHS request: Yuma Sector Arizona. Composed primarily of desert terrain with vast deserts, mountain ranges, and sand dunes, the area encompasses 126 miles of U.S.-Mexico borderland (181,670 square miles) between California and Arizona. DHS requested DOD undertake 36 miles of vehicle barrier replacement, 6 miles of pedestrian fencing, and lighting in this sector. El Paso Sector Texas. This sector covers the entire state of New Mexico and two counties in western Texas; 268 miles of U.S.-Mexico borderland (125,500 square miles). DHS requested 70 miles of vehicle barrier (with pedestrian fencing) and lighting in this sector. El Centro California . Located in Southern California, the sector is characterized primarily by agricultural lands, eastern desert areas (where summer temperatures can exceed 120 degrees), and western mountain ranges. The sector stretches for 71 miles along the U.S.-Mexico border. DHS requested DOD undertake a mix of projects along 15 miles in this sector (vehicle, pedestrian, and lighting). Tucson Sector Arizona. Encompassing nearly all of Arizona, this area a particularly active one for illegal alien apprehension and marijuana seizures covers 262 miles. DHS requested road construction, 86 miles of vehicle barrier (with pedestrian fencing), and lighting in this sector. Between March and April 2019, DOD approved seven of the eleven requested projects, funding them in two tranches. One of the approved projects, Yuma 2, was subsequently terminated due to contract complications. In August 2019, DHS notified DOD of anticipated contract savings and requested surplus 10 U.S.C. 284 funds be applied to the execution of three additional projects (Yuma 3-5). After evaluating the request, DOD agreed to undertake a modified set of projects (Yuma 4-5, Tucson 4). In September, the Department terminated the new projects after new estimates revealed the anticipated contract savings would be insufficient to undertake additional construction. The list below shows projects initially requested by DHS and those added by DOD in subsequent modified requests. The geographic sector is indicated in the "Project Name" column, along with the project's numeric designation. Several projects not funded by the use of 10 U.S.C. 284 funds were later funded by 10 U.S.C. 2808. For those approved for action by DOD, the funding tranche is also indicated. In a letter to Acting DHS Secretary Kirstjen Nielsen, Acting Secretary of Defense Shanahan stated the U.S. Army Corps of Engineers would undertake the planning and construction of approved projects and, upon completion, would hand over custody of all new infrastructure to DHS. Court Injunctions Temporarily Suspended Construction On May 24, 2019, the U.S. District Court for the Northern District of California issued a temporary injunction in Sierra Club v. Trump , barring use of DOD's first funding tranche of $1 billion. In compliance with the court's order, USACE immediately suspended ongoing operations for the two active border barrier projects. At the time of the suspension, $423,999,999 remained unobligated (of the original $1 billion): El Paso 1: An undefinitzed contract was awarded on April 9, 2019. At the time of the court's injunction, $389,999,999 remained unobligated. Yuma 1: An undefinitized contract was awarded on awarded May 15. At the time of the court's injunction, $35,000,000 remained unobligated. On May 25, 2019, DOD executed a second reprogramming action of $1.5 billion. On June 28, 2019, the California district court issued a second injunction that prohibited DOD from using either of the two funding tranches ($2.5 billion total). Again, USACE project managers suspended ongoing operations. At the time of the new suspension, approximately $752,750,000 remained unobligated from the second funding tranche ($1.5 billion): Tucson Sector Projects 1-3: An undefinitzed contract was awarded on May 15, 2019. At the time of the court's injunction, $646,000,000 remained unobligated. El Centro Sector Project 1: An undefinitzed contract was awarded on May 15, 2019. At the time of the court's injunction, $106,750,000 remained unobligated. Project delays have resulted in some additional costs to the government. DOD financial regulations recognize contractors are entitled to compensation for unreasonable contract suspensions, since costs continue to be incurred by idling equipment, site security, contract labor, material storage, or market fluctuations. The government is charged additional penalties for late payment (3.625% per annum). In the event an active contract is terminated, DOD would be held responsible for compensating contractors for sunk costs. On July 26, 2019, the U.S. Supreme Court lifted the lower court injunctions, allowing construction to proceed. Appendix D. Wall Projects Requested by DHS Pursuant to 10 U.S.C. 2808 On September 3, 2019, the Secretary of Defense, having determined that border barrier construction would serve as a "force multiplier" for reducing DHS's demand for DOD personnel and assets, directed the Acting Secretary of the Army to proceed with the construction of 11 border barrier projects. In a memorandum to the Department, the Secretary stated: Based on analysis and advice from the Chairman of the Joint Chiefs of Staff and input from the Commander. U.S. Army Corps of Engineers, the Department of Homeland Security (DHS), and the Department of the Interior and pursuant to the authority granted to me in Section 2808, I have determined that 11 military construction projects along the international border with Mexico with an estimated total cost of $3.6 billion, are necessary to support the use of the armed forces in connection with the national emergency. These projects will deter illegal entry, increase the vanishing time of those illegally crossing the border, and channel migrants to ports of entry. They will reduce the demand for DoD personnel and assets at the locations where the barriers are constructed and allow the redeployment of DoD personnel and assets to other high-traffic areas on the border without barriers. In short, these barriers will allow DoD to provide support to DHS more efficiently and effectively. In this respect, the contemplated construction projects are force multipliers. Of the eleven projects DOD selected for execution, seven were located (in whole or in part) on land under the jurisdiction of the Department of the Interior (DOI) that required an administrative transfer to the Department of Defense before construction could proceed. On September 18, 2019, DOI issued Public Land Orders that temporarily transferred jurisdiction of land required for five of these projects for a period of three years. In the table below, DOI-transferred lands have been indicated with an asterisk (see column marked "Jurisdiction"). Two of the eleven projects selected by DOD (El Centro 5 and Laredo 7) were located on non-public lands that will require either purchase or condemnation before construction may proceed. USACE representatives have stated that such a process would not be completed before April 2020. The remaining two projects (Yuma 2 and Yuma 10/27), are located exclusively on the Barry M. Goldwater Range (BMGR), a military installation under the jurisdiction of the U.S. Navy where construction may begin immediately. The table below indicates the eleven projects DOD has agreed to fund using 10 U.S.C. 2808 funds, and describes the estimated cost of construction, the jurisdiction of associated lands, and a description of the parcel. Appendix E. Military Construction Projects Deferred Pursuant to 10 U.S.C. 2808 On September 3, 2019, DOD delivered to congressional defense committees a list of ongoing military construction projects the Department had selected for deferral pursuant to 10 U.S.C. 2808. The list had been preceded by two additional notifications that identified potential military construction projects that might be affected by use of the statute. The first of these three lists of military construction projects, delivered to defense committees in March 2019, identified all military construction projects that had not yet received contract awards making them vulnerable for selection under 10 U.S.C. and the Department's independent internal criteria. A second list, which DOD delivered to defense committees in late May 2019, selectively updated the contract award dates of some military construction projects. The final list, comprised of approximately 127 projects ($3.6 billion), updated the contract award dates for six projects ($209 million) located outside of the United States, making them newly eligible for selection. Additionally, the Department's final list included one planning and design project ($13.6 million) not included in previous notifications. The table below summarizes this final list.

The Department of Defense (DOD, or the Department) has played a prominent role in the Trump Administration's border security strategy because of controversies related to $13.3 billion in defense funding it has sought to use for border barrier construction projects not otherwise authorized by Congress. These defense funds would comprise a complex mix of DOD program savings and unobligated military construction funds from past years ($6.1 billion), as well as a request for new appropriations in FY2020 ($7.2 billion). An additional $2 billion in non-DOD appropriations are often cited as part of the Administration's overall border funding plan. These include $1.375 billion in previously enacted FY2019 Department of Homeland Security (DHS) appropriations, and $601 million in contributions from a Treasury Forfeiture Fund (TFF) that manages seized assets. Altogether, these defense and non-defense funds would total $15.3 billion, of which 87% would be DOD funds. President Donald Trump has consistently declared the deployment of fencing, walls, and other barriers along the U.S.-Mexico border a high priority, however, he has been unable to fully secure from Congress the total amount of funding he deems necessary for that purpose. On February 15, 2019, in part to gain access to such funding, the President declared a national emergency at the southern border that required use of the Armed Forces, an act that triggered statutes allowing the President to redirect national resources—including unobligated military construction funds—for purposes for which they were not originally appropriated by Congress. Concurrent with the declaration, the Administration released a fact sheet entitled, President Donald J. Trump's Border Security Victory ( hereafter referred to as the border security factsheet ) that described a plan for redirecting $6.1 billion in DOD funds to border barrier construction projects not authorized by Congress. An additional $601 million was included using TFFs. The plan invoked a mixture of emergency and nonemergency authorities that included: $2.5 billion in defense funds authorized by the (nonemergency) statute 10 U.S.C. 284 Support for counterdrug activities and activities to counter transnational organized crime; $3.6 billion in defense funds authorized by the emergency statute Title 10 U.S.C. 2808 Construction authority in the event of a declaration of war or national emergency; and $601 million in nondefense, nonemergency TFFs. Shortly after the release of the border security fact sheet , the DHS requested that DOD undertake 11 construction projects along the Southwest U.S.-Mexico border for execution under 10 U.S.C. 284 authority. Typically, such construction would be funded using congressionally provided appropriations from DHS's own budget. Nevertheless, citing the ongoing state of emergency, DOD agreed to undertake seven of the projects and, between March and May 2019, reprogrammed $2.5 billion in defense program savings over the objections of House congressional defense committees, a deviation from the Department's own regulations. Subsequent court injunctions temporarily prevented approximately half ($1.2 billion) of these appropriations from being fully obligated, and resulted in the suspension of contracts that had been quickly awarded following DOD's reprogramming actions. The U.S. Supreme Court lifted these injunctions on July 26, 2019, but there has been no final ruling in the case ( Sierra Club v. Tru mp) . It remains unclear how a potentially unfavorable ruling might affect construction completed during the ongoing litigation. In September, DOD officials stated that $1.9 billion of the 10 U.S.C. 284 funds have been obligated, with the remainder to be obligated by the end of the month. On September 3, 2019, the Secretary of Defense exercised his authority under the emergency statute 10 U.S.C. 2808 to defer approximately 127 authorized military construction projects ($3.6 billion) and redirect the funds to 11 border barrier projects identified by the DHS. Deferred military construction projects would be halted indefinitely (or terminated) unless Congress were to provide replenishing appropriations. Congressional critics of the Administration's border barrier funding plans have hesitated to reimburse DOD for transfer actions they opposed or expressly prohibited. Furthermore, in March 2019, as part of its annual budget submission to Congress, the Administration also requested an additional $7.2 billion in defense appropriations (not described by the February 2019 border security factsheet plan). DOD officials stated that half this amount ($3.6 billion) would be used to support new DHS border barrier projects which the Administration has not yet described. The other half ($3.6 billion) would replenish military construction projects deferred by DOD's earlier 10 U.S.C. 2808 transfer actions. There has been considerable congressional concern over the Administration's efforts to fund the construction of border barriers outside of the regular budgetary process. In broad terms, these concerns are related to the novel and unorthodox use of emergency authorities, and the possibility that the Administration's actions jeopardize congressional control of appropriations, thereby potentially violating the Constitution's separation of powers. At the interagency level, DOD's break from comity-based agreements with congressional defense committees on reprogramming actions has generated new legislative interest in limiting the Department's budgetary flexibility and applying sharper oversight. More narrowly, individual Members have voiced apprehensions that military construction projects in their states and districts have been jeopardized by DOD's emergency transfers. FY2020 defense authorization and appropriation bills currently under consideration (as of September 2019) include provisions that would constrain the Administration from fully executing its plan, though final versions have not yet been passed. In late July 2019, news outlets reported congressional leadership had come to an informal understanding as part of a settlement of the annual budget caps for FY2020 and FY2021 that would specifically prohibit legislative provisions limiting the use of transfer authority—a key part of the President's Border security factsheet plan—unless such language was adopted on a bipartisan basis. Ongoing litigation has generally slowed the execution of border barrier construction and imperiled large portions of the President's plan. Of the $6.7 billion in future DOD and Treasury Funds included in the border security factsheet , $2.1 billion (32%) has been obligated as of September 13, 2019. This includes $242 million in TFFs and $1.9 billion transferred from the defense Drug Interdiction and Counter-Drug Activities account.

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<1. Introduction> This report discusses twenty criminal law cases the United States Supreme Court decided during its 2018 term (Term). Twelve of the cases addressed sentencing issues: capital punishment, violent crime enhancements, supervised release, and excessive fines. Five featured the Court's analysis of pretrial questions associated with drunk driving, double jeopardy, and suits against law enforcement officers. Two decisions sought to discern congressional intent in cases involving firearms and sex offenders. An ineffective of assistance of counsel decision rounded out the Term. <2. Sentencing> <2.1. Capital Punishment> The High Court largely relied on existing case law to dispense with capital punishment cases on its 2018 docket. Thus, it held: (1) The prosecution's repeated, racially motivated misconduct during the defendant's six trials for the same murders precluded a creditable Batson finding that the prosecutor's challenge of an African-American prospective juror was based on race-neutral factors ( Flowers v. Mississippi ); (2) Ford and Panetti barred executing a death row inmate with a deteriorating mental condition that prevented him from understanding that he was being punished for his misconduct, regardless of the cause of his condition, but not if he could merely no longer remember the facts surrounding his offense ( Madison v. Alabama ); (3) A state's resubmission of previously rejected intellectual-disability analysis did not change the result ( Moore v. Texas ); (4) The "clearly established Supreme Court precedent" exception to the bar on federal habeas relief for state inmates only applies to precedents in place at the time of state proceedings ( Shoop v. Hill ); and (5) The Baze-Glossip standards apply with equal force both to a general challenge to a method of execution and to an "as-applied" challenge based on an inmate's individual circumstances ( Bucklew v. Precythe ). <2.1.1. Flowers v. Mississippi, 139 S. Ct. 2228 (2019)> Holding : "[T]he trial court at Flowers' sixth trial committed clear error in concluding that the State's peremptory strike of [a] black prospective juror was not motivated in substantial part by discriminatory intent." Background : State authorities prosecuted Flowers six times for an offense in which a furniture store owner and three employees were shot to death. The state supreme court reversed Flowers' first and second convictions "due to numerous instances of prosecutorial misconduct." The state supreme court overturned Flowers' third conviction on the grounds of discriminatory jury selection. The fourth and fifth trials ended in hung juries. A sixth jury convicted Flowers of murder and sentenced him to death. Flowers argued that the prosecutor in his sixth trial used peremptory challenges in a racially discriminatory manner. Peremptory challenges allow prosecutors to have prospective jurors dismissed without having to explain the reason for the challenge. A prosecutor may not exercise peremptory challenges in a racially discriminatory manner. The Supreme Court in Batson v. Kentucky established a three-part test to assess claims of racially discriminatory use of peremptory challenges. First, the accused must make a prima facie showing that the challenge was made for discriminatory reasons. Second, the prosecutor has the burden of proving a race-neutral justification for the challenge. Third, the trial court must determine whether the prosecutor has satisfied his burden. The Mississippi Supreme Court considered the prosecutor's peremptory challenges to be race neutral based on valid and not pretextual reasons. The U.S. Supreme Court initially returned Flowers to the state courts for reconsideration in light of its decision in Foster v. Chatman . In Foster , the High Court held that the record demonstrated that the state judiciary had failed the third Batson test determining whether the state had satisfied the standard that its peremptory strikes be race-neutral. On remand, the Mississippi Supreme Court maintained its earlier assessment Flowers' trial court had not erred in finding that the prosecution's peremptory challenges were race-neutral. Supreme Court : The U.S. Supreme Court again reversed and returned the case to the Mississippi courts. The Court, speaking through Justice Kavanaugh, declared "[f]our critical facts, taken together, require reversal: First , in the six trials combined, the State employed its peremptory challenges to strike 41 of the 42 black prospective jurors that it could have struck. Second , in the most recent trial, the sixth trial, the State exercised peremptory strikes against five of the six black prospective jurors. Third , at the sixth trial, in an apparent attempt to find pretextual reasons to strike black prospective jurors, the State engaged in dramatically disparate questioning of black and white prospective jurors. Fourth , the State then struck at least one black prospective juror, Carolyn Wright, who was similarly situated to white prospective jurors who were not struck by the State. Justice Alito concurred because of the "unique combinations of circumstances present." Justices Thomas and Gorsuch dissented on the grounds that the prosecutor had presented sufficient race-neutral reasons for the challenges. <2.1.2. Madison v. Alabama, 139 S. Ct. 718 (2019)> Holding : "First, under Ford and Panetti , the Eighth Amendment may permit executing Madison even if he cannot remember committing his crime. Second, under those same decisions, the Eighth Amendment may prohibit executing Madison even though he suffers from dementia, rather than delusions. The sole question on which Madison's competency depends is whether he can reach a 'rational understanding' of why the State wants to execute him." Background : The Supreme Court's Ford and Panetti decisions lie at the heart of the Court's decision in Madis on . In Ford v. Wainwright , the Court held that the Eighth Amendment prohibits executing a defendant who is insane. In Panetti v. Quarterman , the Court held that the state may not execute a death-row inmate "whose mental illness deprives him of 'the mental capacity to understand that [he] is being executed as a punishment for crime." During a dispute with his former girlfriend, Madison murdered a police officer. He was convicted and sentenced to death. As his case passed through the various stages of state and federal review, Madison suffered a series of strokes leaving him with a continuously eroding mental condition that he asserted precluded his execution. After Alabama set Madison's execution date, he petitioned the state court for a stay on the grounds of his mental health. The state court denied his petition. Madison then sought federal habeas corpus relief. The district court concluded that the state court had correctly interpreted federal law. The U.S. Court of Appeals for the Eleventh Circuit, however, held that if Madison could not remember the facts of his crime, he could not understand the link between his crime and the decision to execute him. The Supreme Court reversed and remanded the case with the observation that "[n]either Panetti nor Ford 'clearly established' that a prisoner is incompetent to be executed because of a failure to remember his commission of the crime, as distinct from a failure to rationally comprehend the concepts of crime and punishment as applied in his case." Back in state court, the government contended that: (1) neither Madison's memory loss nor any dementia barred his execution and (2) he had failed to prove that he was either delusional or psychotic which might have provided the grounds to stay his execution. The state court agreed and Madison asked the Supreme Court for review. Supreme Court : Speaking for the Court, Justice Kagan emphasized that the critical question was whether Madison lacked the mental capacity to "reach a 'rational understanding' of why the State wants to execute him." The Court returned the case to state court to determine with a reminder that Madison's loss of memory, alone, does not bar his execution but a want of mental capacity would bar to execution regardless of whether the incapacity resulted from dementia or delusion. In dissent, Justice Alito, joined by Justices Gorsuch and Thomas, objected that the case should be resolved solely on the basis for which certiorari was granted: "Does the Eighth Amendment prohibit the execution of a murderer who cannot recall committing the murder for which the death sentence was imposed?" <2.1.3. Moore v. Texas, 139 S. Ct. 666 (2019) (Moore II)> Holding : The Texas Court of Criminal Appeals again erred in assessing and denying a death-row inmate's claim of intellectual disability. Background : In 1980, a Texas state court convicted Moore and sentenced him to death for a murder committed during an attempted robbery. In 2002, the Supreme Court held in Atkins that the Eighth Amendment bars executing an intellectually-disabled death row inmate. In 2014, the Court in Hall held unconstitutional a "rigid rule" under which no one with an IQ above 70 could be considered "intellectually-disabled" for death penalty purposes. In the same year, a Texas state habeas court found Moore to be intellectually disabled and recommended that he be declared ineligible for the death penalty. The Texas Court of Criminal Appeals declined to do this in Moore I . Moore I : The Texas Court of Criminal Appeals faulted the state habeas court for failing to apply the Texas appellate court's Briseno standard for intellectual disability and applying the American Association on Intellectual and Developmental Disabilities' [AAIDD] standards instead. The Supreme Court vacated and remanded the case, faulting the Texas Court of Criminal Appeals' for, among other things, relying on unadjusted IQ scores in spite of the Court's Hall decision and using a lay assessment of intellectual disability in its Briseno standard. Moore II : On remand, the Texas Court of Criminal Appeals again concluded that Moore was not intellectually disabled for capital punishment purposes. The Supreme Court reversed and remanded the case to the Texas Court of Criminal Appeals with a per curiam opinion, which reiterated the standard that the lower court should use and identified instances in which the Texas court had applied the standard improperly. The Supreme Court explained that to designate a death row inmate to be ineligible for execution, "a court must see: (1) deficits in intellectual functioning primarily a test related criterion; (2) adaptive deficits, 'assessed using both clinical evaluation and individualized measures;' and (3) the onset of these deficits while the defendant was still a minor." The Supreme Court cited "at least" five instances of the lower court misapplying the standard: First, the Texas Court of Criminal Appeals "overemphasized Moore's perceived adaptive strengths. But the medical community," we said, "focuses the adaptive-functioning inquiry on adaptive deficits." Second, the appeals court "stressed Moore's improved behavior in prison." But "[c]linicians caution against reliance on adaptive strengths developed "in a controlled setting," as a prison surely is. Third, the appeals court "concluded that Moore's record of academic failure childhood abuse [,] and suffering detracted from a determination that his intellect and adaptive deficits were related." But "in the medical community," those "traumatic experiences" are considered "' risk factors' for intellectual disability." Fourth, the Texas Court of Criminal Appeals required "Moore to show that his adaptive deficits were not related to 'a personality disorder.' But clinicians recognize that the "existence of a personality disorder or mental-health issue is 'not evidence that a person does not also have intellectual disability.'" Fifth, the appeals court directed state courts, when examining adaptive deficits, to rely upon certain factors set forth in a Texas case called Ex parte Briseno . We criticized the use of these factors both because they had no grounding in prevailing medical practice, and because they invited "lay stereotypes" to guide assessment of intellectual disability. Emphasizing the Briseno factors over clinical factors, we said, "creat[es] an unacceptable risk that person with intellectual disability will be executed." Chief Justice Roberts, who had dissented earlier, concurred in the decision as the arguments the Court rejected earlier were no more persuasive when presented a second time. Justice Alito, joined by Justices Thomas and Gorsuch, contended that the Court had given the lower court insufficient guidance in Moore I and that the case should be returned with clearer instructions. <2.1.4. Shoop v. Hill, 139 S. Ct. 504 (2019)> Holding : Federal courts may not grant state prisoners habeas relief based on "clearly established" Supreme Court precedent when the precedent is established after the state proceedings concluded. Background : In 1986, an Ohio state court convicted Hill, and sentenced him to death, for kidnaping, raping, and murdering a 12-year old. Hill petitioned for federal habeas corpus relief following his unsuccessful state court appeals. In 2002, the U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit) returned Hill's habeas case to state court to address Hill's claim that his mental retardation prevented his execution in light of Atkins . The state courts found Hill competent for execution, and Hill again filed for federal habeas relief. Ordinarily, a federal court may not grant a state prisoner habeas relief unless the state courts have failed to follow clearly established Supreme Court precedent. Although Moore I occurred after the state court proceedings, the Sixth Circuit thought Moore I showed that Atkins was "clearly established." Supreme Court : The Sixth Circuit's reasoning did not convince the Supreme Court. The Court's per curiam opinion noted that following Atkins , the Supreme Court continued to elaborate on Atkins in both H a ll and Moore I . In addition, the Court noted the Sixth Circuit's use of Moore I 's analysis in its proceedings and opinion, concluding that, "[b]ecause the reasoning of the Court of Appeals leans so heavily on Moore [I] , its decision must be vacated." <2.1.5. Bucklew v. Precythe, 139 S. Ct. 1112 (2019)> Holding : A death-row inmate challenging the state's method of execution must show that the state's method involves a risk of severe pain and that a feasible, readily available alternative method will significantly reduce the risk of pain. The Supreme Court reasoned, "[E]ven if execution by nitrogen hypoxia were a feasible and readily implemented alternative to the State's chosen method, Mr. Bucklew has still failed to present any evidence suggesting that it would significantly reduce his risk of pain." Background : In 1996, Bucklew stole a car; kidnapped, beat, and raped his former girlfriend; murdered a man from whom she had sought refuge; attacked her mother with a hammer; and wounded an officer during the shootout that lead to his capture. Having exhausted his direct appeals and opportunities for collateral review, Bucklew sought a preliminary injunction at the eleventh hour to block his execution, claiming that an unusual medical condition would render the state's method of execution particularly painful and therefore uniquely cruel and unusual in violation of the Eighth Amendment. The federal district court granted the state's motion for summary judgment and the U.S. Court of Appeals for the Eighth Circuit affirmed. Supreme Court : The Supreme Court agreed. A decade earlier, Chief Justice Roberts and two colleagues in Baze v. Rees identified an Eighth Amendment standard governing challenges to methods of execution. First, the state's method must involve a risk of severe pain. Second, "[t]o qualify, the [proffered] alternative procedure must be feasible, readily implemented, and in fact significantly reduce a substantial risk of severe pain." Third, the state must unjustifiably persist in using its more painful method. Justices Thomas and Scalia had concurred in the result, reasoning that "a method of execution only violates the Eighth Amendment if it is deliberately designed to inflict pain." Several years later in Glossip v. Gross , when a second method of execution became more common, the Court applied the same standard (the "inmates did not show that the risks they identified were substantial and imminent and they did not establish the existence of a known and available alternative method of execution that would entail significantly less severe risk."). In 2019, Justice Gorsuch, writing for the Court, rejected Bucklew's contention that his unique situation warranted applying a standard other than that formulated in Baze and Glossip . From Justice Gorsuch's perspective, Baze-Glossip established that an Eighth Amendment analysis always involves comparing alternative levels of suffering. Bucklew failed to present evidence of a feasible, readily available alternative execution method or to establish that any such alternative would significantly reduce the risk of severe pain. The four dissenters argued that Glossip's sweeping language regarding its standard's applicability in all cases must be put in context and subject to the kind of exceptions that Bucklew raised. <2.2. Violent Crime Cases> Among other things, the Supreme Court's 2019 violent crime cases explored what constitutes a violent crime with respect to three statutes: 18 U.S.C. 924(e) (The Armed Career Criminal Act (ACCA)), 18 U.S.C. 924(c) (the firearm-in-furtherance statute), and 18 U.S.C. 16 (the general definition statute). These provisions are similar with each having an elements clause and a residual clause. The ACCA defines the term "violent felony" as a felony that: (i) has as an element the use, attempted use, or threatened use of physical force against the person of another [the elements clause]; or (ii) is burglary, arson, or extortion, involves use of explosives [the specific offense clause], or otherwise involves conduct that presents a serious potential risk of physical injury to another [the residual clause]. Section 924(c) defines the term "crime of violence" to be "an offense that is a felony and: (A) has as an element the use, attempted use, or threatened use of physical force against the person or property of another, or (B) that by its nature, involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense. Section 16 defines the term "crime of violence" as: (a) an offense that has as an element the use, attempted use, or threatened use of physical force against the person or property of another, or (b) any other offense that is a felony and that, by its nature, involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense. In 1990, the Supreme Court addressed an ACCA case in Taylor v. United States . Under the ACCA, courts must sentence defendants convicted of federal unlawful possession of a firearm to prison for at least 15 years if the defendant has three or more prior violent felony convictions. Taylor had a prior state burglary conviction in addition to other offenses. The ACCA defines violent felony to include "burglary," which the Court found to mean "unlawful or unprivileged entry into, or remaining in, a building or structure, with intent to commit a crime." To decide whether Taylor's state burglary conviction constituted an ACCA burglary conviction, the Court examined the state burglary statute to determine whether a jury would have to find each element of an ACCA burglary offense. The Court held that Taylor's state burglary conviction did not qualify as an ACCA predicate because his state conviction might not have required proof of each element of the ACCA offense ( e.g ., the state statute covered burglarizing a vehicle, while the ACCA limited burglaries to "building[s] or structure[s]"). Following Taylor , the Court declared the ACCA residual clause (" otherwise involves conduct that presents a serious potential risk of physical injury ") unconstitutionally vague in Johnson v. United States . Three years later in Sessions v. Dimaya , the Court found the residual clause in 18 U.S.C. 16(b) (" any offense that by its nature, involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense ") to be unconstitutionally vague. In 2019, the Court found that Section 924(c)'s language (" involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense ") to be unconstitutionally vague in United States v. Davi s . At the same time, the High Court endorsed penalties under the elements and specific offenses clauses of the ACCA in Stokeling v. United Stat es , United States v. Stitt , and Quarles v. United States . <2.2.1. United States v. Davis, 139 S. Ct. 2319 (2019)> Holding : Section 924(c)'s residual clause is constitutionally vague. Background : In Davis , the government argued that the vagueness issue that permeated the residual clauses in the ACCA and Section 16(b) cases could be avoided if the courts abandoned the categorical approach and examined the facts underlying a particular conviction to determine whether the offense actually involved a substantial risk of injury to another. Davis committed a series of gas station robberies armed with a sawed off shotgun. He was convicted and sentenced for multiple Hobbs Act robbery offenses, possession of a firearm by a felon, and under Section 924(c)'s residual clause. The U.S. Court of Appeals for the Fifth Circuit held the residual clause to be unconstitutionally vague and vacated the Section 924(c) conviction. Supreme Court : The Supreme Court affirmed the Fifth Circuit's conclusion and returned the case to the lower courts for resentencing. The government had urged the Supreme Court to analyze the case using a "case-specific" approach rather than the "categorical" approach, conceding that the residual clause is unconstitutionally vague under the categorical standard. The Court acknowledged that a case-specific standard would alleviate at least some constitutional concerns. Justice Gorsuch, writing for the majority, explained that Section 924(c)'s text, context, and history preclude a case-specific approach. First, the residual clause refers to an "offense" that risks the use of physical force "by its nature." As Justice Gorsuch stated, "[I]n plain English, when we speak of the nature of an offense, we're talking about 'what an offense normally entails, not what happened to occur on one occasion.'" Second, in the federal criminal code, statutes may refer to one of the twin definitions of a "crime of violence" in Sections 16 and 924(c). Justice Gorsuch stated: "To hold, as the government urges, that 16(b) [the section's residual clause] requires the categorical approach while 924(c)(3)(B) [that section's residual clause] requires the case-specific approach would make a hash of the federal criminal code." Third, Congress initially created the two sections within the same statute. At first, relying on the Section 16 definition for Section 924(c), and soon thereafter copying Section 16's definition into Section 924(c)(3). The Court stated: "What's more, when Congress copie[d] 16(b)'s language into 924(c) in 1986, it proceeded on the premise that the language required a categorical approach. By then courts had, as the government puts it, 'beg[u]n to settle' on the view that 16(b) demanded a categorical analysis." Writing for the four dissenting Justices, Justice Kavanaugh favored a case-specific approach as consistent with Section 924(c)'s language and the principle of constitutional avoidance. <2.2.2. United States v. Stitt, 139 S. Ct. 399 (2018)> Holding : Under the ACCA's specific crimes clause, the generic crime of "burglary" covers unlawfully entering, or remaining in, a building or structure, including mobile homes, trailers, tents, or vehicles, if they are designed, adapted, or customarily used for overnight accommodations of individuals. Background : In Stitt, the Supreme Court expanded on Mathis v. United States in which it had held that merely breaking into a plane, boat, or truck may not constitute burglary under the ACCA. In Stitt , the Court said that breaking into a plane, boat, or truck that is designed or adapted for overnight accommodation is ACCA burglary. A federal jury convicted Stitt, who had six previous Tennessee aggravated burglary convictions, on a charge of being a felon in possession of a firearm. The Tennessee aggravated burglary statute outlaws "burglary of a habitation and defines 'habitation' as 'any structure which is designed or adapted for the overnight accommodation of persons.' The term 'habitation' includes 'mobile homes, trailers, and tents,' as well as any 'self-propelled vehicle that is designed or adapted for the overnight accommodation of persons and is actually occupied at the time of initial entry by the defendant.'" The U.S. Court of Appeals for the Sixth Circuit concluded that the Tennessee statute was broader than the ACCA generic burglary definition and consequently could not serve as an ACCA predicate. Sims, whose case the Supreme Court joined with Stitt's, pleaded guilty to a felon-in-possession charge. His record included two ACCA predicate drug convictions and two convictions under the Arkansas residential burglary statute, which provides that residential burglary occurs when an individual "enters or remains unlawfully in a residential occupiable structure of another person with the purpose of committing any offense punishable by imprisonment." A "'residential occupiable structure' means a vehicle, building, or other structure: (i)[i]n which any person lives; or (ii) [t]hat is customarily used for overnight accommodation of a person whether or not a person is actually present." The U.S. Court of Appeals for the Eighth Circuit "conclude[d] that Arkansas residential burglary categorically sweeps more broadly than [ACCA] generic burglary. Accordingly, Sims's Arkansas residential burglary convictions do not qualify as ACCA predicate offenses." Supreme Court : The Supreme Court unanimously overturned both appellate court decisions. In the opinion for the Court, Justice Breyer pointed out that the ACCA generic burglary definition represented an assumption of Congress's understanding of state law at the time of ACCA's enactment. In 1986, a majority of the states included vehicles, designed or adapted for overnight occupancy, within burglary's location element. He also noted that Congress crafted the ACCA with an eye to the risk of violent confrontations between an intruder and an occupant, a risk little altered by the physical characteristics of the lodging where the clash occurs. <2.2.3. Quarles v. United States, 139 S. Ct. 1872 (2019)> Holding : Under the ACCA's specific crimes clause, the generic burglary definition includes entry or remaining in a building or structure with the intent to commit a crime formed while remaining unlawfully present. Background : Grand Rapids, Michigan police officers arrested Quarles after he assaulted his girlfriend and threatened her with a gun. Quarles had previously committed third-degree home invasion and on two occasions committed assault with a deadly weapon. Third-degree home invasion occurs when an individual "breaks and enters a dwelling or enters a dwelling without permission, and, at any time while he or she is entering, present in, or existing the dwelling, commits a misdemeanor." Quarles argued that his home invasion conviction could not count as an ACCA predicate offense because the Michigan statute permitted conviction for conduct that the ACCA did not cover under its generic definition of burglary, which is "unlawful or privileged entry into, or remaining in, a building or structure, with intent to commit a crime." Neither the federal district court nor the U.S. Court of Appeals for the Sixth Circuit accepted Quarles' contention. Supreme Court : The Supreme Court affirmed. Writing for a unanimous Court, Justice Kavanaugh noted that, because "remaining" is continuous, the generic definition by condemning unlawfully remaining -in refutes "that burglary only occurs when the defendant has the intent to commit a crime at the exact mome nt when he or she fir st unlawfully remains in a building or structure." Justice Kavanaugh encapsulated the Court's view, stating: The Armed Career Criminal Act does not define the term "burglary." In Taylor , the Court explained that 'Congress did not wish to specify an exact formulation that an offense must meet in order to count as "burglary" for enhancement purposes. And the Court recognized that the definitions of burglary "vary" among the States. The Taylor Court therefore interpreted the generic term "burglary" in 924(e) in light of: the ordinary understanding of burglary as of 1986 [when the ACCA was enacted]; the States' laws at that time Congress' recognition of the dangers of burglary; and Congress' stated objective of imposing increased punishment on armed career criminals who had committed prior burglaries. Looking at those sources, the Taylor Court interpreted generic burglary under 924(e) to encompass remaining-in burglary. Looking at those same sources, we interpret remaining in-in burglary under 924(e) to occur when the defendant forms the intent to commit a crime at any time while unlawfully present in a building or structure. <2.2.4. Stokeling v. United States, 139 S. Ct. 544 (2019)> Holding : Conviction under Florida robbery statute qualifies as a crime of violence under the ACCA elements clause. Backgrou nd : Police discovered a firearm in Stokeling's possession while investigating a burglary of a restaurant where he worked. At the time, he had already been convicted of home invasion, kidnapping, and robbery. At sentencing for the federal firearms charge, Stokeling challenged application of the ACCA. He argued that the Florida robbery statute under which he was convicted included "sudden snatch" robbery. Robbery under the ACCA's element clause reached only robberies that had "as an element the use, attempted use, or threatened use of physical force." Thus, he contended the broader Florida robbery statute did not qualify as a crime of violence under the ACCA's element clause. The district court agreed, but the U.S. Court of Appeals for the Eleventh Circuit reversed based on its earlier decisions. Supreme Court : The Supreme Court affirmed the Eleventh Circuit's opinion. Writing for the Court, Justice Thomas concluded "that the elements clause encompasses robbery offenses that require the criminal to overcome the victim's resistance." He noted that, as originally crafted, the ACCA recognized only prior robbery and burglary predicate convictions and defined "robbery" in terms that "mirrored the elements of the common-law crime of robbery, which has long required force or violence. At common law, an unlawful taking was merely larceny unless the crime involved 'violence.' And 'violence' was 'committed if sufficient force [was] exerted to overcome the resistance encountered.'" "Thus," Justice Thomas explained, "the application of the categorical approach to the Florida robbery statute is straightforward. Because the term 'physical force' in [the] ACCA encompasses the degree of force necessary to commit common-law robbery, and because Florida robbery requires the same degree of 'force,' Florida robbery qualifies as an ACCA-predicate offense under the elements clause." Joined by three members of the Court, Justice Sotomayor dissented, writing that the Florida statute allowed conviction based on a minimal level of force while the elements clause did not. <2.3. Excessive Fines> <2.3.1. Timbs v. Indiana, 139 S. Ct. 682 (2019)> Holding : The Eighth Amendment's Excessive Fines Clause is incorporated in the Fourteenth Amendment's Due Process Clause and therefore binds the States. Background : The Eighth Amendment denies federal officials authority to require excessive bail, impose excessive fines, or inflict cruel and unusual punishments. The Due Process Clause of the Fourteenth Amendment imposes on states many Bill of Rights limits on the federal government. The Supreme Court has held that the Due Process Clause incorporates the Eighth Amendment's Cruel and Unusual Punishment Clause. With insurance policy proceeds, Timbs bought a new Land Rover to use in his drug trafficking enterprise. Following his conviction, the state trial court did not order confiscation of the Land Rover, reasoning that the vehicle's forfeiture would violate the Eighth Amendment's Excessive Fines Clause as applied to the state through the Fourteenth Amendment. The Indiana Court of Appeals concurred. The Indiana Supreme Court, however, reversed the trial court's decision because it "decline[d] to find or assume incorporation until the [U.S.] Supreme Court decides the issue authoritatively," which the U.S. Supreme Court did in Timbs v. Indiana . Supreme Court : Writing for the Court, Justice Ginsburg traced the concept of excessive fines from the Magna Carte to the English Bill of Rights to the laws of a majority of the original thirteen states at the Constitution's ratification and finally to the laws of a vast majority of the states at the Fourteenth Amendment's ratification. Justice Ginsburg wrote: Like the Eighth Amendment's proscriptions of "cruel and unusual punishment" and "[e]xcessive bail," the protection against excessive fines guards against abuses of government's punitive or criminal-law-enforcement authority. This safeguard, we hold, is "fundamental to our scheme of ordered liberty," with "dee[p] root[s] in [our] history and tradition." The Excessive Fines Clause is therefore incorporated by the Due Process Clause of the Fourteenth Amendment. While the Justices agreed that the Fourteenth Amendment incorporates the Eighth Amendment's Excessive Fines Clause, Justices Thomas and Gorsuch viewed this as resulting from the Privileges and Immunities Clause rather than the Due Process Clause. In the Supreme Court, the State unsuccessfully challenged a feature of Eighth Amendment law, rather than incorporation itself. In Austin v. United States , the Court had held that forfeitures, authorized at least in part with punitive intent and effect, constitute fines for purposes of the Excessive Fines Clause, regardless of whether confiscation occurs by criminal trial or a civil in rem proceeding. The Court declined to re-examine Austin or to endorse less than full incorporation. <2.4. Supervised Release> <2.4.1. United States v. Haymond, 139 S. Ct. 2369 (2019)> Holding : By imposing a mandatory term of imprisonment after revoking supervised release based on finding by a preponderance of the evidence that Haymond had breached his conditions of supervised release, a federal court violated the Sixth Amendment's jury trial guarantee and the Fifth Amendment Due Process proof beyond-a-reasonable doubt standard for criminal cases. The Court left for the lower court to determine whether the error was harmless and, if not, the appropriate remedy. Background : Haymond involved the federal supervised release statute, 18 U.S.C. 3583, which subjects federal inmates on their release from prison to certain conditions usually for a maximum of five years. For certain sex offenses, however, the supervised release term is at least five years and may be for the sex offender's entire life. Under the statute, a court may revoke an individual's supervised release and return him to prison if, by a preponderance of the evidence, the court finds that the individual has violated a condition of his release. Ordinarily, when a court revokes supervised release, it re-imprisons the individual for no longer than his remaining time of supervised release and, in any event, for no longer than five years. Under Subsection 3583(k), a court must sentence a sex offender registrant to re-imprisonment for at least five years when the court revokes his supervised release based on a sex offense. A federal jury convicted Haymond of possessing child pornography, which is punishable by imprisonment for not more than 10 years. The district court sentenced him to 38 months in prison and supervised release for 10 years thereafter. The court conditioned Haymond's supervised release on him committing no further crimes, submitting to periodic polygraph examinations, and consenting to searches by his probation officer. Haymond passed several polygraph tests, suggesting he had neither viewed nor possessed child pornography since his release. Yet, when Haymond's probation officer seized Haymond's cell phone, he found images of child pornography cached there. At his revocation hearing, Haymond presented expert testimony that the material could have been put on his cell phone without his knowledge. Nevertheless, the court concluded that it was more likely than not that Haymond had knowingly possessed child pornography in violation of a condition of his release. The court "with reservations" ordered him returned to prison for the mandatory minimum five years. The U.S. Court of Appeals for the Tenth Circuit reversed holding the mandatory minimum feature of the sentencing revocation procedure violates the Fifth and Sixth Amendments. Supreme Court : While five Justice agreed that Subsection 3583(k) is unconstitutional, they did not agree why. Joined by Justices Ginsburg, Sotomayor, and Kagan, Justice Gorsuch concluded that the subsection, which increased Haymond's term of imprisonment, applied a preponderance of the evidence standard, rather than providing for a jury to find guilt beyond a reasonable doubt: Based on the facts reflected in the jury's verdict, Mr. Haymond faced a lawful prison term of between zero and 10 years But then a judge acting without a jury and based only on a preponderance of the evidence found that Mr. Haymond had engaged in additional conduct in violation of the terms of his supervised release. Under 3583(k), that judicial factfinding triggered a new punishment in the form of a prison term of at least five years and up to life. So the facts the judge found here increased 'the legally prescribed range of allowable sentences in violation of the fifth and Sixth Amendments. In this case, that meant Mr. Haymond faced a minimum of five years in prison instead of a little as none. Justice Breyer concurred in the judgment but not the rationale. For Justice Breyer, Subsection 3583(k) has three characteristics that together suggest the punishment is for a new crime rather than a continuation of punishment for the crime for which the jury convicted him: First , 3583(k) applies only when a defendant commits a discrete set of federal criminal offenses specified in the statute. Second , 3583(k) takes away the judge's discretion to decide whether violation of a condition of supervised release should result in imprisonment and for how long. Third , 3583(k) limits the judge's discretion in a particular manner: by imposing a mandatory minimum term of imprisonment of 'not less than 5 years' upon a judge's finding that a defendant 'has commit[ted] any' listed 'criminal offense.' Taken together, these features of 3583(k) more closely resemble the punishment of new criminal offenses, but without granting a defendant the rights including the jury right, that attend a new criminal prosecution. The plurality agreed to remand the case to the lower court to address whether the issue could be resolved by requiring that Subsection 3583(k) revocation hearings be conducted before a jury using the standard of proof beyond a reasonable doubt. Joined by Justices Thomas and Kavanaugh, Justice Alito wrote a dissent maintaining that a jury and "proof beyond a reasonable doubt" are not constitutionally required for supervisory release revocation proceedings and that to suggest otherwise has serious implications. <2.4.2. Mont v. United States, 139 S. Ct. 1826 (2019)> Holding : Time served in state pretrial detention while on federal supervised release tolls the running of the term of federal supervised release if time in state pretrial detention counts as time served for state conviction purposes. Background : On March 6, 2012, U.S. prison officials released Mont and he began serving a five-year term of federal supervised release, conditioned on not committing any new federal or state crimes. On June 1, 2016, state authorities arrested Mont on drug trafficking charges and held him in pretrial detention. On March 21, 2017, 15 days after Mont's term of supervised release was scheduled to expire, a state trial court sentenced him to six years in prison on state charges with credit for the 10 months he had served in state pretrial detention. On March 30, 2017, the U.S. District Court scheduled a supervisory release revocation hearing. Although Mont argued his term of supervised release had expired, the court revoked his supervised release and sentenced him to an addition 42 months in federal prison to be served upon completing his state sentence. The U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit) affirmed on the basis of Sixth Circuit precedent interpreting the law governing supervised release. The statute stated, "[a] term of supervised release does not run during any period in which the person is imprisoned in connection with a conviction for a Federal, State, or local crime unless the imprisonment is for a period of less than 30 consecutive days." An earlier Sixth Circuit decision had concluded that, "[1] when a defendant is held for thirty days or longer in pretrial detention, and [2] he is later convicted for the offense for which he was held, and [3] his pretrial detention is credited as time served toward his sentence, then the pretrial detention is 'in connection with' a conviction and tolls the period of supervised release under 3624." Supreme Court : In Mont, interpreting Section 3624 divided both the federal courts of appeals and the Supreme Court , a majority of which sided with the Sixth Circuit. Writing for the Court, Justice Thomas explained that a person in pretrial detention is "imprisoned," and such imprisonment may be "in connection with a conviction," albeit after the fact. Justice Thomas also noted that Section 3624 does not qualify imprisonment with " after conviction." While the statute identifies a precise point at which supervised release begins, it is less clear where it ends. Referring to the section's statutory setting and purpose, Justice Thomas recognized supervised release to be a "conditional liberty" during time of good behavior, but punishment nonetheless. Justice Thomas stated: "[I]t would be an exceedingly odd construction of the statute to give a defendant the windfall of satisfying a new sentence of imprisonment and an old sentence of supervised release with the same period of pretrial detention." Joined by Justices Breyer, Kagan, and Gorsuch, Justice Sotomayor dissented, observing, "I cannot agree that a person 'is imprisoned in connection with a conviction' before any conviction has occurred." <3. U.S. Substantive Offense Statutes> The Supreme Court examined the scope of federal statutes that establish various criminal offenses in two cases. In the first, the Court held that, in order to convict a foreign national unlawfully present in the United States with knowingly possessing a firearm, the government must prove that the defendant knew both that he was in possession of a firearm and that he was unlawfully present in the country ( Rehaif v. United States ). In the second, the Justices held that Congress had validly authorized the Attorney General to apply the Sex Offender Registration and Notification Act (SORNA) to offenders convicted before SORNA's enactment ( Gundy v. United States ). <3.1. Firearms> <3.1.1. Rehaif v. United States, 139 S. Ct. 2191 (2019)> Holding : Conviction of an alien unlawfully present in the United States for unlawful firearms possession requires proof that the alien knew both that he was in possession of a firearm and that he was unlawfully present. Background : Rehaif entered the United States on a student visa. When the university to which he was admitted dismissed him for poor performance, it advised him that he would lose his immigration status unless he enrolled elsewhere, which he did not do. He went to a shooting range where he purchased ammunition and practiced using the range's firearms. The ammunition he bought came from out-of-state and the firearms he used were from Austria. Federal law declares it unlawful for an individual, unlawfully present in the United States, to possess a firearm or ammunition that has been transported or shipped in interstate or foreign commerce. A second statute makes it a federal crime to knowingly engage in such unlawful possession. At his trial, the U.S. district court advised the jury that the government did not have to prove that Rehaif knew that he was in the U.S. unlawfully. The jury convicted Rehaif, and the court sentenced him to prison for 18 months. The U.S. Court of Appeals for the Eleventh Circuit (Eleventh Circuit) affirmed Rehaif's conviction on several grounds. The Eleventh Circuit noted that conviction requires proof of three elements: "(1) the defendant falls within one of the categories [of disqualified possessors] ('the status element'); (2) the defendant possessed a firearm or ammunition ('the possession element'); and (3) the possession was 'in or affecting [interstate or foreign] commerce [(the jurisdictional element)].'" With regard to the status element, binding Eleventh Circuit case law dispensed with a mens rea requirement (sometimes referred to as a scienter, state of mind, or knowledge requirement). Supreme Court : The Supreme Court held that "the Government therefore must prove both that the defendant knew he possessed a firearm and also that he knew he belonged to the relevant category of persons barred from possessing a firearm," and reversed Rehaif's conviction. Speaking for a majority of the Court, Justice Breyer pointed out that mens rea questions are first and foremost a matter of congressional intent. He noted that the "longstanding presumption, traceable to the common law, that Congress intends to require a defendant to possess a culpable mental state regarding 'each of the statutory elements that criminalize otherwise innocent conduct.'" Nevertheless, he explained that the presumption does not necessarily apply to all of a crime's elements. For example, it rarely attaches to jurisdictional elements, such as interstate shipment or use of the mail, that "do not describe the 'evil Congress seeks to prevent,' but instead simply ensure that the Federal Government has the constitutional authority to regulate the defendant's conduct." Justice Breyer acknowledged that the Court has "typically declined to apply the presumption in favor of scienter in cases involving statutory provisions that form part of a 'regulatory' or 'public welfare' program and carry only minor penalties." Public welfare offenses generally involve a regulatory regime designed to protect the public from some exceptionally harmful product or device, such as mislabeled drugs, sulfuric acid, or hand grenades. These offenses ordinarily expose to criminal liability only those, such as manufacturers or shippers, who have placed themselves in a responsible relationship to such a public danger. Qualified regulatory statutes usually proscribe conduct that was innocent at common law and punish offenders relatively lightly. Here, Justice Breyer emphasized, the public welfare exception did not apply because the "firearms provisions before us are not part of a regulatory or public welfare program, and they carry a potential penalty of 10 years in prison that we have previously described as 'harsh.'" Consequences : On remand, the Court left the Eleventh Circuit to determine whether the erroneous jury instruction constituted harmless error. The Court left unresolved what is required to show that a defendant knew of his status. Federal law bars firearm possession by classes of individuals other than illegal aliens, i.e ., (1) convicted felons; (2) fugitives; (3) drug addicts; (4) the mentally disabled; (5) those dishonorably discharged from the armed services; (6) those who have denounced their U.S. citizenship; (7) those under certain restraining orders; and (8) those convicted of misdemeanor domestic violence. The Court "express[ed] no view, however, about what precisely the Government must prove to establish a defendant's knowledge of status" in the case of these other instances of disqualifying status. Justice Alito's dissent, which Justice Thomas joined, may have influenced the Court to limit the opinion's scope. Among other criticisms, Justice Alito focused on unlawful possession by others in addition to unlawfully present foreign nationals, stating: It [the unlawful possession statute] probably does more to combat gun violence than any other federal law. It prohibits the possession of firearms by, among others, convicted felons, mentally ill persons found by a court to present a danger to the community, stalkers, harassers, perpetrators of domestic violence, and illegal aliens. Today's decision will make it significantly harder to convict persons falling into some of these categories, and the decision will create a mountain of problems with respect to the thousands of prisoners currently serving terms for [unlawful possession] convictions. <3.2. SORNA> <3.2.1. Gundy v. United States, 139 U.S. 2116 (2019)> H olding : Authorizing the Attorney General to issue regulations, as soon as feasible, governing the registration requirements under the Sex Offender Registration and Notification Act (SORNA) for pre-Act offenders did not violate the nondelegation doctrine. Background : In Gundy v. United States , the defendant argued unsuccessfully that the federal statute featured an unconstitutional delegation of Congress's legislative authority. The alignment of the Justices, however, suggests that the Court may revisit the issue in the near future. Four Justices considered the delegation proper; three did not; one joined the Court too late to participate fully; and one voted with the four based on precedents that he considered occasionally marked by "extraordinarily capacious standards" and would have voted to reexamine. SORNA : Congress passed SORNA in 2006. Congress designed SORNA in order to provide a publicly available, online gateway to federal, state, tribal, and territorial registration systems that met certain minimum federal standards. It authorized the Attorney General to promulgate implementing regulations including provisions concerning SORNA's retroactive application. An individual with a qualifying state offense, who fails to follow SORNA's registration and updating requirements and subsequently travels interstate, is guilty of a federal crime. An individual with a qualifying federal, tribal, or territorial sex offense conviction, who fails to follow SORNA's registration and updating requirements, is also guilty of a federal offense . Second Circuit : While Gundy was on federal supervised release, a Maryland state court convicted him of a state sex offense and a federal court determined that he had violated the terms of his supervised release as a consequence. The federal court sentenced him to prison for two years to be served when he completed his Maryland sentence. While Gundy was serving time in Maryland, Congress passed SORNA and the Attorney General activated its retroactive application. Maryland prison authorities subsequently transferred Gundy to a federal correctional facility in Pennsylvania to serve his federal sentence. Gundy did not register under SORNA either while in state or federal custody. Towards the end of his sentence, federal authorities transferred him to a federal half-way house in New York and approved his request to travel unescorted from Pennsylvania to the half-way house. Thereafter, federal authorities charged him with interstate travel while failing to register as a sex offender. The district court dismissed the indictment under the misimpression that Gundy was not required to register. The U.S. Court of Appeals for the Second Circuit (Second Circuit) reversed. On remand from the Second Circuit, the district court convicted Gundy on the failure to register charge. The Second Circuit rejected his statutory interpretation arguments and observed that Gundy's other arguments on appeal were without merit "includ[ing] Gundy's argument made only for preservation purposes that SORNA violates antidelegation principles." Supreme Court : Gundy asked the Court to review four questions: (1) Whether convicted sex offenders are 'required to register' under the federal Sex Offender Notification and Registration Act ('SORNA') while in custody, regardless of how long they have until release. (2) Whether all offenders convicted of a qualifying sex offense prior to SORNA's enactment are 'required to register' under SORNA not later than August 1, 2008. (3) Whether a defendant violates 18 U.S.C. 2250(a), which requires interstate travel, where his only movement between states occurs while he is in the custody of the Federal Bureau of Prisons and serving a prison sentence. (4) Whether SORNA's delegation of authority to the Attorney General to issue regulations under 42 U.S.C. 16913(d) [now 34 U.S.C. 20913(d)] violates the nondelegation doctrine. The Justices addressed only the nondelegation question. While a majority agreed on the result, they did not agree on a rationale. Joined by Justices Ginsburg, Breyer, and Sotomayor, Justice Kagan declared that the "delegation easily passes constitutional muster" and voted to affirm the Second Circuit's pronouncement. Justice Alito also voted to affirm but did not join Justice Kagan's opinion, perhaps to avoid a 4-4 split on the Court. He explained that he thought the result was consistent with the Court's earlier cases, although he would prefer to reconsider them. Justice Gorsuch, joined by the Chief Justice and Justice Thomas, dissented. Justice Kavanaugh, who was seated late in the Court's term, did not participate in the case. The participating Justices read the Court's earlier cases differently. Justice Kagan pointed to the low bar the Court's earlier delegation decisions had set but conceded that the decisions had required a guiding "intelligible principle" or limiting policy statement to accompany the delegation. Justice Kagan noted, however, that the Court had only held a delegation to be invalid twice and then only because Congress had failed to provide "' any policy or standard' to confine discretion." She concluded that SORNA's direction to the Attorney General "to require pre-Act offenders to register as soon as feasible" was a far more confining policy statement than the "very broad delegations" the Court had approved in the past. Justice Gorsuch disputed the comparison, stating: "SORNA leaves the Attorney General free to impose on 500,000 pre-Act offenders all of the statute's requirements, some of them, or none of them. . . . In the end, there isn't a single other case where we have upheld executive authority over matters like these on the ground they constitute mere 'details.'" He found none of the executive fact-finding or overlapping legislative-executive powers in SORNA's delegation to the Attorney General that he discerned in the Court's precedents. Justices Kagan and Alito's opinions looked only at Court precedents. Examining these, Justice Gorsuch declared that, as least in the case of SORNA, his colleagues should have been more demanding. He stated: "[W]hile Congress can enlist considerable assistance from the executive branch in filling up details and finding facts, it may never hand off to the nation's chief prosecutor the power to write his own criminal code. That 'is delegation running riot.'" <4. Pretrial> Five decisions in the Supreme Court's most recent term dealt with pre-trial matters. One confirmed the continued validity of the double jeopardy dual sovereign doctrine ( Gamble v. United States ). A second addressed circumstances under which the Fourth Amendment permits the warrantless performance of a blood alcohol test on an individual suspected of drunk driving ( Mitchell v. Wisconsin ). Three others discussed the obstacles individuals face when they seek to sue officers for the manner in which the officers performed their law enforcement duties ( Nieves v. Bartlett ; McDonough v. Smith ; and City of Escondido v. Emmons ). <4.1. Double Jeopardy> <4.1.1. Gamble v. United States, 139 S. Ct. 1960 (2019)> Holding : The dual sovereign doctrine of the Fifth Amendment's Double Jeopardy Clause, which permits successive state and federal prosecutions for the same misconduct, remains in force. Background : Police stopped Gamble for a traffic violation, smelled marijuana, and searched his car, uncovering a handgun. State authorities prosecuted him for unlawful firearm possession under state law. Federal authorities also prosecuted him for unlawful firearm possession under federal law based on the same incident. Gamble challenged his federal indictment on double jeopardy grounds. In light of the Double Jeopardy Clause's dual sovereignty doctrine, the district court refused to dismiss the indictment and the U.S. Court of Appeals for the Eleventh Circuit (Eleventh Circuit) affirmed. Gamble petitioned the Supreme Court to reconsider the validity of the dual sovereignty doctrine, and the Court agreed. Supreme Court : Gamble continues the status quo. All but two members of the Court voted to continue the dual sovereignty doctrine. Writing the majority opinion, Justice Alito noted that the Double Jeopardy Clause's reference to the "same offence" implies a ban only on prosecution under the laws of the same sovereign. Justice Alito reviewed a continuous line of cases beginning in the early Nineteenth Century that endorsed the dual sovereignty doctrine. These precedents pose an obstacle to rejecting the doctrine because s tare decisis counsels against abandoning earlier precedents, which the majority declined to do. Justices Ginsburg and Gorsuch dissented separately because they considered the doctrine "misguided" and "wrong." <4.2. Drunk Driving> <4.2.1. Mitchell v. Wisconsin, 139 S. Ct. 2525 (2019)> Holding : A suspect's loss of consciousness following a probable cause arrest for drunk driving will almost always qualify for the exigent circumstances exception to the Fourth Amendment's warrant requirement. (Plurality). Ba ckground : Mitchell is the latest case in which the Court has wrestled with Fourth Amendment requirements in drunk driving cases. In the 1966 decision Schmerber v. California , the defendant hit a tree while drunk and was taken to the hospital. There, the arresting police officer directed a doctor to take a sample of Schmerber's blood for a blood alcohol test. The Supreme Court recognized that the Fourth Amendment protects against warrantless bodily intrusions in drunk driving cases, but it held admissible the test results based on the circumstances. In 2013, the Court held that the natural dissipation of alcohol in blood, without more, does not justify warrantless blood alcohol tests in drunk driving cases. Three years later, the Court decided that officers with probable cause might conduct warrantless breath tests incident to an arrest but they could not administer warrantless blood tests incident to an arrest for drunk driving or under an implied consent theory. In Mitchell , officers, acting on a complaint, discovered the defendant stumbling around the edge of a lake with his van parked nearby. They arrested him after he failed a preliminary field breath test and took him to the police station for a more exacting breath test. Along the way, Mitchell became unconscious. When the officers were unable to administer a second breath test at the station because Mitchell had passed out, they took him to a hospital for a blood test. As a result of the test, officials charged him with drunk driving. Mitchell sought unsuccessfully to suppress the results of the blood tests. Wisconsin appellate courts affirmed his conviction, as did a divided U.S. Supreme Court. Supreme Court : For four of the Justices, the issue was a matter of balance. Justice Alito, speaking for the four, listed a series of factors documenting the states' compelling interest in access to a reliable test to determine the extent of a suspect's intoxication: Highway safety is a legitimate public interest; In a good year, alcohol-related deaths occur at the rate of no more than one per hour; States rely heavily on blood alcohol limits as an effective means of promoting highway safety; Enforcing blood alcohol limits depends on reliable testing methods; Alcohol in the blood dissipates rapidly so speed is of the essence; When a reliable breathalyzer test cannot be administered, a blood test is the only comparable alternative; and Drivers who cannot remain conscious represent an even greater threat. In the eyes of the four, "the only question left, under our exigency doctrine, is whether this compelling need justifies a warrantless search because there is, furthermore, 'no time to secure a warrant.'" And they concluded, "[w]hen police have probable cause to believe a person has committed a drunk-driving offense and the driver's unconsciousness or stupor requires him to be taken to the hospital or similar facility before police have a reasonable opportunity to administer a standard evidentiary breath test, they may almost always order a warrantless blood test to measure the driver's BAC [blood alcohol content] without offending the Fourth Amendment." Justice Alito acknowledged that the case should be remanded to the Wisconsin courts to permit Mitchell to offer any evidence that the "police could not have reasonably judged that a warrant application would interfere with other pressing need or duties." Justice Thomas concurred in the result because he would have recognized a per se rule under which the dissipation of alcohol in blood would always justify a warrantless, probable cause test. With Justices Ginsburg and Kagan, Justice Sotomayor noted that, because Wisconsin admitted there was time to get a warrant, she would have held that "the Fourth Amendment requires police officers seeking to draw blood from a person suspected of drunk driving to get a warrant if possible." Because the lower courts had not addressed the exigent circumstance exception, Justice Gorsuch dissented on the grounds that the decision should have been postponed until the issue had been more fully developed below. <4.3. Section 1983> Section 1983 establishes a cause of action for those deprived, under color of law, of some right under the U.S. Constitution or other federal law. The successful plaintiff must overcome at least three hurdles: He must (1) establish that he has been deprived of a right under color of law, e.g ., Nievers v. Bartlett ; (2) satisfy Section 1983's procedural requirements, e.g ., McDonald v. Smith ; and (3) overcome any claim of qualified immunity, e.g., City of Escondido v. Emmons . <4.3.1. Nieves v. Bartlett, 139 S. Ct. 1715 (2019)> Holding : The existence of probable cause to arrest precludes a Section 1983 civil liability claim based on an alleged First Amendment retaliatory arrest, unless "a plaintiff presents objective evidence that he was arrested when otherwise similarly situated individuals not engaged in the same sort of protected speech had not been." Background : Officers arrested Bartlett at a raucous "Arctic Man" sports festival and "beer blast" in a remote area of Alaska. In an earlier encounter with Officer Nieves, Bartlett had refused to speak to Officer Nieves. Bartlett and the officers disputed whether Bartlett: (1) was drunk; (2) was loud and belligerent on two occasions; (3) got into Officer Wright's face to provoke a confrontation, or spoke closely to the officer in order to be heard over the loud music; and (4) refused to back away from Officer Wright, or was slow to back away because of a bad back. Charges against Bartlett were later dismissed, and he sued the officers under Section 1983 on several grounds, including a retaliatory arrest claim. Bartlett alleged that, at the time of his arrest, Officer Nieves said: "[B]et you wish you would have talked to me now." The U.S. District Court dismissed the complaint because it found that the officers had probable cause to arrest Bartlett. The U.S. Court of Appeals for the Ninth Circuit reversed based on Ford v. City of Yakima in which the Ninth Circuit had ruled that probable cause does not preclude a Section 1983 retaliatory arrest claim. Supreme Court : The Supreme Court disagreed, stating: "Because there was probable cause to arrest Bartlett, his retaliatory arrest claim fails as a matter of law." Writing for the Court, Chief Justice Roberts, acknowledged that, as a general rule, a First Amendment retaliatory arrest claim will survive in the face of probable cause to arrest, if the arrestee demonstrates that similarly situated, but silent, individuals had not been arrested. The case triggered four individual opinions. Justice Thomas concurred in part and in the judgment, disagreeing with the majority's disparate-application exception. Justice Gorsuch and Justice Ginsburg concurred in part and dissented in part. Justice Gorsuch's position was that "the absence of probable cause is not an absolute requirement of such a claim, and its presence is not an absolute defense." Justice Ginsburg questioned whether the case was the appropriate vehicle for the rule the majority announced. Justice Sotomayor, in dissent, took the position that probable cause does not always doom a Section 1983 First Amendment retaliatory arrest claim. <4.3.2. McDonough v. Smith, 139 S. Ct. 2149 (2019)> Holding : Statute of limitations for a Section 1983 cause of action alleging falsification of evidence "began to run when criminal proceedings against him terminated in his favor." Background : McDonough was a commissioner on a local board of elections when allegations of forged absentee ballots surfaced. A grand jury indicted McDonough. He was arrested and held for bail. His first trial ended in a mistrial. The jury acquitted him in a second trial. Just short of three years after his acquittal, McDonough sued the special prosecutor in federal court under Section 1983, claiming denial of due process in the form of malicious prosecution and fabrication of evidence. The U.S. District Court dismissed the malicious prosecution claim against the special prosecutor on the grounds of absolute prosecutorial immunity. The court also ruled that the three-year statute of limitations on McDonough's fabrication claim began to run when McDonough became aware of the fabrication not when he was acquitted. Thus, the statute of limitations had expired by the time McDonough filed his Section 1983 complaint. The U.S. Court of Appeals for the Second Circuit (Second Circuit) affirmed. Supreme Court : The Second Circuit noted a circuit split over whether the statute of limitations on due process fabrication claims begins to run with the claimant's exoneration or with his knowledge of the fabrication and its improper use. The Supreme Court agree to hear the case in order to resolve the issue. Writing for the Court, Justice Sotomayor explained that state law governs the length of the statute of limitations in Section 1983 cases. Federal law, however, determines when the statute of limitations begins to run based on "common-law principles governing analogous torts." The inquiry starts with identifying the constitutional or other federal right said to have been abridged under color of law. Justice Sotomayor accepted the Second Circuit's presumption that the Due Process Clause was the basis for McDonough's fabrication claim. While the Second Circuit had decided that common-law malicious prosecution, with its "end-of-game" exoneration requirement, did not match McDonough's fabrication claim, the Court ruled that common-law malicious prosecution was the most closely analogous tort to McDonough's fabrication claim. Justice Sotomayor pointed out that one involves a malice-driven, groundless prosecution, the other a thrust for conviction slaked by the use of fabricated evidence. "At bottom," she declared, "both claims challenge the integrity of criminal prosecutions undertaken 'pursuant to legal process.'" Moreover, she noted, the Second Circuit's approach would mean starting the statute of limitations clock when use of the fabricated evidence became obvious at trial or the return of the indictment. Either alternative presents the risk of parallel criminal and civil proceedings, and worse yet, the risk of inconsistent results. <4.3.3. City of Escondido v. Emmons, 139 S. Ct. 500 (2019)> Holding : "The Court of Appeals should have asked whether clearly established law prohibited the officers from stopping and taking down a man in these circumstances. Instead, the Court of Appeals defined the clearly established right at a high level of generality by saying only that the 'right to be free of excessive force' was clearly established." Background : Ametria Douglas shared an apartment with Maggie Emmons and Emmons' two children. Douglas' mother called 911 after hearing the sounds of fighting and a plea for help during an interrupted telephone conversation with her daughter. When officers arrived they found Douglas outside in the pool with the children. She assured them it was a false alarm. Nevertheless, the officers went to the apartment in order to conduct a "welfare check" (to make sure no one inside was injured or in danger). Emmons, who had charged her husband with domestic violence a month earlier, refused to let them in without a warrant. Then, Marty Emmons, who had been visiting his daughter, came out of the apartment and closed the door behind him. Officer Craig, who had instructed him to leave the door open, threw Marty Emmons to the ground. Marty Emmons subsequently sued Officer Craig and his fellow officers for unlawful search and seizure and the use of excessive force. Each of the parties moved for summary judgment in federal district court. Police officers and other public officials "performing discretionary functions, generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." The district court granted Officer Craig's motion of summary judgment on the excessive use of force claim because it concluded that "relevant legal authorities do not establish that the underlying conduct violate[d] clearly established law." The U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) reversed and held that Officer Craig was not entitled to qualified immunity because the "right to be free of excessive force was clearly established at the time of the events in question." Supreme Court : The Supreme Court reversed and sent the case back to the Ninth Circuit. As it has done in a number of recent cases, the Court reminded the Ninth Circuit that the circumstances of the cases that "clearly establish" a constitutional right must be closely analogous to the circumstance of the case at issue. The Court stated: "This Court has repeatedly told courts not to define clearly established law at a high level of generality." 'An officer cannot be said to have violated a clearly established right unless the right's contours were sufficiently definite that any reasonable official in the defendant's shoes would have under that he was violating it.'" Rather than ask whether the right to be free of excessive force was clearly established, the Ninth Circuit "should have asked whether clearly established law prohibited the officers from stopping and taking down a man in these circumstances." On remand, the Ninth Circuit concluded that Officer Craig was entitled to qualified immunity, since it could find no case "so precisely on point with this one as to satisfy the Court's demand for specificity." <5. Appeals> <5.1. Ineffective Assistance of Counsel> <5.1.1. Garza v. Idaho, 139 S. Ct. 738 (2019)> Holding : A defense attorney's failure to appeal in spite of a client request is presumptively prejudicial ineffective assistance of counsel "even when the defendant has signed an appeal waiver." Background : Garza entered into plea agreements covering state aggravated assault and possession of controlled substance charges. Garza waived his right to appeal in the agreements and his counsel did not file a notice of appeal. Thereafter, Garza sought post-conviction review (state habeas corpus) asserting his trial attorney had ignored his request to appeal and claiming ineffective assistance of counsel. The Sixth Amendment provides the criminally accused the right to "reasonably effective" assistance of counsel for his defense. Appellate courts overturn convictions or sentences when the defense counsel made "errors so serious that counsel was not functioning as the 'counsel' guaranteed the defendant by the Sixth Amendment" if "the deficient performance prejudiced the defense." Prejudice occurs when "counsel's errors were so serious as to deprive the defendant of a fair trial, a trial whose result is reliable." The Court has held that prejudice may be assumed, stating: "[W]hen counsel's deficient performance deprives a defendant of an appeal that he otherwise would have taken, the defendant has made out a successful ineffective assistance of counsel claim entitling him to an appeal." Denying Garza's petition for relief, the trial court stated that Garza's waiver precluded him being a victim of ineffective assistance. The Idaho Court of Appeals and the Idaho Supreme Court affirmed. The U.S. Supreme Court reversed and remanded. Supreme Court : In the opinion, Justice Sotomayor focused on two concepts notice of appeal and waiver of appeal to rebut that Garza's filing a notice of appeal would breach his plea agreements and deny him their benefits. She explained that a notice of appeal is ministerial being "a simple, nonsubstantive act that is within the defendant's prerogative." She noted: (1) any "waiver of appeal" is limited to the language of the particular agreement; (2) some appellate issues cannot be waived; and (3) matters that are within the scope of the waiver are only binding if the prosecution elects to stand on its rights. Thus, she concluded, "simply filing a notice of appeal does not necessarily breach a plea agreement, given the possibility that the defendant will end up raising claims beyond the waiver's scope. And in any event, the bare decision whether to appeal is ultimately the defendant's, not counsel's, to make." Justice Sotomayor further found that Idaho's approach was inconsistent with precedent. Justice Sotomayor recalled the Flores-Ortega holding that "'a lawyer who disregards specific instructions from the defendant to file a notice of appeal acts in a manner that is professionally unreasonable.'" She stated: " Flores-Ortega 's reasoning shows why an appeal waiver does not complicate [a] straightforward application" and further commented: "As the Court explained, given that past precedents call for a presumption of prejudice whenever 'the accused is denied counsel at a critical state' it makes even greater sense to presume prejudice when counsel's deficiency forfeits an 'appellate proceeding altogether.'" She noted, "[a]fter all, there is no disciplined way to 'accord any presumption of reliability to judicial proceedings that never took place,'" concluding "[t]hat rationale applies just as well here because Garza retained a right to appeal at least some issues despite the waivers he signed. In other words, Garza had a right to a proceeding and he was denied that proceeding altogether as a result of counsel's deficient performance."

In 2019, the Supreme Court issued a sizeable number of criminal law decisions, which addressed several topics, including sentencing, pretrial, statutory construction, and ineffective assistance of counsel. This report discusses the following Supreme Court holdings in greater detail: Racially Discriminatory Jury Selection : "[T]he trial court at Flowers' sixth trial committed clear error in concluding that the State's peremptory strike of [a] black prospective juror … was not motivated in substantial part by discriminatory intent." Flowers v. Mississippi , 139 S. Ct. 2228 (2019). Execution of the Mentally Inc ompetent : "First, under Ford and Panetti , the Eighth Amendment may permit executing Madison even if he cannot remember committing his crime. Second, under those same decisions, the Eighth Amendment may prohibit executing Madison even though he suffers from dementia, rather than delusions. The sole question on which Madison's competency depends is whether he can reach a 'rational understanding' of why the State wants to execute him." Madison v. Alabama , 139 S. Ct. 718 (2019). Execution of the Intellectually Disabled : Texas Court of Criminal Appeals erred in assessing and denying a death-row inmate's claim of intellectual disability. Moore v. Texas , 139 S. Ct. 666 (2019). Habeas Jurisdiction : Federal courts may not grant state prisoners habeas relief based on Supreme Court precedent established after the completion of state proceedings. Shoop v. Hill , 139 S. Ct. 504 (2019). Method of Execution : A death row inmate challenging the state's method of execution must show that the state's method involves a risk of severe pain and that a feasible, readily available alternative method will significantly reduce the risk of pain. "[E]ven if execution by nitrogen hypoxia were a feasible and readily implemented alternative to the State's chosen method, Mr. Bucklew has still failed to present any evidence suggesting that it would significantly reduce his risk of pain." Bucklew v. Precythe , 139 S. Ct. 1112 (2019). Violent Crime Sentencing : The Armed Career Criminal Act's (ACCA) Section 924(c) residual clause purporting to provide an alternative definition for "crime of violence" is constitutionally vague. United States v. Davis , 139 S. Ct. 2319 (2019). Conviction under Florida robbery statute qualifies as a crime of violence under ACCA elements clause. Stokeling v. United States , 139 S. Ct. 544 (2019). Under the ACCA's specific crimes clause, the generic crime of "burglary" covers unlawfully entering, or remaining in, a building or structure, including mobile homes, trailers, tents, or vehicles, if they are designed, adapted, or customarily used for overnight accommodations of individuals. United States v. Stitt , 139 S. Ct. 399 (2018). Under the ACCA's specific crimes clause, the generic burglary definition includes entering with an intent to commit a crime or remaining in a building or structure after forming an intent to commit a crime . Quarles v. United , 139 S. Ct. 1872 (2019). Excessive Fines : The Eighth Amendment's Excessive Fines Clause is incorporated in the Fourteenth Amendment's Due Process Clause and is therefore binding on the States. Timbs v. Indiana , 139 S. Ct. 682 (2019). Supervised Release : Imposing a mandatory term of imprisonment after revoking supervised release, based on finding by a preponderance of the evidence that Haymond had breached the conditions of his supervised release, violated the Sixth Amendment's jury trial guarantee and the Fifth Amendment's Due Process beyond-a-reasonable doubt standard for criminal cases. The lower court will decide, at least initially, whether the error was harmless and, if not, the appropriate remedy. United State s v. Haymond , 139 S. Ct. 2369 (2019). A federal supervised release term does not run for a convict held in state pretrial detention if the time in state pretrial detention counts as time served for state conviction purposes. Mont v. United States , 139 S. Ct. 1826 (2019). Mens Rea : Conviction of an alien unlawfully present in the United States for unlawful firearms possession requires proof that the alien knew both that (1) he was in possession of a firearm and (2) he was unlawfully present. Rehaif v. United States , 139 S. Ct. 2191 (2019). Nondelegation : Authorizing the Attorney General to issue regulations governing registration requirements under the Sex Offender Registration and Notification Act (SORNA) for pre-Act offenders as soon as feasible did not violate the nondelegation doctrine. Gundy v. United States , 139 U.S. 2116 (2019). Double Jeopardy : The dual sovereign doctrine of the Fifth Amendment's Double Jeopardy Clause permits successive state and federal prosecutions for the same misconduct. Gamble v. United States , 139 S. Ct. 1960 (2019). Drunk Driving : A suspect's loss of consciousness following his probable cause arrest for drunk driving will almost always qualify for the exigent circumstances exception to the Fourth Amendment's warrant requirement. Mitchell v. Wisconsin , 139 S. Ct. 2525 (2019) (plurality). Section 1983 Litigation : Probable cause to arrest precludes a Section 1983 civil liability claim based on alleged First Amendment retaliation unless "a plaintiff presents objective evidence that he was arrested when otherwise similarly situated individuals not engaged in the same sort of protected speech had not been." Nieves v. Bartlett , 139 S. Ct. 1715 (2019). The statute of limitations for a Section 1983 cause of action alleging falsification of evidence "began to run when criminal proceedings against him terminated in his favor." McDonough v. Smith , 139 S. Ct. 2149 (2019). In assessing a Section 1983 qualified official immunity claim, "[t]he Court of Appeals should have asked whether clearly established law prohibited the officers from stopping and taking down a man in these circumstances. Instead, the Court of Appeals defined the clearly established right at a high level of generality by saying only that the 'right to be free of excessive force' was clearly established." City of Escondido v. Emmons , 139 S. Ct. 500 (2019). Ineffective Assistance of Counsel : A defense attorney's failure to honor his client's request to appeal is presumptively prejudicial ineffective assistance of counsel "even when the defendant has signed an appeal waiver." Garza v. Idaho , 139 S. Ct. 738 (2019).

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<1. Introduction> The Department of Homeland Security (DHS) is the third largest agency in the federal government in terms of personnel. The appropriations bill that funds it providing $70 billion in FY2020 is the seventh largest of the 12 annual funding measures developed by the appropriations committees, and is the only appropriations bill that funds a single agency in its entirety and nothing else. This report provides an overview of the FY2021 budget request for the Department of Homeland Security. It provides a component-level overview of the appropriations sought in the FY2021 budget request, putting the requested appropriations in the context of the FY2020 requested and enacted level of appropriations, and noting some of the larger changes in this proposal from those baselines. <1.1. Data Sources and Caveats> To ensure consistency of methodology, the analysis in this report is based on Office of Management and Budget (OMB) data as presented in the FY2020 and FY2021 Budget in Brief for DHS, with supporting information from the DHS congressional budget justifications for FY2021, except where noted. Most other CRS reports rely on Congressional Budget Office (CBO) data, which was not available at the time of publication at a similar level of granularity. Numbers expressed in billions are rounded to the nearest hundredth ($10 million), while numbers expressed in millions are rounded to the nearest million. None of the FY2020 requested or enacted levels in this bill include supplemental appropriations requested and provided in the wake of the COVID-19 pandemic, as the intent is to analyze the FY2021 annual appropriations request in comparison to the preceding request and ensuing annual appropriation. <2. Structure of the DHS Budget> <2.1. FY2021 Context> The FY2021 budget request represents the fourth detailed budget proposed by the administration of President Donald J. Trump. It is the earliest release of a budget request by the Trump Administration, and comes 52 days after the enactment of the FY2020 consolidated appropriations measures the longest such gap since the release of the FY2017 request (53 days), and the first since then to include prior-year enacted funding levels as a comparative baseline. This allows for easier analysis of the request compared to current funding. The budget for DHS includes a variety of discretionary and mandatory budget authority. Aside from standard discretionary spending, some of the discretionary spending in the bill is offset by collections of fees, reducing the net effect on the general fund of the Treasury. Some discretionary budget authority is specially designated under the Budget Control Act (BCA), adjusting the statutory limits on discretionary spending to accommodate it. DHS also draws resources from fee revenues and other collections included in the mandatory budget, which are not usually referenced in annual appropriations legislation. However, some mandatory spending items still require an appropriation because there is no dedicated source of funding to meet the government's obligations established in law e.g., U.S. Coast Guard (USCG) retirement accounts. Figure 1 shows a breakdown of these different categories from the FY2021 budget request. Congress and the Administration may differ on how funding for the department is structured; frequently, administrations of both parties have suggested paying for certain activities with fee increases that would require legislative approval. If fees are not increased, additional discretionary appropriations must be provided to fund the planned activities. Figure 2 compares the structure of the FY2021 budget request to its enacted FY2020 equivalent, as well as the FY2020 request. Significant differences include In budget authority from discretionary appropriations, a $3 billion reduction in border barrier funding through U.S. Customs and Border Protection (CBP) compared to the FY2020 request; and a $2.4 billion reduction from the enacted level of funding due to the proposed move of the U.S. Secret Service to the Department of the Treasury. In fee-funded discretionary budget authority, a $709 million increase in requested Transportation Security Administration (TSA) fee revenues; and In discretionary budget authority covered by adjustments under the BCA, a $9 billion reduction in disaster relief funding through the Federal Emergency Management Agency (FEMA) compared to the FY2020 request. <2.2. Appropriations Analysis> <2.2.1. Comparing the FY2021 Request to Prior-Year Levels> Table 1 presents for comparison the requested gross budget authority controlled in appropriations legislation for FY2021 for each DHS component, as well as the level requested and enacted for FY2020. This is essentially composed of the first four elements in Figure 1 and Figure 2 . Four analytical columns on the right side of the table provide comparisons of the FY2021 requested funding levels with the FY2020 requested and enacted levels, indicating dollar and percentage change. Components are listed in order of their total FY2020 enacted gross budget authority. Indented and italicized lines beneath the Coast Guard and Federal Emergency Management Agency entries show the portion of the above amount covered by adjustments for disaster relief and overseas contingency operations, provided for under the BCA. The funding levels in Table 1 include the effects of all elements of the budget tracked in the detail tables accompanying annual appropriations for DHS, except rescissions of prior-year appropriations. While this table compares data developed with the Congressional Budget Office (CBO) scoring methodology and the Office of Management and Budget (OMB) scoring methodology, most of the data compared is identical. Most of the $40 million in scoring differences identified by OMB is the result of $34 million differences in the treatment of fees, transfers and rounding within the CBP budget, with the remainder being the result of differences in rounding across the DHS funding structure. Table 1 illuminates several shifts within the FY2021 DHS budget request that are not apparent in top-line analysis: a $986 million increase from the FY2020 requested level for the U.S. Coast Guard; a $1.1 billion increase from the FY2020 requested level for Immigration and Customs Enforcement $2 billion (24%) more than enacted in FY2020; a $456 million increase for the Transportation Security Administration's budget from the FY2020 requested level; and a proposed transfer of the Federal Protective Service from the Cybersecurity and Infrastructure Security Agency to the Management Directorate during the FY2020 process, shifting almost $1.6 billion between the components. Table 1 also illuminates budgetary pressure on DHS's smaller headquarters and support components. With one exception Analysis and Operations the seven smallest components by gross budget authority saw their budget requests reduced by at least 5% from the enacted level, and four of those components saw reductions of more than 10%. <2.2.2. Common DHS Appropriation Types> Under the Common Appropriations Structure (CAS) first implemented with the FY2017 DHS annual appropriation, most DHS discretionary appropriations were rearranged into four uniform categories: Operations and Support generally personnel and operational costs (all components have this); Procurement, Construction, and Improvements generally acquisition and construction (many components have this); Research and Development (TSA, USCG, USSS, CISA, S&T, and CWMD have this in the FY2021 budget request); and Federal Assistance (only FEMA and CWMD have this in the FY2021 budget request). FEMA's Disaster Relief Fund is a unique discretionary appropriation which was preserved separately, in part due to the history of the high level of public and congressional interest in that particular structure. The use of the CAS structure allows a quick survey of the level of departmental investment in these broad categories of spending through the appropriations process. A visual representation of this new structure follows in Figure 3 . On the left are the five appropriations categories of the CAS with a black bar representing the requested FY2021 funding levels requested for DHS for each. A sixth catch-all category is included for budget authority associated with the legislation that does not fit the CAS categories. Colored lines flow to the DHS components listed on the right, showing the amount of funding provided through each category to each component. <2.2.3. Staffing> The Operations and Support appropriation for each component pays for most DHS staffing. Table 2 analyzes changes to DHS staffing, as illuminated by the request's information on positions and full-time equivalents (FTEs) for each component. Appropriations legislation does not explicitly set these levels, so the information is drawn from budget request documents alone. The first data column indicates the number of positions requested for each component in the FY2021 budget request. The next four columns show the difference between the FY2021 request and the Administration's previous request expressed numerically, then as a percentage and then shows the same comparison with the FY2020 enacted number of positions as interpreted by the Administration. Another data column shows the number of FTEs, followed by four more analytical columns showing the same comparisons as were run for positions. <3. Overview of Component-Level Changes> The following summaries of the budget requests for DHS components are drawn from a survey of the DHS FY2021 B udget in Brief and the budget justifications for each component. Each begins with a graphic outlining the appropriations requested and enacted for the components in FY2020 and FY2021, followed by some observations on the factors that contribute to the illustrated structure. The appropriations request includes all funding provided through the appropriations measure, regardless of how it is scored: it does not include most mandatory spending, such as programs paid for directly by collected fees that have appropriations in permanent law. Each component has an Operations and Support appropriation, which includes discretionary funding for pay. A 3.1% civilian pay increase was adopted for 2020, and a 1.0% civilian pay increase has been proposed by the Administration for 2021. Descriptions of each Operations and Support appropriation note the impact of these pay increases and associated increases to component retirement contributions to better illuminate the changes in the level of other operational funding. <3.1. Law Enforcement Operational Components (Title II)> <3.1.1. Customs and Border Protection (CBP)> The Administration's $15.60 billion appropriations request for CBP was $724 million (4.9%) above the FY2020 enacted level, and $2.55 billion (14.1%) below the level of appropriations originally requested for FY2020. The request includes $252 million more than enacted for Operations and Support, largely driven by $414 million for pay and retirement cost increases. $161 million was requested for 750 additional border patrol agents and 126 support staff. No additional appropriations were requested for new CBP Officers, who staff ports of entry. $21 million was requested for 300 Border Patrol Processing Coordinators, who are intended to take over non-law enforcement duties currently performed by Border Patrol Agents. The request for Operations and Support includes a new $7 million item for the Southwest Border Wall System Program, intended to maintain newly constructed barriers. $377 million more than enacted for Procurement, Construction, and Improvements. The $2.06 billion request for Border Security Assets and Infrastructure is $552 million more than enacted in annual appropriations for FY2020, and $3.12 billion less than requested in FY2020. The primary driver of this change from the FY2020 request is a reduction of $3.04 billion in construction funding for the border wall system. While the FY2020 Budget-in-Brief cites $182 million for facilities improvements and various investments for technology, aircraft, and vehicles, appropriations not for border barriers were reduced from the FY2020 enacted level of $529 million to $281 million in the request. <3.1.2. Immigration and Customs Enforcement (ICE)> The Administration's $9.93 billion appropriations request for ICE was $1.85 billion (22.9%) above the FY2020 enacted level, and $1.15 billion (13.0%) above the level of appropriations originally requested for FY2020. The request includes $1.79 billion more than enacted for Operations and Support, largely driven by a 4,636 position (22%) increase requested in personnel funded through appropriations. This increase would include 2,844 law enforcement officers and 1,792 support staff. While all of the primary programs under ICE would receive additional staff, Enforcement and Removal Operations (ERO) would receive 2,792 positions, a 34% increase above the current enacted level (8,201). Homeland Security Investigations (HSI) would receive 1,053 additional personnel, a 12% increase above the current enacted level (8,784). $220 million (12.3%) of the requested increase in Operations and Support appropriations is for pay and retirement increases. $58 million more than enacted for Procurement, Construction, and Improvements. This is $26 million more than the request for FY2020, growth largely driven by a nearly $14 million increase above the FY2020 requested level for Operational Communications and Information Technology. Also included in the Administration's request was $112 million in fee funding from the Immigration Examinations Fee Account similar to a proposal not approved by Congress for FY2020 which would fund 936 current personnel. <3.1.3. Transportation Security Administration (TSA)> The Administration's $4.09 billion net appropriations request for TSA was $890 million (17.9%) below the FY2020 enacted level, and $175 million (4.5%) above the level of appropriations originally requested for FY2020. With the resources from offsetting fees included, the gross discretionary total is for a request of $7.63 billion, $181 million (2.3%) below the FY2020 enacted level, and $334 million (4.6%) above the FY2020 requested level. The request includes $820 million (16.9%) less than enacted in FY2020 for Operations and Support appropriations, compensated for in large part by $709 million in proposed increases to offsetting collections. Operations and Support cost increases within this amount include $251 million for paying increased pay and retirement costs. $77 million (69.7%) less in discretionary appropriations than enacted in FY2020 for Procurement, Construction, and Improvements; $129 million less in discretionary appropriations than was requested for FY2020. $250 million continues to be provided in mandatory appropriations from the Aviation Security Capital Fund as it has since FY2004. $7 million (28.9%) more than enacted in FY2020 for Research and Development appropriations, on the basis of $8 million for two new projects to improve threat detection at TSA checkpoints. <3.1.4. U.S. Coast Guard (USCG)> The Administration's $12.11 billion appropriations request for USCG was $139 million (1.2%) above the FY2020 enacted level, and $986 million (8.9%) above the level of appropriations originally requested for FY2020. The request included $196 million (2.4%) more than enacted in FY2020 for Operations and Support, $164 million of which is for pay and retirement increases, and increases to allowances for military personnel. For the first time in many years, the costs of Overseas Contingency Operations (OCO) were proposed for inclusion in the base discretionary appropriation for Operations and Support, without designation to adjust the discretionary budget limits to accommodate it. The OCO proposal was for $215 million in FY2021, up $25 million from the FY2020 enacted level. The budget request also included more than $30 million in increases for cyber operations. $135 million (7.6%) less than enacted for Procurement, Construction, and Improvements. Reductions of $130 million (80.7%) for the National Security Cutter program and $240 million (92.3%) for the Fast Response Cutter program were offset by increases of $234 million (75%) for the Offshore Patrol Cutter program and $420 million (311%) for the Polar Security Cutter program, as part of a net increase of $286 million (28.8%) for USCG vessels procurement. $351 million (69.6%) less than enacted was requested for USCG aircraft procurement. $13 million (18.6%) less than enacted was requested for other acquisition programs, and $58 million (28.3%) less than enacted for Shore Facilities and Aids to Navigation. Less than $1 million (6.6%) more than enacted was requested for Research and Development. <3.1.5. U.S. Secret Service (USSS)> The Administration's budget request envisions moving the USSS to the Department of the Treasury. However, the budget is still structured as it would be in DHS, and the numbers are provided here for analytical purposes. The $2.36 billion appropriations request for USSS was $55 million (2.3%) below the FY2020 enacted level, and $52 million (2.2%) above the level of appropriations originally requested for FY2020. The request included $26 million (1.1%) less than enacted for Operations and Support, despite $71 million being added for the costs of pay and retirement increases. The primary driver of the decrease was the anticipated reduction of $86 million in costs from the conclusion of the 2020 presidential election cycle. $20 million for 119 additional personnel and $20 million in transition costs for the proposed transition of the USSS back to Treasury also are included in the request. $29 million (42.8%) less than enacted in FY2020 for Procurement, Construction, and Improvements, and less than $1 million (4.2%) less than enacted for Research and Development. <3.2. Incident Response and Recovery Operational Components (Title III)> <3.2.1. Cybersecurity and Infrastructure Security Agency (CISA)> The Administration's $1.76 billion appropriations request for CISA was $258 million (12.8%) below the FY2020 enacted level, and $150 million (9.3%) above the level of net appropriations originally requested for FY2020. The request included $128 million (8.2%) less than enacted in FY2020 for Operations and Support, despite $28 million being added for the costs of pay and retirement increases. The reduction is largely driven by the proposal to convert the Chemical Facility Anti-Terrorism and Safety program to a voluntary initiative, reducing program costs by $68 million, and a $34 million reduction in Threat Analysis and Response. $121 million (27.9%) less than enacted in FY2020 for Procurement, Construction, and Improvements, largely driven by a $114 million reduction in Cybersecurity Assets and Infrastructure, $75 million of which is to the National Cybersecurity Protection System. $8 million (55.4%) less than enacted in FY2020 for Research and Development, due to reductions in funding for the Technology Development and Deployment Program and National Infrastructure Simulation and Analysis Center. <3.2.2. Federal Emergency Management Agency (FEMA)> The Administration's $9.36 billion appropriations request for FEMA was $12.92 billion (58.0%) below the FY2020 enacted level, and $8.65 billion (48.0%) below the level of appropriations originally requested for FY2020. The primary driver of this change is a $12.29 billion reduction from the enacted level for the costs of major disasters (a large portion of the resources in the Disaster Relief Fund). If this reduction is set aside, the request is a $628 million reduction from the FY2020 enacted level, and a $364 million increase from the FY2020 request. The request includes $32 million (2.9%) more than enacted for Operations and Support, $32 million of which is for pay and retirement increases (the combination of other increases and decreases in the account has a net zero effect); $47 million (35.1%) less than enacted for Procurement, Construction, and Improvements, largely due to lower requests for grants management modernization, Mount Weather facilities, and the Center for Domestic Preparedness; $696 million (21.9%) less than enacted for Federal Assistance, largely due to reduction in preparedness grants, the Flood Hazard Mapping and Risk Analysis Program, and elimination of the Emergency Food and Shelter Program; and $12.21 billion (68.4%) less than enacted for the Disaster Relief Fund (DRF). The request for the portion of the DRF that covers major disasters dropped from an enacted level of $17.35 billion to $5.06 billion, a request that is based on the average of the last 10 years obligations for major disasters costing less than $500 million (termed "non-catastrophic disasters"), and spending plans for past disasters costing FEMA more than $500 million (termed "catastrophic disasters"). The portion of the DRF that covers emergencies and other activities increased $82 million (16.1%) to $521 million, largely on the basis of an increase in the 10-year average of those costs, and $15 million for real estate needs associated with FEMA's Recovery Service Centers. <3.3. Support Components (Title IV)> <3.3.1. U.S. Citizenship and Immigration Services (USCIS)> The Administration's $119 million appropriations request for USCIS was $14 million (10.4%) below the FY2020 enacted level, and $3 million (2.4%) below the level of appropriations originally requested for FY2020. The request includes $4 million (3.0%) less for Operations and Support than enacted in FY2020, and $3 million (2.4%) less than requested $2 million in increased pay raise and retirement costs were offset by reduced costs for rent and efficiencies through modernization efforts. The request does not include an appropriations request for Federal Assistance, which received $10 million in the FY2020 enacted DHS appropriations bill for Citizenship and Integration Grants, which the Administration proposes funding through Immigration Examinations Fee revenues. Less than 3% of the USCIS budget is appropriated. The budget request projects more than $4.9 billion in mandatory spending for USCIS 97% of its total budget will be supported by fees in FY2021, up $213 million (4.5%) from FY2020 levels. This overall structure is similar to last year's request. <3.3.2. Federal Law Enforcement Training Centers (FLETC)> The Administration's $331 million appropriations request for FLETC was $20 million (5.6%) below the FY2020 enacted level, and $19 million (5.5%) below the level of appropriations originally requested for FY2020. FLETC also anticipates receiving $211 million (up $25 million, or 13.4%) in reimbursements for training and facilities use from those it serves. The request includes $12 million (4.3%) more than was enacted in FY2020 for Operations and Support, $7 million of which is for increased pay and retirement costs; $32 million (55.3%) less than was enacted in FY2020 for Procurement, Construction, and Improvements, due to completion of funding for projects in the FY2020 enacted appropriation. The FY2021 budget includes $26 million for the purchase of two dorms it currently leases. <3.3.3. Science and Technology Directorate (S&T)> The Administration's $644 million appropriations request for the S&T Directorate was $94 million (12.7%) below the FY2020 enacted level, and $62 million (10.6%) above the level of appropriations originally requested for FY2020. The request includes $30 million (9.6%) less than the enacted level for the Operations and Support appropriation, largely due to a $35 million (24.6%) reduction in mission support activities; Only $3 million of the Operations and Support request is for pay and retirement cost increases. $19 million in the Procurement, Construction, and Improvements appropriation (which had no funding requested or provided in FY2020) for costs associated with the closure and sale of the Plum Island Animal Disease Center; and $82 million (19.5%) less than enacted for the Research and Development appropriation, due to a $64 million (16.6%) reduction in in-house research activities and a $19 million (46.3%) reduction in university-based research. <3.3.4. Countering Weapons of Mass Destruction Office (CWMD)> The Administration's $377 million appropriations request for CWMD was $55 million (12.8%) below the FY2020 enacted level, and $46 million (10.9%) below the level of appropriations originally requested for FY2020. The request includes $7 million (3.7%) less than the enacted level for the Operations and Support appropriation, $40 million (18.7%) less than was requested for FY2020; This reduction is driven by a $5 million (40.7%) reduction in funding for the National Biosurveillance Integration Center's biosurveillance and early warning support on biological attacks and emerging pandemics, and an almost $3 million reduction in technical forensics operational readiness, which the request says is being funded by the National Nuclear Security Administration. $1 million (0.4%) was requested for covering the increased pay and retirement costs. $32 million (26.5%) less than the enacted level for the Procurement, Construction, and Improvements appropriation, largely driven by reductions to the Radiation Portal Monitor Replacement Program ($46 million, 68.1%) and Common Viewer program ($8 million, zeroed out); $11 million (15.9%) less than the enacted level for the Research and Development appropriation, largely driven by a $7 million reduction in Technical Forensics and a $9 million (27.3%) reduction in detection capability activity; and $6 million (9.3%) less than the enacted level for the Federal Assistance appropriation, largely due to an $11 million (44.6%) reduction in funding for the Securing the Cities program. <3.4. Headquarters Components (Title I)> <3.4.1. Office of the Secretary and Executive Management (OSEM)> The Administration's $150 million appropriations request for OSEM was $28 million (15.9%) below the FY2020 enacted level, and $9 million (6.4%) above the level of appropriations originally requested for FY2020. The request includes $18 million (10.9%) less than enacted level for the Operations and Support appropriation, largely driven by a $15 million (25.9%) reduction in operations and engagement activities. The request included $5 million to pay for increased salary and retirement costs. $10 million less than the enacted level for the Federal Assistance program, as the targeted violence grants funded in this component in FY2020 are funded in the FEMA request for FY2021. <3.4.2. Departmental Management Directorate (MD)> The Administration's $1.76 billion appropriations request for MD was $198 million (12.7%) above the FY2020 enacted level, and $204 million (13.1%) above the level of appropriations originally requested for FY2020. The request includes $220 million (18.6%) more than was enacted in FY2020 for the Operations and Support appropriation, $186 million of which is net transfers as a result of DHS transitioning away from using a working capital fund; Also included in this appropriations request is a $13 million increase to cover increased pay and retirement costs. Of the remaining changes, most of the net increase is due to investments in information technology and cybersecurity. $22 million (5.7%) less than was enacted in FY2020 for the Procurement, Construction, and Improvement appropriation. Of the $359 million requested, over $200 million was for investments in DHS headquarters facilities, including St. Elizabeths; Mount Weather; and consolidation of headquarters leases. <3.4.3. Analysis and Operations (A&O)> The Administration's $313 million appropriations request for A&O was $28 million (10.0%) above the FY2020 enacted level, and $36 million (13.0%) above the level of appropriations originally requested for FY2020. Most of the details of the A&O budget request are classified. However, the request included a $6 million increase to cover increases in pay and retirement costs. <3.4.4. Office of Inspector General (OIG)> The Administration's $178 million appropriations request for the OIG was $12 million (6.5%) below the FY2020 enacted level, and $8 million (4.5%) above the level of appropriations originally requested for FY2020. $5 million in additional funding is requested to cover increased pay and retirement costs. The budget request includes a reduction of more than $15 million (16.5%) in OIG audits and investigations. The budget justification notes that the OIG submitted a funding request of $196 million, which the OIG states "is essential to sustain FY 2020 operations into FY 2021 at the FY 2020 appropriated level and maintain oversight capacity commensurate with the Department's growth in several high-risk areas, including frontline security and infrastructure along the southern border, cybersecurity defenses, major acquisitions and investments, and accelerated hiring of law enforcement personnel." <3.5. Administrative and General Provisions> <3.5.1. Administrative Provisions> Administrative provisions are included at the end of each title of the DHS appropriations bill and generally provide direction to a single component within that title. In the FY2021 budget request, the Administration proposed a number of changes from the FY2020 enacted DHS appropriations measure, including Deleting 106, which established the Ombudsman for Immigration Detention. Adding a new section related to the proposed transfer of the Secret Service to the Department of the Treasury, which would allow for funds from the DHS OIG to be transferred to the Treasury OIG. Deleting 207- 212, which barred any new land border crossing fees; required an expenditure plan be submitted to Congress for the CBP Procurement, Construction, and Improvements appropriation before any of that appropriation could be obligated; constrained the use of the CBP Procurement, Construction, and Improvements appropriation, including limiting the types and locations of border barriers that could be constructed and requiring reporting to the appropriations committees on (1) the plans for barrier construction, (2) changes in barrier construction priorities, and (3) consultation with affected local communities, as well as an annual update to risk-based plan for improving border security; barred construction of barriers in certain locations; required statutory authorization for reducing vetting operations at the CBP's National Targeting Center; and directed certain CBP Operations and Support appropriations to humanitarian needs at the border and addressing health, life, and safety issues at Border Patrol facilities. Deleting 216, which barred DHS from detaining or removing a sponsor, potential sponsor or the family member of sponsor or potential sponsor of an unaccompanied alien child on the basis of information from the Department of Health and Human Services, unless a background check reveals certain felony convictions or association with prostitution or child labor violators; Deleting 227, which provided flexibility in allocating Coast Guard Overseas Contingency Operations funding; Deleting 229, which bars the use of funds to conduct or implement an A-76 competition for privatizing activities at the National Vessel Documentation Center; Deleting 231- 232, which were changes to permanent law (and thus no longer required inclusion in the bill) that allowed for continued death gratuity payments for the USCG if appropriated funding was unavailable for obligation; and categorized amounts credited to the Coast Guard Housing Fund as offsetting receipts. Deleting 233- 236, which allowed the Secret Service to obligate funds in advance of reimbursement by other federal agencies for training expenses; barred the Secret Service from protecting agency heads other than the secretary of DHS, unless an agreement is reached with DHS to do so on a reimbursable basis; allowed the Secret Service to reprogram up to $15 million in its Operation and Support appropriation; and allowed flexibility for Secret Service employees on protective missions to pay for travel without regard to limitations on costs, with prior notification to the appropriations committees. Adding 308, which requires a 25% nonfederal contribution for projects funded under the State Homeland Security Grant Program, Urban Area Security Initiative, Public Transportation Security Assistance, Railroad Security Assistance, and Over-the-Road Bus Security Assistance programs currently there is no such cost share; and Adding 309, which would allow a transfer 1% of funding provided for the State Homeland Security Grant Program and Urban Area Security Initiative to FEMA Operations and Support for evaluations of the effectiveness of those programs. <3.5.2. General Provisions> General provisions are included in the last title of the DHS appropriations bill and generally provide direction to the entire department. They include rescissions or additional budget authority in some cases. In the FY2021 budget request, the Administration proposed relatively few substantive changes to the general provisions enacted in the FY2020 bill. They sought to: Remove 530, which provided $41 million for reimbursement of extraordinary law enforcement costs for protecting the residence of the President; Remove 532, which required that DHS allow Members of Congress and their designated staff access to DHS facilities housing aliens for oversight purposes; and Remove 537- 540, which rescinded prior year appropriations from various accounts. <3.5.2.1. Appendix.>

On February 10, 2020, the Donald J. Trump Administration released their budget request for FY2021, including a $75.84 billion budget request for the Department of Homeland Security (DHS). DHS is the third largest agency in the federal government in terms of personnel. The appropriations bill that funds it—providing $70 billion in FY2020—is the seventh largest of the twelve annual funding measures developed by the appropriations committees, and is the only appropriations bill that funds a single agency in its entirety and nothing else. This report provides an overview of the FY2021 budget request for the Department of Homeland Security. It provides a component-level overview of the appropriations sought in the FY2021 budget request, putting the requested appropriations in the context of the FY2020 requested and enacted level of appropriations, and noting the primary drivers of changes from the FY2020 enacted level. The FY2021 budget request represents the fourth detailed budget proposed by the Trump Administration. It is the earliest release of a budget request by the Trump Administration, and comes 52 days after the enactment of the FY2020 consolidated appropriations measures—the longest such gap since the release of the FY2017 request (53 days), and the first since then to include prior-year enacted funding levels as a comparative baseline. Some of the major drivers of change in the FY2021 request include A $3 billion reduction in border barrier funding through U.S. Customs and Border Protection (CBP) compared to the FY2020 request; A $2.4 billion reduction from the enacted level of funding due to the proposed move of the U.S. Secret Service to the Department of the Treasury; A $709 million increase in requested Transportation Security Administration (TSA) fee revenues; A $9 billion reduction in disaster relief funding through the Federal Emergency Management Agency (FEMA) compared to the FY2020 request; A $986 million increase from the FY2020 requested level for the U.S. Coast Guard—proposing funding $129 million above the enacted level; A $1.1 billion increase from the FY2020 requested level for Immigration and Customs Enforcement—$2 billion (24%) more than enacted in FY2020; and A $456 million increase for the Transportation Security Administration's budget from the FY2020 requested level—proposing funding $59 million below the enacted level. Six of the seven smallest components by gross budget authority saw their budget requests reduced by at least 5% from the enacted level, and four of those components saw reductions of more than 10%. This report will not be updated.

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<1. Introduction> Swiping a card to pay for something seems routine today; however, at one point in recent history, a piece of plastic with a magnetic strip capable of electronically communicating payment information between the banks of a consumer and a merchant was completely unprecedented. Financial technology, or fintech , refers to the broad subset of financial innovations that apply new technologies to a financial service or product. Although the term was coined only recently, it likely would have been applied to a broad set of innovations, such as the advent of automated teller machines, or ATMs, in the 1960s and mobile payments in the 2000s. There is no singular definition of fintech, often making policy discussions around this topic complicated. Further, U.S. financial system regulation is fragmented across many regulators by industry, business practice, and geographical jurisdiction, so regulating fintech is multifaceted. Each financial regulator has a different mandate, creating gaps and overlaps among their jurisdictions. Regulators have used various policy tools to approach the new technologies in a manner consistent with their mandate, which impacts both institutions under their direct jurisdiction and new firms that do not cleanly fit under one regulator's jurisdiction. Recent congressional interest in fintech has led to several hearings, the creation of fintech task forces, and legislation pertaining to one or multiple financial system regulators. This report examines activities and proposals initiated after the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. 111-203 ) that are relevant to fintech. These can include fintech actions as defined by a regulator or actions pertaining to areas of financial services that intersect with technology but may not be explicitly considered fintech. Financial regulators generally fall into three groups, which are responsible for (1) depository institutions, (2) consumer protection, and (3) securities. Their approaches may include the following: writing new rules or amending existing ones; issuing guidance to clarify the applications of the rules to new types of business lines; creating new types of charters for institutions; using supervisory authorities to examine partnerships between regulated and unregulated entities; issuing enforcement actions to companies that violate regulations or laws; or establishing new offices and staffing experts to serve as outreach points-of-contact for relevant industry concerns. Table 1 summarizes the federal regulators discussed in this report, including their scope, and relevant authorities. The depository institution regulators discussed in this report include the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) these are referred to as banking regulators. The consumer protection agencies include the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). The securities regulators include the Securities and Exchange Commission (SEC) and the Commodity Futures Trade Commission (CFTC). More information on the mandates and relevant authorities of these regulators can be found in Appendix A . <2. Banking Regulators: Approach to Fintech> The banking regulators the Federal Reserve, FDIC, OCC, and NCUA face particular fintech-related challenges regarding how to ensure banks and credit unions can efficiently and safely interact with nonbank fintech companies. Sometimes fintech companies partner with and offer services to banks or credit unions. Other times, they seek to compete with banks by offering bank or bank-like services directly to customers. In some circumstances, banks themselves can develop their own fintech. Given their broad responsibilities, banking regulators can engage with and respond to fintech in numerous ways, including by amending rules and issuing guidance to clarify how rules apply to new products; supervising the relationship banks form with fintech companies; granting banking licenses to fintech companies; and conducting outreach with new types of firms to facilitate communication between industry and regulators. Examples of these regulatory actions are discussed in more detail below. Each of the agencies has slightly different regulatory scope, so the efforts described in the sections below reflect each regulator's interest in balancing the risks and benefits of financial technologies. <2.1. Partnerships with Technology Service Providers> In general, banking regulators have not been active in issuing fintech-specific rules in the last 10 years. Instead, regulators have focused more heavily on issuing guidance on how new products and new relationships fit into the current regulatory framework. Relationships between banks and technology service providers (TSPs) third-party partnerships are particularly relevant because many TSPs are fintech companies. Banking regulators use their authority to examine the operations of these third-party partnerships as a critical tool to supervise the interactions between banks and nonbank technology firms. Further, third-party supervision demonstrates how regulators have used and applied the existing framework to fintech activities. <2.1.1. Updated Guidance on Bank Partnerships with Technology Service Providers> From a banking regulator's standpoint, an institution can be a bank, a nonbank, or a nonbank that partners with a bank. Bank regulators have jurisdiction over banks and their partnerships with nonbanks. Some insured depository institutions opt to partner with TSPs to receive software and technical support. Often, banks will use TSPs to support critical business needs, such as core processing, loan servicing, accounting, or data management areas where fintech companies have become active market participants. As banks increasingly rely on TSP partnerships, regulators are becoming increasingly interested in how banks manage the risks associated with these partnerships. Banking regulators require a financial institution that chooses to partner with a TSP to ensure that the activities performed by the TSP for the institution meet the same regulatory requirements as if they were performed by the bank itself. Banking regulators' broad set of authorities to supervise TSPs are provided by the Bank Service Company Act (BSCA; P.L.87-856). Specifically, the BSCA provides banking regulators with authority to examine and regulate third-party vendors that provide services to banks. The banking regulators periodically issue and update guidance pertaining to third-party vendors. They issued interagency guidelines in 2001 that, among other things, require banks to provide continuous oversight of third-party vendors such as TSPs to ensure they maintain appropriate security measures. In 2017, the FDIC's Office of Inspector General issued an evaluation of TSP contracts, noting that many of the sampled institutional relationships did not adequately address the risks associated with TSP partnerships. In 2019, the FDIC issued a financial institution letter on TSP contracts, outlining the statutory obligations of firms pursuant to the BSCA and the Gramm-Leach-Bliley Act ( P.L. 106-102 ) and encouraging financial institutions to ensure service provider contracts adequately address business continuity and incident response risks. <2.2. Brokered Deposits with Technology-Based Tools> Rulemaking with a specific focus on fintech companies is relatively infrequent, but banking regulators occasionally issue rules or proposed rules that have some tangential impact on fintech companies, such as a recently proposed FDIC rule on brokered deposits. This proposed rule is another example of how regulators have used an existing regulatory framework to potentially accommodate fintech developments. <2.2.1. FDIC Proposed Rulemaking on Brokered Deposits> Generally, banks hold two types of deposits: core deposits and brokered deposits. Core deposits are funds individuals or companies directly place in checking and savings accounts, whereas brokered deposits are funds that a third-party broker places in a bank on behalf of a client, typically to maximize interest earned and possibly to ensure that the accounts are covered by the FDIC's $250,000 insurance limit. Brokered deposits are considered less stable than core deposits, as the former is typically moved around frequently depending on market conditions. If a bank is not considered well-capitalized by its regulator, the regulator can prohibit the bank from accepting brokered deposits. Consumers increasingly use nonbank technology-based tools, such as mobile phones and fintech apps, to move money between accounts. Under certain circumstances, rules against accepting brokered deposits could apply to money transfers using nonbank technologies. The FDIC, responding to concerns that regulators have applied the rules too broadly, published a notice of proposed rulemaking in December 2019 that would allow deposits to enter the banking system through new technological channels without being subject to brokered deposit rules. <2.3. Regulatory Sandboxes> Regulators occasionally create programs through which firms can experiment with new products in a way that allows industry and regulators to better understand how new technologies can impact consumers and the market. These programs are sometimes referred to as sandboxes or greenhouses . As a state-level example, Arizona created such a program in March 2018. At the federal level, these programs are being discussed but have not fully taken shape. Among the banking regulators, the OCC has proposed a regulatory sandbox program, discussed below. <2.3.1. OCC Proposed Innovation Pilot Program> In April 2019, the OCC proposed a voluntary Innovation Pilot Program to support the testing of innovative products, services, and processes that could significantly benefit consumers, businesses, and communities, including those that could promote financial inclusion the OCC is considering public comments on the program as of the date of this report. This proposed program is similar to the concept of a regulatory sandbox or greenhouse, which is discussed in the " Sandboxes and No-Action Letters to Promote Innovation " section, below. Some key characteristics and considerations of the proposed program include the following: The pilot would be open to banks, their subsidiaries, and federal branches and agencies, including those partnering with third parties to offer innovative products, services, or processes. It would also be open to banks working together, such as in a consortium or utility. The OCC is considering a suite of regulatory tools during the pilot to communicate with banks, including interpretive letters, supervisory feedback, and technical assistance from OCC subject-matter experts the tools would not include statutory or regulatory waivers. The OCC may address the legal permissibility of a product or service that a bank proposes to test as part of the program. The OCC would expect banks to address risks to consumers and would not permit into the program proposals that have potentially predatory, unfair, or deceptive features. <2.4. Bank Charters for Fintech Companies> One foundational way banking regulators can regulate institutions not traditionally covered by banking regulations, such as fintech companies, is to grant a banking license to a new type of firm. By doing this, the institution becomes covered by the regulatory framework that applies to other depository institutions, and the regulator can apply a similar supervisory framework to the new institution's operations. The OCC and FDIC recently have taken measures to consider charters for nonbank companies. The OCC's efforts are specifically targeted to fintech companies, and the FDIC's efforts could affect a fintech company's opportunity to become a chartered bank. <2.4.1. OCC Special Purpose National Bank Charters for Fintech Companies> Many nonbank financial companies are licensed at the state level. Thus, a fintech company wanting to do business across the United States would need to obtain 50 different state licenses and meet a complex set of 50 state regulations and standards in order to do so. In response to concerns about this complexity, the OCC requested comments in 2016 on a proposal to offer national bank charters to fintech companies. In 2018, it announced that it would begin offering charters to fintech companies. The OCC's charter initiative has been controversial. State regulators and consumer advocates have argued that granting such charters would inappropriately allow federal preemption of important state-level consumer protections, and that the OCC does not have the authority to grant bank charters to these types of companies. State regulators have filed lawsuits, and the matter is the subject of ongoing legal proceedings. <2.4.2. Industrial Loan Company Charters and the FDIC24> In addition to traditional bank charters, several states offer a type of bank charter for industrial loan companies (ILCs). Recently, fintech firms have begun to explore these types of charters. ILCs chartered in some states are allowed to accept certain types of deposits if the FDIC has approved the ILC for deposit insurance. Given this condition, the FDIC is considering whether or not to grant deposit insurance to fintech firms; doing so would allow ILCs to operate, under certain state charters, what would be in effect full-service, FDIC-insured banks. Several technology-focused companies have applied to establish new ILCs. ILCs are regulated in two unique ways, which make them both attractive and controversial to certain fintech companies seeking to have deposit-taking bank operations: ILCs can be owned by a nonfinancial parent company, creating an avenue for commercial firms, such as fintech companies, to own a bank. Critics of ILCs argue this runs counter to the long-standing U.S. policy of separating banking and commerce. In some circumstances, these parent companies are not considered a bank-holding company; therefore a fintech company owning a bank as a nonfinancial parent company might not be subject to supervision by the Federal Reserve, pursuant to the Bank Holding Company Act of 1956 (BHCA; P.L. 84-511). Critics argue this would result in under regulation of an ILC parent company. In response to concerns over ILCs, the FDIC and Congress have in the past implemented moratoriums on approving FDIC-insurance for new ILCs. No new ILC charters have been granted since the end of the most recent moratorium in 2013, prompting ILC proponents to argue an unofficial moratorium is in effect without regulatory or statutory basis. By applying to establish new ILCs, technology companies have renewed public interest in ILCs in general. If the FDIC generally begins granting deposit insurance to ILCs, this could create a path for nontraditional banking companies beyond fintechs to offer bank services. <2.4.2.1. FDIC Notice of Proposed Rulemaking on Parent Companies of Industrial Banks and Industrial Loan Companies> The BHCA establishes the terms and conditions under which a company can own a bank in the United States and grants the Federal Reserve the authority to regulate these holding companies. In 1987, Congress enacted the Competitive Equality Banking Act of 1987 (CEBA; P.L. 100-86 ) to provide exemptions to permit certain financial and commercial companies to own and control industrial banks without becoming a bank-holding company under the BHCA. In granting deposit insurance for any insured depository institution, including industrial banks, the FDIC must assess the safety and soundness of the proposed institution and the risk posed to the Deposit Insurance Fund. Recent deposit insurance filings involving industrial banks have proposed ownership and control structures that would not be subject to federal consolidated supervision. To codify and enhance the FDIC's supervisory process with respect to these institutions, the FDIC issued a notice of proposed rulemaking on March 31, 2020, which would require certain conditions and commitments for agency approval of applications that would result in an insured industrial bank or ILC becoming a subsidiary of a company that is not subject to supervision by the Federal Reserve. The proposed rule would also require that the parent company and industrial bank or ILC enter into one or more agreements with the FDIC. <2.5. Consumer Protection and Payments Innovation> Many regulators have expressed interest in developing programs that facilitate innovation. Innovation can lead to new types of products for consumers, such as mobile payments, but it can also create obstacles for consumers to manage. Banking regulators and other financial system regulators, such as the Consumer Financial Protection Bureau (CFPB) (see " Consumer Protection Agencies: Approach to Fintech "), implement and promulgate rules pertaining to the payments system. (See Appendix B for these rules and other regulatory interests in payments innovation.) The payments system provides a few examples where new technologies create the potential for both benefits and risks to consumers. <2.5.1. Federal Reserve FedNow Service> The Federal Reserve's proposed FedNow Service payments initiative is one example of a regulator facilitating a new product for consumers. The Federal Reserve operates or regulates important elements of the payments and settlement system, including retail payment networks such as the FedACH network, multilateral settlement services such as the National Settlement Service, and real-time gross settlement systems such as Fedwire Funds Service. Recently, the Federal Reserve announced plans to develop the FedNow Service: a real-time payments and settlement system for peer-to-peer and business-to-consumer payments. The FedNow Service is expected to impact consumers as they continue to conduct commerce using electronic payments, mobile phones, and apps. Transacting in this way can lead to better outcomes for consumer budgeting, as transactions are settled in real time, but it also may impact a consumer's ability to resolve errors, as instantaneous payments are harder to stop or return. Given the importance of safety in the payments system, the Federal Reserve and a private organization called the Clearing House have both established real-time payments to create competition in the market for payments and settlement services, with the idea that competition will increase market discipline and enhance resiliency in the system. The Federal Reserve anticipates the FedNow Service will be available in 2023 or 2024. <2.6. Outreach Offices for Stakeholders> Each depository regulator has put together a working group or formal office to understand how new technologies may affect institutions under their jurisdictions and to establish a point of contact for industry. A summary of these efforts is presented below. Table B-1 in Appendix B provides a synopsis of the offices established by each financial regulator discussed in this report, and Appendix C summarizes other efforts, such as research programs, notable fintech conferences, and working groups. <2.6.1. Federal Reserve Innovation Program> In December 2019, the Federal Reserve established a series of programs to support financial innovation in the financial services marketplace. Part of this effort includes offering "office hours" to supervised financial institutions and nonbank fintech firms looking for information about financial innovation. These office hours are held at the various Federal Reserve Banks. The Federal Reserve also established a new website, which contains information about related supervisory information, regulatory guidance, staff speeches, publications, research, and events. The Reserve Banks have created working groups to address fintech issues, which are summarized in Appendix C . <2.6.2. OCC Office of Innovation> In 2015, the OCC began developing a "Responsible Innovation" framework to address issues of financial services innovations. This framework is summarized in Table C-1 of Appendix C . As part of the framework, the OCC created a group to meet with banks, fintech companies, consumer groups, regulators, and other stakeholders to discuss various issues, concerns, and areas of interest relevant to fintech. In 2017, the OCC formally established the Office of Innovation to implement its Responsible Innovation framework and provide a central point of contact for requests and information related to innovation. <2.6.3. FDIC Tech Lab> The FDIC recently has taken steps to establish fintech-specific programs. It created its own version of an office of innovation, the FDIC Tech Lab, or "FDiTech," in October 2018. The FDIC Tech Lab is intended to promote, coordinate, and understand the role of new innovations among technology firms, financial institutions, and other regulators. The Tech Lab's stated goals are to engage with financial and technology companies to identify opportunities to improve the safety and soundness of insured depository institutions, promote competition, increase economic inclusion, support risk management, and facilitate efficient resolution of failed institutions. <3. Consumer Protection Agencies: Approach to Fintech> The mandate for the consumer protection agencies CFPB and FTC is largely to ensure that consumers are unharmed by the practices of businesses under their jurisdiction while maintaining a competitive marketplace. Within the context of fintech, there are tradeoffs between these objectives. For instance, encouraging firms to offer new kinds of consumer-friendly financial services can help create a competitive market, but the new products also can create the potential for unforeseen risks to consumers. Similar to the banking regulators, the CFPB and FTC issue and promulgate regulations on issues pertinent to fintech, such as payments and data security, and both agencies have created outreach offices. The consumer protection agencies, however, tend to use enforcement actions as tools to manage the effects of fintech on the financial system to a greater extent than banking regulators. This partly is because the consumer protection agencies are responsible for implementing and enforcing consumer protection laws for many nonbank financial companies unlike the banking regulators, which generally do not have enforcement authorities for nonbank financial companies. The consumer protection agencies use enforcement actions to balance their mandates with respect to fintechs in two additional ways: protect consumers by levying enforcement actions against firms that violate consumer protection laws, and promote market competition and facilitate innovations that benefit consumers by creating safe harbors for firms from enforcement actions in order to encourage firms to develop new technologies and solve challenges facing consumers. Whereas the CFPB has a broad range of regulatory authorities relevant to fintech, the FTC is somewhat limited to enforcement actions for many fintech activities, as it has some investigative authority but no supervisory authorities. Examples of these approaches are explored in more detail below. <3.1. Enforcement Actions to Ensure Consumer Protection> One way consumer protection agencies implement their legal authorities is through enforcement actions: agencies can take a number of actions to levy penalties against or stop firms that violate law or regulation. The FTC's enforcement actions include a number of orders that pertain to fintech firms. <3.1.1. FTC Fintech Enforcement Actions> The FTC enforces federal consumer protection laws that prevent fraud, deception, and unfair business practices, as well as federal antitrust laws that prohibit anticompetitive mergers and other business practices that could lead to higher prices, fewer choices, or less innovation. Companies that violate laws under FTC jurisdiction are liable for civil penalties for each violation. Over the past decade, the FTC has brought over 20 cases against telecommunications firms, money service businesses, prepaid card companies, and technology firms, among others, with operations relevant to fintech and in violation of FTC competition and fairness rules. Table 2 describes the outcomes of selected recent FTC fintech-related enforcement actions. <3.2. Sandboxes and No-Action Letters to Promote Innovation> Consumer protection agencies occasionally create policies or programs that temporarily shield firms from enforcement actions if they meet certain conditions. In the past few years, the CFPB has built upon its No-Action Letter (NAL) policy, which provides some assurances that if a company offers a product or service in a specific way, the agency will withhold enforcement actions for that particular activity. With respect to fintech, the CFPB has identified the NAL policy as a way to encourage firms to produce products and disclosures that may benefit consumers. Consumer protection agencies also promote innovation through programs such as sandboxes or greenhouses, which can allow firms to trial new ideas and products while being subject to a subset of the existing regulatory framework or while being granted safe harbor from certain enforcement actions (see " Regulatory Sandboxes "). <3.2.1. CFPB No-Action Letter Policy> In 2016, the CFPB introduced its NAL policy to withhold enforcement actions against qualifying consumer-friendly innovations and to help inform the CFPB on new products and services being offered. Although the CFPB anticipated limited participation in this original NAL policy, it announced its first NAL in 2017 to a company that used alternative data and machine learning in making credit underwriting and pricing decisions. To encourage more robust participation, the CFPB revised its NAL policy in 2019, amending the application and review process and reportedly strengthening its commitment to provide safe harbor to qualifying firms. <3.2.2. CFPB Compliance Assistance and Revised Trial Disclosure Sandbox Policies> The CFPB created sandbox programs to encourage certain firms to test consumer financial services by granting the firms temporary safeguards from liability and enforcement actions. In addition to creating the NAL policy, the CFPB created the Compliance Assistance Sandbox (CAS) policy to enable some firms to test certain innovative products by providing the firms with temporary safe harbor from liability under certain statutes. The CFPB expects participation in the CAS policy to be time-limited, typically two years, with extensions available in specific circumstances. In addition, Dodd-Frank allows the CFPB to provide trials for companies to test new types of disclosures with safeguards from certain liabilities and on a basis that is limited in time and scope to make them more effective for consumers. The CFPB first released a Trial Disclosure Policy (TDP) in 2013 and updated it in 2019 to encourage more robust participation. <3.3. Outreach, Coordination, and Research Programs> Similar to the banking regulators, the CFPB has an office that serves as a point of contact for industry and other stakeholders. The CFPB also created a network to facilitate policy coordination pertaining to fintech among the federal and state financial regulators. The FTC, to support its investigation authorities, has done research and outreach to try to better understand the ways fintech may impact consumer protection and market competition. These programs are briefly explained below, and additional information regarding these programs can be found in Appendix C . <3.3.1. CFPB Office of Innovation> In 2012, the CFPB created Project Catalyst to encourage "consumer-friendly innovation and entrepreneurship in markets for consumer financial products and services" by communicating and engaging with industry innovators. Through Project Catalyst, the CFPB studied issues surrounding access to credit, safeguarding financial records, cash flow management, student loan refinancing, mortgage servicing platforms, credit reporting, and peer-to-peer money transfers. The CFPB also held office hours, provided technical assistance, and offered an earlier version of the above-mentioned TDP and NAL policy programs before the new Office of Innovation was created designed to encourage firms to produce consumer-friendly innovations by safeguarding those products from CFPB enforcement actions. In 2018, the CFPB rebranded Project Catalyst, introducing a suite of policies and programs to centralize policies pertaining to consumer-focused innovation through a newly established Office of Innovation. The office provides a single point of contact for firms looking to participate in the revised NAL policy and sandbox policy programs, explained above. <3.3.2. CFPB American Consumer Financial Innovation Network> In September 2019, the CFPB launched the American Consumer Financial Innovation Network (ACFIN) of state regulators. The CFPB created ACFIN to enhance coordination among federal and state regulators and to facilitate financial innovation as regulators develop new regulations and apply existing ones. The network is open to all state and federal financial regulators, as well as state attorneys general. <3.3.3. FTC Investigation of Fintech Issues> The FTC develops policy and research tools through hearings, reports, workshops, and conferences to support its investigation authorities. Since 2012, the FTC has hosted numerous events and developed several reports on mobile payments, big data, marketplace lending, cryptocurrency scams, and small business financing. For example, the FTC has hosted several forums on fintech issues, including one on marketplace lending in June 2016, crowdfunding and peer-to-peer payments in October 2016, and artificial intelligence and blockchain technology in March 2017. In 2018, the FTC hosted an event on cryptocurrency scams for consumer groups, law enforcement, researchers, and the private sector as part of its consumer protection work. <4. Securities Regulators: Approach to Fintech60> The securities regulators the SEC and the CFTC are focused on any securities-related activities, including those of fintech companies. Examples would include a fintech company raising capital by issuing equity through an initial coin offering or a firm creating a new technology for derivatives contracts. Given their mandate, the securities regulators have used a range of regulatory tools, largely focused on clarifying whether and how the existing regulatory framework applies to new types of technologies, including the following: writing rules and guidance to clarify how existing rules apply to new types of approaches to securities; issuing enforcement actions against any fintech firms that may violate the securities laws under their jurisdiction; and setting up fintech outreach offices to serve as points of contact for stakeholders. Examples of these regulatory approaches are provided below. <4.1. Application of Existing Securities Rules to Fintech> The SEC recently published guidance and rules on new capital-raising measures known as Initial Coin Offerings (ICOs) and crowdfunding, as well as on issues regarding automated investment advice ("robo advisors"). Both the SEC and CFTC have used their broad enforcement authorities to issue enforcement actions against digital asset practices that violated rules under their respective jurisdictions. Further, the SEC used its NAL policy (similar to that used by the CFPB, discussed above) to provide safe harbor to digital asset related companies. These initiatives are summarized below. <4.1.1. SEC Guidance for Initial Coin Offerings> Firms that issue cryptocurrencies may consider an ICO to raise capital by issuing digital assets to investors. In 2019, the SEC published a framework to build on 2018 guidance for companies to understand whether their ICOs qualify as securities and are subject to SEC regulation. The process of issuing an ICO is similar to a public companies' Initial Public Offering a well- regulated and commonplace way to raise capital in equity markets for newly public companies in that both aim to raise funding, but confusion may exist among investors and industry over whether digital assets are treated the same way under SEC regulation. <4.1.2. SEC Crowdfunding Final Rule> The Jumpstart Our Business Startups Act (JOBS Act; P.L. 112-106 ) contains provisions that establish a regulatory structure for startups and small businesses to raise capital through issuing securities using internet-based crowdfunding. Effective May 2016, the SEC adopted a rule to implement these provisions, thereby governing the offer and sale of such securities and providing a framework for regulating certain registered funding portals and other intermediaries. <4.1.3. SEC Guidance for Automated Investment Advice> The SEC has issued guidance for robo advisors, which provide automated investment advice. The staff guidance serves to inform registered and other investment advisers on how to comply with the relevant securities statutes. Compliance requires firms or sole practitioners compensated for advising others about securities investments to register with the SEC and conform to regulations designed to protect investors. <4.1.4. SEC and CFTC Digital Asset Enforcement Actions and No-Action Letters> The SEC has broad enforcement authorities, granting it the ability to suspend business practices through injunctions and to bring administrative proceedings, such as cease and desist orders. The SEC manages a robust enforcement action program across several industries and has issued 48 such actions against digital asset-related companies since 2013. Similarly, the CFTC issues enforcement actions to enforce derivatives laws; since 2018, it has issued more than 20 enforcement actions against firms related to Bitcoin and other cryptocurrency fraud schemes. In addition to its enforcement authority, the SEC grants NALs in some instances to provide relief from the SEC taking an enforcement action against a company. The SEC provided three such letters to digital asset companies in 2019. <4.2. Outreach Offices for Stakeholders> <4.2.1. SEC Strategic Hub for Innovation and Financial Technology> In 2018, the SEC created the Strategic Hub for Innovation and Financial Technology (FinHub) to serve as a resource for public engagement on fintech issues, such as distributed ledger technology, digital assets, automated investment advice, digital marketplace financing, and artificial intelligence/machine learning. FinHub, developed from numerous SEC internal working groups, also is designed to make the SEC's fintech work more accessible to industry and serve as a platform to inform the SEC's understanding of new financial technologies. <4.2.2. LabCFTC> LabCFTC is the focal point of the CFTC's efforts around financial innovation and is designed to make the CFTC more accessible to innovators. LabCFTC also serves as a platform to inform the CFTC's understanding of new technologies, providing information for CFTC staff that may influence policy development. LabCFTC seeks to promote responsible innovation to improve the quality, resiliency, and competitiveness of markets. It also aims to accelerate CFTC engagement with new technologies that may enable the CFTC to carry out its mission responsibilities more effectively and efficiently. There are two main components to LabCFTC: (1) GuidePoint, which creates a dedicated point of contact for stakeholders, and (2) CFTC 2.0, which serves as a beta testing environment for new technologies. Appendix A. Summary of Financial Regulator Mandates Banking Regulators Banks and credit unions serve a vital role in the economy. Thus, they are subject to a strong regulatory framework that requires institutions operate in a safe and sound manner. Depository institutions are routinely examined to ensure their business lines are healthy and to make sure they comply with various laws. These regulators also write and provide guidance on rules for depository institutions to implement their legal authorities over certain business practices. Although the mandates and authorities for each agency are a bit different, the agencies all serve as primary federal regulators for some kind of depository institution. The type of depository institution depends on whether a bank is chartered at the federal or state level and whether it is a member of the Federal Reserve System. (See Table A-1 .) Federal Reserve System The Federal Reserve Act of 1913 (P.L. 63-43) established the Federal Reserve as the central bank of the United States, comprising the Board of Governors and 12 Federal Reserve Banks. The Board generally sets policy, which is carried out by the Reserve Banks. In addition to its responsibility as the central bank to set monetary policy, the Federal Reserve is also responsible for supervising and regulating state banks that are members of the system and all bank-holding companies. The Federal Reserve also has an important role in operating the payments and settlement system. Table B-2 summarizes the Federal Reserve's notable recent activities in the payments system. Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (OCC) was established in 1863 as a bureau of the U.S. Department of the Treasury. The OCC is the primary federal regulator for nearly 1,200 national banks, federal savings associations, and federal branches and agencies of foreign banks operating in the United States. The OCC grants national bank charters, which allow the charter holder to legally operate as a bank. Federal Deposit Insurance Corporation The Federal Deposit Insurance Corporation (FDIC), established by the Banking Act of 1933 (P.L. 73-66) and largely shaped into its modern form by the Federal Deposit Insurance Act of 1950 (P.L. 81-797), insures the deposits of banks and serves as the primary federal regulator for state-chartered banks and thrifts that are not members of the Federal Reserve. The FDIC manages the Deposit Insurance Fund, which provides the funds necessary to insure deposits and to resolve failed banks. The FDIC provides deposit insurance for deposits at all U.S. banks, both national and state, but most of the banks the FDIC supervises are smaller institutions, known as community banks. National Credit Union Administration In 1970, Congress amended the Federal Credit Union Act to establish the National Credit Union Administration (NCUA) as the regulator for the federal credit union system (P.L. 91-206). The NCUA supervises and insures deposit shares at federal credit unions and is responsible for resolving failing institutions. Consumer Protection Agencies Consumer protection laws and regulations are mainly within the jurisdiction of two agencies. The Consumer Financial Protection Bureau (CFPB) regulates certain financial firms for unfair, deceptive, and abusive acts and practices, as well as for compliance with several consumer protection laws. In addition, many firms both financial and nonfinancial are subject to oversight by the Federal Trade Commission (FTC), which regulates firms for competition and fairness. Consumer Financial Protection Bureau The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. 111-203 ) established the CFPB to implement and enforce federal consumer financial law while ensuring that markets for consumer financial services and products are fair, transparent, and competitive. Dodd-Frank consolidated the consumer protection authorities promulgated by other agencies and provided CFPB new powers to issue rules declaring certain acts or practices associated with consumer financial products and services to be unlawful because they are unfair, deceptive, or abusive. The CFPB generally has regulatory authority over providers of an array of consumer financial products and services, including deposit taking, mortgages, credit cards and other extensions of credit, loan servicing, collection of consumer reporting data, and debt collection associated with consumer financial products. The scope of its supervisory and enforcement authority varies depending on an institution's size and whether it holds a bank charter. Federal Trade Commission Congress passed the Federal Trade Commission Act in 1914 to create the FTC and give it legal authority to protect consumers and promote competition. Specifically, the FTC looks to prevent unfair or deceptive acts or practices and to seek monetary redress or other relief for conduct deemed injurious to consumers. Generally, the FTC has broad investigation, rulemaking, and enforcement authorities that enable it to accomplish its mission. Securities Regulators Many companies issue stocks and bonds, trade derivatives, and offer other products collectively called securities. Securities are generally regulated by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). (The CFTC has specific responsibility for derivatives markets.) The securities regulators promulgate rules and provide oversight over the institutions in their jurisdiction. They also conduct enforcement actions to investigate and prosecute violations of relevant regulations. Securities and Exchange Commission Congress passed the Securities Exchange Act of 1934 (P.L. 73-291) to establish the SEC and restore confidence in the securities markets after the stock market crash of 1929. The SEC is an independent agency that has broad authority over much of the securities industry in order to protect investors, promote fair and efficient markets, and facilitate capital formation. Commodity Futures Trading Commission The CFTC was created in 1974 by the Commodity Futures Trading Commission Act ( P.L. 93-463 ) to address the expansion of commodities beyond agriculture. Prior to this law, commodities generally were regulated at the Commodity Exchange Authority, a former agency within the U.S. Department of Agriculture. The CFTC regulates the U.S. derivatives markets, including futures, options, and swaps, and implements the Commodity Exchange Act (CEA; P.L. 74-675). Similar to the SEC, the CFTC has rulemaking and enforcement authorities for a range of issues, but the CFTC's authorities focus on derivatives markets derived from the CEA. Appendix B. Financial Innovation Offices Appendix C. Select Regulatory Fintech Initiatives Federal Reserve System Innovation Programs <4.3. OCC Responsible Innovation Framework> The OCC's Office of Innovation implements its Responsible Innovation framework in a number of ways that are described and summarized in Table C-1 . For instance, the agency established an outreach and technical assistance program to establish a dialogue with banks, fintech companies, consumer groups, trade associations, and regulators. It engages in outreach through a variety of channels. Over the past two years, for example, the Office of Innovation hosted office hours in five different cities for over 125 stakeholders, approximately 250 additional meetings and calls with stakeholders, and over 100 conferences and other events. The office provides technical assistance to help banks and fintech companies understand OCC expectations, relevant laws, regulations, and guidance, such as the agency's third-party risk management guidance. The Office of Innovation also conducts research and develops content, including white papers, webinars, and collaborations with other OCC business units to deliver in-house training, including on payment technologies. The Office of Innovation convenes representatives from various OCC business units to develop a coordinated strategy on particular topics, and it forms working groups to consider particular issues to coordinate and facilitate discussion between stakeholders and the OCC. It also endeavors to reduce regulatory uncertainty and inconsistency, provides assistance to agencies interested in establishing innovation offices, and helps the OCC share information and communicate with other U.S. agencies on emerging trends and ways to improve its innovation initiatives. The OCC participates in various regulatory forums, such as the Financial Stability Board's Financial Innovation Network, and it serves as co-chair of the Task Force on Financial Technology, established by the Basel Committee on Banking Supervision (BCBS). Furthermore, the OCC collaborates on cybersecurity issues domestically and internationally through the Federal Financial Institutions Examination Council, the Financial and Banking Information Infrastructure Committee, and the BCBS. Consumer Financial Protection Bureau Financial Innovation Programs The CFPB's recent efforts pertaining directly to fintech are summarized in Table C-2 below. Financial Crimes Enforcement Network The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of the Treasury charged with administering U.S. anti-money laundering (AML) and combating the financing of terrorism (CFT) laws, most notably the Bank Secrecy Act (BSA; P.L. 91-508). In 2018, FinCEN, along with the Federal Reserve, the FDIC, the NCUA, and the OCC, announced an effort to encourage banks and credit unions to take innovative approaches to combating money laundering, terrorist financing, and other illicit financial threats by enhancing the effectiveness and efficiency of BSA/AML compliance programs. FinCEN Innovation Initiative. FinCEN launched an Innovation Initiative to address the challenges and opportunities of BSA and AML-related innovation in the financial services sector. FinCEN's Innovation Initiative includes the FinCEN Innovation Hours Program and regulatory relief programs to facilitate innovation around AML/CFT compliance. Additionally, FinCEN suggested that it will consider incorporating testing programs, similar to sandboxes, and "Tech Sprints" to facilitate the development of innovative solutions to AML/CFT challenges. Innovation Hours Program. The Innovation Hours Program is the most recent addition to the FinCEN Innovation Initiative. FinCEN intends to host financial institutions, technology providers, and other firms involved in financial services to discuss their interests in innovation around AML/CFT compliance. Appendix D. Payments Regulation and Programs Consumers generally have shifted toward electronic payments such as debit and credit cards. Since 2001, the Federal Reserve has been studying consumer trends in payment activities on a triennial basis. In 2019, the CFPB issued a rule to grant protections to prepaid cards in a similar fashion to debit and credit cards this reflects the shift in consumer preference toward electronic payments. However, regulatory actions around electronic payments may create adverse conditions for some consumers who rely on cash. Balancing the interests of a faster, efficient payment system with one that works for different types of consumers is a challenge currently facing the Federal Reserve and CFPB. Table B-1 shows a number of these rules, which can impact fintech companies that offer services or support payments operations through partnerships at banks. As the Federal Reserve contemplates the design of its proposed faster payments system, it has numerous long-standing payments groups working on fintech and related issues. Many of these groups focus on the payments market. An overview of the Federal Reserve's payments groups is provided in Table B-2 to show the scope of work of the agency and its Reserve Banks. Appendix E. CRS Fintech Products Cybersecurity CRS Report R44429, Financial Services and Cybersecurity: The Federal Role , by M. Maureen Murphy and Andrew P. Scott CRS Report R45631, Data Protection Law: An Overview , by Stephen P. Mulligan, Wilson C. Freeman, and Chris D. Linebaugh. CRS In Focus IF10559, Cybersecurity: An Introduction , by Chris Jaikaran. Lending CRS Report R44614, Marketplace Lending: Fintech in Consumer and Small-Business Lending , by David W. Perkins. CRS Report R45726, Federal Preemption in the Dual Banking System: An Overview and Issues for the 116th Congress , by Jay B. Sykes. Payments CRS Report R45927, U.S. Payment System Policy Issues: Faster Payments and Innovation , by Cheryl R. Cooper, Marc Labonte, and David W. Perkins. CRS Report R45716, The Potential Decline of Cash Usage and Related Implications , by David W. Perkins. Banks and Third-Party Vendor Relationships CRS In Focus IF10935, Technology Service Providers for Banks , by Darryl E. Getter. Cryptocurrency and Blockchain-Based Payment Systems CRS Report R45427, Cryptocurrency: The Economics of Money and Selected Policy Issues , by David W. Perkins. CRS Report R45116, Blockchain: Background and Policy Issues , by Chris Jaikaran. CRS Report R45664, Virtual Currencies and Money Laundering: Legal Background, Enforcement Actions, and Legislative Proposals , by Jay B. Sykes and Nicole Vanatko. CRS In Focus IF10824, Financial Innovation: "Cryptocurrencies" , by David W. Perkins. Digital Assets and Capital Formation CRS Report R46208, Digital Assets and SEC Regulation , by Eva Su. CRS Report R45221, Capital Markets, Securities Offerings, and Related Policy Issues , by Eva Su. CRS Report R45301, Securities Regulation and Initial Coin Offerings: A Legal Primer , by Jay B. Sykes. CRS In Focus IF11004, Financial Innovation: Digital Assets and Initial Coin Offerings , by Eva Su. High-Frequency Securities and Derivatives Trading CRS Report R44443, High Frequency Trading: Overview of Recent Developments , by Rena S. Miller and Gary Shorter. CRS Report R43608, High-Frequency Trading: Background, Concerns, and Regulatory Developments , by Gary Shorter and Rena S. Miller. Regulatory Approaches and Issues for Congress CRS In Focus IF11195, Financial Innovation: Reducing Fintech Regulatory Uncertainty , by David W. Perkins, Cheryl R. Cooper, and Eva Su. CRS Report R46332, Fintech: Overview of Innovative Financial Technology and Selected Policy Issues , coordinated by David W. Perkins.

New technologies in the financial services sector can create challenges for the various federal agencies responsible for financial regulation in the United States. As these regulators address the potential benefits and risks of innovation, policymakers have demonstrated significant interest in understanding the types of technologies that may benefit consumers and financial markets while identifying the risks that new financial services may present. As Congress considers the potential tradeoffs of financial technology or fintech , it can be useful to understand how the financial system regulators are approaching these issues. The financial system regulators can be grouped into three general categories: (1) depository institution regulators, (2) consumer protection agencies, and (3) securities regulators. Each type of regulator has the authority to write rules, publish guidance, supervise institutions, and enforce compliance with the laws they implement. Further, there are similarities and differences among each regulator's mandate, which shed light on the approaches the regulators tend to take when considering new fintech. The banking regulators generally are responsible for banks and credit unions, particularly focusing on the safety and soundness of these institutions. They have limited authority to write rules for, supervise the operations of, or enforce actions against firms outside their jurisdiction. Some banking regulators are responsible for granting licenses, or charters, to financial institutions so they can operate as banks and credit unions. Fintech firms typically are not licensed banks or credit unions; however, banks and credit unions often form partnerships with fintech firms, and banking regulators have legal authority to examine these types of relationships. This third-party partnership supervision allows the regulators to supervise depository institutions' interactions with new fintech firms. Banks and credit unions also have an important role in the payments system. Banking regulators have used some of their rulemaking authorities to influence technological advances in the payments system as consumers continue to shift toward electronic payment tools, such as debit and credit cards. The consumer protection agencies generally are responsible for protecting consumers from unfair and deceptive business activities while maintaining a fair, competitive marketplace. Similar to banking regulators, consumer protection agencies have rulemaking, supervision, and enforcement authorities to implement and ensure industry compliance with consumer protection and competition laws, but consumer protection agencies have broader jurisdiction than banking regulators. For example, often they can directly regulate fintech companies and use their enforcement authorities to interact with fintech. In addition, they have promulgated rules pertaining to aspects of fintech. Consumer protection agencies generally balance the potential benefits of new technologies that could improve consumer outcomes with the potential risks to consumers posed by new, untested products entering the marketplace. This mandate allows consumer protection agencies to take enforcement actions to protect consumers and create safeguards from enforcement actions to protect companies offering financial services that benefit consumers or the market. Securities regulators generally are concerned with protecting investors, maintaining fair and efficient markets, and facilitating capital formation. These regulators generally have limited concern for safety and soundness of the firms in their jurisdiction, focusing on disclosure requirements and contracts to promote investor protection and efficiency in the marketplace. Similar to the other regulators, they promulgate and enforce rules, but their mandate positions them somewhat differently than banking regulators and consumer protection agencies with respect to fintech. Securities regulators may endeavor to determine whether a new type of fintech product from a company counts as a security and how fintech is changing the way securities are offered. To this end, securities regulators tend to rely on their enforcement authority to ensure that new technologies do not violate securities laws.

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<1. Introduction> The U.S. Coast Guard is the agency charged by law with overseeing the safety of vessels and maritime operations. For at least four decades, Congress has been concerned about the Coast Guard's ability to maintain an adequate staff of experienced marine safety personnel with technical knowledge of vessel construction and accident investigation. Recent incidents, particularly the 2015 sinking of the U.S.-flag cargo ship El Faro with the loss of 33 lives during a hurricane near the Bahamas, have revived questions about the Coast Guard's persistent difficulty with hiring and training a marine safety workforce. The safety inspections of the vessel were found to have been inadequate. In the Hamm Alert Maritime Safety Act of 2018 ( P.L. 115-265 , 210), Congress directed the Coast Guard to brief congressional committees of jurisdiction on its efforts to enhance its marine inspections staff, the staff responsible for ensuring that vessels are meeting safety standards. In the Frank LoBiondo Coast Guard Authorization Act of 2018 ( P.L. 115-282 , 501) Congress requested a report from the Coast Guard detailing the courses and other training a marine inspector must complete to be considered qualified, including any courses that have been dropped from the training curriculum in recent years. This report examines the staffing challenges the Coast Guard faces in assuring marine safety at a time when its responsibilities in this area are increasing significantly. It also considers proposals to realign marine safety functions within the federal government. <2. The Marine Safety Mission> The Coast Guard engages in two distinct activities with respect to marine safety: Vessel inspection . The Coast Guard has a staff of 671 marine inspectors 533 military and 138 civilian who are responsible for inspecting U.S.-registered passenger and cargo vessels, foreign-flag vessels calling at U.S. ports, mobile offshore drilling units, and towing vessels and barges carrying hazardous cargoes. Foreign-flag vessels are those registered in jurisdictions other than the United States. Accident investigation. The Coast Guard employs 158 accident investigators 120 military and 38 civilian who conduct casualty investigations of U.S.- and foreign-flag vessels to detect and correct safety hazards, prepare investigation reports, analyze trends, and recommend enforcement action. These two assignments fall under the Coast Guard's prevention policy workforce headed by the Assistant Commandant for Prevention Policy, a rear admiral. Reporting to the Assistant Commandant is the Director of Inspections and Compliance, a captain, who oversees the Office of Commercial Vessel Compliance and the Office of Investigations and Casualty Analysis, among other safety-related offices. The prevention policy workforce is especially critical for the commercial U.S.-flag fleet because a majority of this fleet is much older than the 15 to 20 years of age at which ships in the worldwide oceangoing fleet are typically scrapped. About 60% of the 217 ships in the dry-cargo U.S.-flag commercial fleet and 53% of U.S.-flag offshore supply vessels (which service oil rigs) are older than 20 years; the El Faro had been in service for 40 years. Some 72% of the 1,497 vessels in the U.S.-flag passenger and ferry fleet are over 20 years old. In general, older vessels require more frequent inspection; the National Transportation Safety Board (NTSB) raised questions about the quality of the Coast Guard's inspections in its investigation of the El Faro sinking, after which the Coast Guard revoked the safety certificate for another vessel of the same design and similar age, forcing its removal from service. Generally, inspections of vessels carrying passengers or hazardous cargo, and inspections of older vessels, are more frequent than inspections of general-cargo vessels and newer vessels. Vessels transporting cargo or passengers domestically (from one U.S. point to another U.S. point) must be U.S.-built, as required by the Jones Act. The cost of U.S.-built vessels, particularly deep-draft ships, can be multiples of world prices, which may retard vessel replacement. U.S.-flag vessels on international voyages need not be U.S.-built, and this fleet is younger than the Jones Act fleet. Congress's request for information about the Coast Guard's inspection staff comes at a time when the number of vessels requiring inspection is increasing by about 50% because towing vessels have been added to the list. Congress has been increasing the agency's role in fishing vessel safety as well, putting additional demands on the safety workforce. Adding to the Coast Guard's safety responsibilities is the construction of several liquefied natural gas (LNG) export terminals, whose siting, operations, and security are partly or entirely under Coast Guard jurisdiction, as well as the increasing use of LNG as ship fuel. <2.1. Workforce Qualifications, Training, and Pay Scales> According to the Coast Guard, the marine inspector workforce consists of commissioned officers, chief warrant officers (CWOs), and civilians. Officer marine inspectors enter the workforce through a variety of accession sources, including Officer Candidate School, the Direct Commission Officer program for U.S. Maritime Academy graduates, and the Coast Guard Academy. CWOs are divided into two specialties: Marine Safety Specialty Deck and Marine Safety Specialty Engineer. Those who meet the eligibility requirements to compete for CWO are selected through an accession panel. An emphasis is placed on past maritime and inspection experience when hiring civilian marine inspectors. Additionally, the Coast Guard hires and trains civilians who are inexperienced in inspections to become marine inspectors through its civilian marine inspector apprenticeship program. The normal entry is a marine inspector apprenticeship tour at a larger port (referred to as a feeder port). A feeder port is located near a unit that is better prepared and equipped to train inspectors. The civilian inspectors generally remain at a single location for their entire careers to provide continuity. Most officers complete one to three tours as a field-level marine inspector or marine investigator and do not rotate between tours ashore and afloat. Officers rotate approximately every three years and may be promoted to leadership positions in the marine safety organization. CWOs remain marine inspectors or marine investigators until retirement. On average, a CWO serving as a marine inspector works in this capacity for approximately 8.7 years. Inspector pay scales range from CWO2 to CWO4 (approximately $90,000 to $124,000); officers (O-1 to O-5, approximately $64,000 to $152,000). Civilian marine inspectors are typically classified at GS-12 ($64,000 to $84,000). The investigator workforce also comprises commissioned officers, CWOs, and civilians. It has the same path for entry as marine inspection. Many marine investigators have prior experience as inspectors, giving them familiarity with commercial shipping operations and regulations. However, this is not true in all cases, and some marine investigators become familiar with marine inspections through on-the-job training. The typical pay scale for investigators is CWO3 to CWO4 (approximately $106,000 to $124,000) and O-2 to O-4 (approximately $83,000 to $130,000). The Coast Guard has recognized the training of the inspection staff as an important concern. As Rear Admiral John Nadeau, then the Coast Guard's Assistant Commandant for Prevention Policy, testified at a January 2018 hearing about the El Faro casualty: [T]his is not strictly a capacity problem. There are elements to training. If you just gave me another 1,000 marine inspectors, it wouldn't solve this problem. This problem involves training. This problem involves getting the right information. This problem involves getting the right policy and procedures in place.... Entry-level marine inspections is not what I am talking about. I need to have a small corps it is not a lot a small corps of people that can get out and are highly trained and proficient and stay focused on this area until we get it right. In a March 2019 hearing, Rear Admiral Nadeau testified that the agency was improving the quality of its safety inspection workforce: [T]he Coast Guard has prioritized marine inspector training, established new staff dedicated to performing third party oversight, increased opportunities for maritime graduates to join the Coast Guard, and prioritized the hiring of civilian marine inspectors.... The Coast Guard is actively developing a comprehensive training architecture for our marine inspectors. This architecture will provide cohesive strategy, policy, and performance support to ensure that Coast Guard marine inspectors are trained consistently from the basic to the advanced level in a manner that keeps pace with industry, technology, and related regulatory changes. <3. Managing Marine Safety> The Coast Guard repeatedly has made statements in recent decades laying out its plans to improve the quality of its inspection workforce. Often, these pronouncements have been in response to heightened congressional scrutiny of the agency's marine inspection program in the aftermath of a major marine casualty in which investigators found that subpar vessel inspections played a contributing role. This cycle was described by a retired Coast Guard senior official in 2015: [T]he Marine Safety program is a low profile mission within the Coast Guard's multi-mission portfolio. That is true until a confluence of factors markedly raises its visibility and causes great introspection. The program's purpose is to keep bad things from happening. Non-events are virtually impossible to measure. Marine Safety is normally not a major budget item of interest to the Service. The Coast Guard, especially in what has generally been a declining resource environment, will always have many pressing and competing budget needs. And if a major incident occurs, Congress is willing to throw the Service a lifesaver in the form of significant dollars. As employees of a military organization, Coast Guard personnel typically change mission assignments and/or locations every two or three years, so they do not develop the knowledge and experience required of a proficient marine inspector or investigator. As noted, the scope of the vessel types the Coast Guard inspects ranges from small passenger boats to oceangoing ships to mobile offshore drilling rigs. Geographic reassignments can change the category of vessels an individual inspector must evaluate. Vessel technology can be complex and is constantly changing, and the safety regulations are voluminous and technical. An internal Coast Guard study in 2012 revealed that "41% of marine inspectors were not confident interacting with maritime industry personnel concerning marine inspection issues." Even if personnel rotate back into marine inspection after a different assignment, they need time to regain proficiency. The Coast Guard recognizes the difficulty of building marine inspection and investigation proficiency among uniformed officers who rotate assignments frequently. Consequently, each Commandant's initiative or plan to revamp marine inspections has stated a goal of boosting the civilian inspector and investigator workforce and creating more attractive long-term career paths by extending promotion potential. However, a perception inside the agency that marine safety is an area that retards promotion could be thwarting efforts to boost the inspection workforce. This is asserted in a study by a career Coast Guard official who spent his last several years working in human resources for the agency: [T]he Coast Guard's internal manpower management processes are considered to be at odds with the need to build and maintain a competent marine safety officer corps The perception for decades is that it is difficult for marine safety officers to succeed in the Coast Guard's military officer promotion system. The Service endeavors to manage individual officer specialties, such as marine safety, while at the same time operate an "up or out" promotion system that is mandated by law.... officers who follow a marine safety career path consider themselves disadvantaged as they become more senior and face stiffer competition for promotion.... Currently, the perception of disadvantage continues. <3.1. World War II Gives Coast Guard New Role> The Coast Guard's challenges with marine inspection and investigation date to a government reorganization in preparation for World War II. A 1942 executive order transferred the civilian Bureau of Marine Inspection and Navigation (BMIN) from the Department of Commerce to the Coast Guard for the duration of the war and for six months after hostilities ended. After the war ended, President Truman proposed keeping the marine inspection function under the Coast Guard rather than transferring it back to the Department of Commerce. Proponents of this approach contended that the Coast Guard had performed the mission adequately during the U.S. involvement in the war and that synergies existed with other Coast Guard missions such as maritime search and rescue. Furthermore, they asserted, there was no need to create additional overhead and administrative expenses by establishing a separate bureau. The maritime industry argued against keeping marine inspections under the Coast Guard. A witness representing the American Petroleum Institute testified in 1947 that under the BMIN, almost all of the inspectors had been former merchant marine officers with 10 to 20 years of experience aboard ships who had practical knowledge of vessel safety vulnerabilities. The permanent assignment of marine inspections to the Coast Guard was part of a much larger government reorganization plan advanced by the Truman Administration that was to go into effect unless both houses passed a concurrent resolution of disapproval within a specified period. The House adopted such a resolution, but the Senate did not. Consequently, President Truman's plan became effective in 1946. In subsequent years, the Coast Guard's role remained a point of contention. In 1947, a representative of a ship captains' union testified that under the old regime, the men in the Bureau of Marine Inspection were the wearers of the purple cloth. Before men could become assistant local inspector and go up to the grade of local inspector and supervising inspector, and so forth, they had to be either a master mariner [ship captain], or a chief engineer with the result that the most mature, and most sensible and most experienced and most intelligent of our profession got into the service. It was very seldom that you found a local inspector under 35 years of age.... They were of mature judgement and they were one of the most respected organizations in the entire marine industry. The concern that the Coast Guard would be unable to replace the experience of the ex-BMIN inspectors as they retired persisted over the decades. In 1979, the General Accounting Office (GAO, known since 2004 as the Government Accountability Office) conducted an audit of the Coast Guard's marine inspection program after a series of tanker accidents in or near U.S. waters during the winter of 1976-1977 resulted in losses of life and property and environmental damage. Under the heading "Trained and Experienced Personnel Needed," the GAO report raised questions about the training of marine inspectors: Most of the inspectors in the three districts included in our review have had at least one tour of sea duty on Coast Guard cutters. Considering this sea experience, along with the on-the-job and formal training, it would seem that most inspectors would be highly qualified. However, we found that relatively few field unit inspectors could be considered as qualified hull or boiler inspectors. This has occurred because the Coast Guard has not established uniform criteria or procedures to determine whether inspectors are actually qualified and has not scheduled needed vessel inspection training in a timely manner. In addition, the rotation policy caused by the lack of a specialized job classification or career ladder contributes to the difficulty in achieving and maintaining expertise in marine inspection. The report note d that the Coast Guard Merchant Marine Safety Manual in effect at the time stated as a customarily accepted fact that it takes three years of experience to become a qualified marine inspector , adding that "every 2 to 3 years the Coast Guard rotates its staff among various duty stations such as search and rescue, buoy tenders, and high- and medium-endurance cutters , " and that " about the time personnel become proficient in one area, such as vessel inspection, they are transferred and assigned to another job." The GAO found that "few field inspectors had previous inspection duty or consecutive assignments at marine inspection offices" and the Coast Guard had been "unable to keep experienced and trained staff in the vessel inspection area." Some of the Coast Guard field officers interviewed by the GAO commented that inspectors needed to have additional expertise to gain the respect of the maritime industry, and that most inspectors were not knowledgeable enough to provide industry with a precise interpretation of marine rules and regulations. In response to the 1979 GAO report, the Coast Guard stated that while it would consider establishing an inspection specialty career classification for both officers and enlisted personnel and extend its inspection assignment tour, its existing job classification system was better suited to the multimission nature of the agency. <3.2. The 1980s> In October 1980, the U.S.-flag ship Poet , carrying a load of corn to Egypt, disappeared with no trace somewhere in the Atlantic. Its disappearance was believed to have coincided with a period of heavy weather; the structural integrity of the 36-year-old ship was suspected as a possible cause. The Coast Guard's Marine Board of Investigation found that the Coast Guard inspector conducting most of the ship's inspections during the year prior to the voyage had no previous experience inspecting commercial vessels, which heightened the Marine Board's concern that structural defects may have gone undetected. In February 1983, the Marine Electric , a 40-year-old Jones Act ship carrying coal from Norfolk, VA, to Massachusetts, sank in heavy weather, killing 31 crew members. Investigators concluded that the probable cause of the sinking was the poor condition of the cargo hatches and deck plating, which allowed waves to flood the hull. The Coast Guard's Marine Board of Investigation stated that the ship's Coast Guard inspectors lacked the experience to conduct safety examinations of a vessel the size, service, and configuration of the Marine Electric . The incompleteness of these inspections as to the dictates of regulations and policy was attributed to the lack of training and experience on the part of the Coast Guard inspectors.... the inexperience of the inspectors who went aboard the Marine Electric , and their failure to recognize the safety hazard imposed by the deteriorated, weakened and non-tight hatch covers, raises doubts about the capabilities of the Coast Guard inspectors to enforce the laws and regulations in a satisfactory manner. At a 1983 congressional hearing examining the marine casualty, a representative of a ship engineers' union noted that "Coast Guard officers with 12 weeks experience behind a desk are dealing with officers of the merchant marine who have spent 20 years at sea," and that "an inspector can't condemn a dangerous ship if he doesn't know what a dangerous ship is." This representative further stated that "while multi-mission flexibility and frequent rotation may be an optimal way to fulfill the Coast Guard's military readiness mission, it is a serious and even fatal distraction from the regulation of commercial industry." The witness urged Congress to transfer ship inspection responsibilities to an agency of civilian career professionals, similar to the Bureau of Marine Inspection and Navigation that existed before World War II. Some committee Members appeared receptive to this idea. The witness also raised the issue of whether the more fundamental problem was the age of the U.S. fleet: The problem of course is old ships. This means dangerous ships The Poet and the Marine Electric are trying to tell us something: If a ship isn't retired when it gets old, it will retire itself ... Although 40% of the U.S. fleet is at least 20 years old, 75% of the dozen worst U.S. marine tragedies in the past two decades struck these ships aged 20 or older. Twenty is the rounded number when industry experts say a ship should be junked. In conclusion, any analysis of the plight of maritime safety is misleading if it does not identify old ships as the core of the problem. The only way to uproot this evil is to mandate an aggressive attack by a dedicated and seasoned staff of professional inspectors a team that the Coast Guard could never field unless it ended its fundamental multi-missioned military structure. In 1985, following up on its 1979 audit, the GAO reported that the Coast Guard had recently completed a two-year project to develop a new marine safety training and qualification program. One change was establishment of uniform standardized on-the-job training and on-the-job qualification requirements. Another change was selection of three "training ports" where new inspectors would go for 18 months of intensive training before their initial assignment. The GAO stated that it was too early to assess whether these changes had addressed the qualification problems identified in its 1979 report. On March 24, 1989, the U.S.-flag tanker Exxon Valdez grounded on Bligh Reef after departing Valdez, AK, spilling about 11 million gallons of oil. The actions of the ship captain, who was found to be impaired by alcohol, and who had turned over operation of the vessel to a third mate before reaching open waters, was the focus of the marine casualty investigation. In response to the Exxon Valdez incident, among other things, Congress increased funding for Coast Guard safety personnel. According to one Coast Guard senior official, the "War on Drugs" in the mid-1980s had shifted resources from the agency's safety mission to its drug interdiction mission. <3.3. The 1990s> In the 1990s, the quality of Coast Guard inspections came under scrutiny again as the result of two fatal passenger vessel incidents. On December 5, 1993, the wooden vessel El Toro II , a fishing charter party vessel built in 1961 and carrying 23 people, began sinking in the Chesapeake Bay when water seeped through the hull's planks. There were three fatalities. The Coast Guard's Marine Board of Investigation found that the Coast Guard inspector's knowledge of wooden boat structure was lacking, and that inspection staff were not cognizant of previous inspection reports that would have prompted concern about the vessel's seaworthiness, given the owner's poor track record in making needed repairs to the 32-year-old vessel. The second incident occurred on a lake near Hot Springs, AR, in May 1999. The Miss Majestic , an amphibious "duckboat" built during World War II to transport troops and supplies, which had since been converted into a tour boat, began taking on water and sank in less than 30 seconds, drowning 13 of its 20 passengers. The Coast Guard's Marine Board of Investigation found that the Coast Guard inspector had not noticed that a critical part was missing from the rear shaft that was the main source of the leak. It determined that the inspector lacked awareness of the importance of this vessel's design components. The board also found that the local Coast Guard office was not keeping adequate inspection records, which would have shown that the vessel's owner had not installed safety equipment that previous inspectors had called for. The NTSB concluded that the Coast Guard's inspections of the vessel were "inadequate and cursory" and that the "lack of Coast Guard guidance and training for the inspection of [this vessel design] contributed to the inadequate inspections of the Miss Majestic ." Moreover, the NTSB found that Coast Guard inspectors over the preceding five years had missed deficiencies with the vessel that might have been obvious even to an untrained observer, such as pinholes in the hull of the vessel caused by corrosion and an improper repair using a rubber patch to conceal a large, wasted area of the hull. These marine casualties in the 1990s prompted the Coast Guard and Congress to examine the marine safety mission of the agency once again. In December 1995, the Coast Guard conducted an internal study of its accident investigation activity. One of the recommendations of the internal report was "To improve the overall quality of the information derived from investigations, an investigations career path should be developed. This would enable the Coast Guard to raise the overall level of expertise in investigations." In 1996, the GAO reviewed whether the Coast Guard had fully utilized additional funding Congress provided the agency in the early 1990s to add 875 positions to its Marine Safety Program. At a 1997 congressional hearing, a representative of the passenger vessel industry noted that vessel inspection "responsibilities fill hundreds of pages of regulations and thousands of pages of referenced consensus standards and rules." The industry representative was "concerned that the problems in the commercial vessel safety program will grow because of a resulting lack of training and experience on the part of many Coast Guard inspectors." <3.4. The 2000s> Following the terrorist attacks of September 11, 2001, Congress greatly increased the Coast Guard's resources directed toward maritime security matters. The maritime industry's reaction to the Coast Guard's new security responsibilities came to light at a 2007 congressional hearing. Some industry witnesses at the hearing contended that since the Coast Guard had been transferred from the Department of Transportation to the newly created Department of Homeland Security (DHS) in 2002, the agency was more focused on security matters than on safety. One industry witness asserted that the industry's relationship with Coast Guard inspectors had changed from being partners with a mutual interest in safety to being viewed as a security risk. The purpose of the 2007 hearing was to examine a proposal by the chairman of the House Transportation and Infrastructure Committee to transfer the Coast Guard's marine safety inspection function to a civilian agency in other words, to undo the World War II-era reorganization. The chairman argued that "What we need is what we have in the [Federal Aviation Administration], skilled personnel who have years of seasoning, who aren't shifted year after year from one post to another with only three years on staff." At the hearing, a witness representing ship captains described how marine inspection was performed in other countries: In foreign countries outside the United States, you go to the Netherlands or Germany or Norway, that is a civilian force that comes on. They are all retired masters or chief engineers, and they become the inspection service for that country. When they go aboard a ship, they are interfacing with chief engineers and masters that have a shared experience. There is a great deal of respect for the inspectors, and the inspectors have a great deal of respect for the officers on the ship. It is an effective system. You have expertise. You have competence, and you have motivation. They obviously love the maritime industry because that is their choice. It is not something they have been assigned to as part of their tour of duty and attaining a generalized background in the Coast Guard. I think that is the way to go. When a fellow retires after a career at sea and he is 45, 50 years old, he might not be looking for a future career advancement as Coast Guard officer. You make him a civilian inspector, and he would fill the same role that they fill in Germany and most maritime countries. Most maritime countries do not have a uniform Coast Guard acting as the maritime inspection service. They use maritime professionals from the industry to fill that role. When they send a petty officer down to represent the United States' interest in enforcing international conventions on foreign flag ships as a port state control officer, the foreign masters, the Germans and the British, take offense that the Coast Guard hasn't sent an officer down or a civilian personnel with a maritime background. At the hearing, the Commandant of the Coast Guard explained the dilemma facing the agency regarding its inspection staff: Here is the quandary we are faced with. Sooner or later, as you get promoted in the Coast Guard, you become a commanding officer. If you get selected for flag, you become a district commander and maybe even a Commandant. When you get to there, you become a general. You are representing the entire organization. We have an issue of needing specialists, subject matter experts, but at some point we need to generalize these folks and give them other experiences if they are going to be promotable and move up to become executives in the organization. In corporate America, for example, if you are a vice president, everybody needs to understand corporate finance. What we have developed inside the Coast Guard is the notion of what we call a broadened specialist. What we need to look at is maintaining the subject matter expertise that is critical to mission execution and then how we can broaden these people at a later date and still make them promotable. They want to be able to move up in the organization as well. At the 2007 hearing, the Commandant urged the ex-chairman of the Transportation and Infrastructure Committee to defer his proposal until the Coast Guard had a chance to rectify the problem, which the chairman agreed to do. The Commandant outlined the actions he was taking to improve the inspection workforce: In the last year, I have directed significant changes and improvements in the training and qualifications of our inspectors to keep pace with the technological advancements and growth in maritime industry. We have made changes to our warrant officer selection system to bring more talented and experienced enlisted personnel into the maritime safety specialty. We have learned valuable lessons from joint military and civilian staffing of our sector command centers and our vessel traffic services. These are areas where we used to have Coast Guard personnel only staffing. We now have brought civilian personnel in to provide continuity, corporate memory and way to bridge during the transfer season, so we get the best of training for our people in uniform by maintaining continuity of services. I am committed to the establishment of more civilian positions in the marine inspection field. We need people with critical job skills. We need to maintain continuity while providing our military members access to this type of experience. We must leverage and expand this dual staffing model. Getting the inspection program right in terms of training, qualifications and staffing is my highest maritime safety priority. The Commandant also argued that marine safety and security were two sides of the same coin; they were not mutually exclusive missions but synergistic to the Coast Guard's other maritime missions. The Commandant's first step was an internal study of the issue by a retired Commandant. This internal study acknowledged that the agency's practice of regularly rotating staff geographically or by activity, as military organizations typically do, hindered its ability to develop a cadre of staff with sufficient technical expertise in marine safety. The report noted the following: "If the inspector is constantly referring to the regulations when conducting an inspection, the customer doesn't have much confidence in the quality of the Coast Guard inspection. I understand that the Coast Guard has sent unqualified personnel or marginally qualified personnel to conduct inspections and investigations." The report also stated that "the DHS has no responsibility for transportation safety so getting them to embrace the Marine Safety program could be a heavy lift." In response to this problem, the agency revamped its safety program and Congress appropriated additional funds specifically for safety personnel. The FY2009 Coast Guard budget request noted that "the Coast Guard is encountering serious stakeholder concern about our capacity to conduct marine inspections, investigations, and rulemaking." Under the revamped safety program, the Coast Guard created additional civilian safety positions, converted military positions into civilian ones, and developed a long-term career path for civilian safety inspectors and investigators. A 2008 audit by the DHS Inspector General (IG) confirmed that Coast Guard stated that the problems identified with respect to its safety program workforce also existed among vessel accident investigators. The IG found that accident investigations were hindered by unqualified personnel and recommended hiring more civilians for this activity. The IG also found that the Coast Guard had lowered the qualification standard for accident investigators in August 2007 by removing the requirement that an investigator have experience as a hull or machinery and small passenger vessel inspector. Since vessel casualties commonly involve structural deficiencies in the hull or loss of propulsion, this experience is considered important for an accident investigator. The IG noted that in the United Kingdom, Australia, and Canada, accident investigators are required to be former ship captains or chief engineers with several years of experience. The IG report noted issues with rotating assignments and promotion potential in the marine safety area: A tour in the Prevention Directorate could mean yearly rotations across specialty areas, such as waterways management and drug and alcohol testing. Given the lack of a career path and the unpredictable nature of investigation assignments, potential Coast Guard candidates also may not want to become investigators. Hull and Machinery Inspectors told us that promotion to the position of marine casualty investigator would not advance their careers. Additionally, according to Coast Guard personnel, tour of duty rotations hinder investigators in acquiring the experience needed for career development. The agency's uniformed investigators generally are not in their positions for more than a single, three-year tour of duty in the same location. The forced rotations preclude the investigators from acquiring the extensive knowledge of local waterways and industries that experienced casualty investigators have told us is needed to be an effective investigator. In contrast, civilian marine casualty investigators are not subject to the three year tour of duty rotation standard. Over time, they can gain a greater knowledge of specialties such as local waterways and industries or experience in enforcing maritime regulations to enhance their qualifications. Of the 22 marine casualty investigators that we reviewed, one was a civilian. A 2009 study by the Homeland Security Institute, a federally funded research center established by Congress in the Homeland Security Act of 2002 ( 312) to assist DHS in addressing policy issues, reiterated the same theme regarding frequent rotations of uniformed staff hindering proficiency in marine inspection and investigation. The study's recommendations were to increase tour lengths as well as require back-to-back tours in these areas and to rely more on civilians for these functions. The study found that the Coast Guard's workforce database was not able to indicate years of service or level of expertise for marine safety personnel. The study found that the Coast Guard had no central office responsible for overall management of the marine safety workforce and therefore there were no agency-wide specific standards for determining qualifications in this area. Lacking documentation, the study's authors relied heavily on interviews with hundreds of Coast Guard personnel and private industry to gather data on the marine safety workforce. <3.5. Recent Developments> On April 20, 2010, the mobile offshore drilling unit Deepwater Horizon , 45 miles off the coast of Louisiana, experienced a catastrophic blowout, causing a major explosion and fire, and resulting in its sinking. There were 11 deaths and an oil spill estimated at approximately 206 million gallons, the largest in U.S. history. The Department of the Interior's Minerals Management Service had responsibility for inspection of the drilling apparatus that was the cause of the explosion, but the Coast Guard was responsible for the safety inspection of the rig above water that has commonality with vessels in general (firefighting and lifesaving equipment, evacuation procedures, electrical systems). The ensuing investigation revealed that Coast Guard regulations of offshore structures dated to 1978 and had not been updated as rigs moved farther and farther offshore. For instance, in places where they are not attached to the seabed because of the tremendous depth, these rigs use dynamic positioning systems (propeller systems) to remain in place, but at the time of the accident the Coast Guard had not developed regulations for checking the safety aspects of these critical systems. In response to the Deepwater Horizon marine casualty, Congress required the Coast Guard to take several initiatives to improve the quality of its marine inspection workforce in the Coast Guard Authorization Act of 2010 ( P.L. 111-281 ). Under the subtitle "Workforce Expertise" ( 521-526), these initiatives included improving career path management, adding apprenticeships to the program, measuring workforce quality and quantity, adding a marine industry training program and a marine safety curriculum at the Coast Guard Academy, and preparing a report on recruiting and retaining civilian marine inspectors and investigators. A June 2011 audit by the DHS IG of vessel inspections in the offshore oil and gas industry (involving rigs and vessels that support operation of the rigs) found a positive result for the marine inspection program in this sector. The IG found that 99% of those inspections had been performed by Coast Guard inspectors who had been fully qualified. However, the IG found that the Coast Guard's guidance on how to inspect these vessels and how to record the results of these inspections was deficient. A May 2013 audit by the DHS Inspector General found that the agency's efforts had not improved its marine accident reporting system, due to familiar issues surrounding the qualifications and rotation of the personnel: The USCG [United States Coast Guard] does not have adequate processes to investigate, take corrective actions, and enforce Federal regulations related to the reporting of marine accidents. These conditions exist because the USCG has not developed and retained sufficient personnel, established a complete process with dedicated resources to address corrective actions, and provided adequate training to personnel on enforcement of marine accident reporting. As a result, the USCG may be delayed in identifying the causes of accidents; initiating corrective actions; and providing the findings and lessons learned to mariners, the public, and other government entities. These conditions may also delay the development of new standards, which could prevent future accidents. [T]he Director of Prevention Policy [the marine safety program] provides personnel with career management guidance that suggests they should leave this specialty to improve their promotion potential, because of the USCG's emphasis on personnel attaining a wide variety of experience. Personnel indicated that both investigations and inspections suffer from investing time and money into training people only to have them leave the specialty. The IG found that at the 11 sites it visited, two-thirds of accident inspectors and investigators did not meet the Coast Guard's own qualification standards. The IG stated that the shortage of qualified personnel would be further compounded by the new towing vessel safety regime, which would expand the inspection workload by about 50% (or an additional 5,700 vessels to inspect). In January 2015, the new Commandant, Paul Zukunft, indicated that human resource competencies would be one of his key focus areas. He referred to the need to grow "subject matter experts" for the marine safety workforce and overhaul the generalist-driven military personnel system in favor of a specialist workforce. Commandant Zukunft called for increasing proficiency through more specialization in both the officer and enlisted corps and to extend the time between job rotations. He noted the complexity of systems aboard vessels and new developments in using LNG as fuel, stating that the Coast Guard needed to know these technologies in order to lead the industry on safety rather than having to learn them from industry. In February 2015, Commandant Zukunft stated his priorities regarding the marine safety mission: I have directed the Vice Commandant to undertake a service-wide effort to revitalize our marine safety enterprise with particular focus on marine inspection and our regulatory framework.... We will increase the proficiency of our marine safety workforce, and we will continue to train new marine inspectors adding to the more than 500 that have entered our workforce since 2008.... We will review our civilian career management process to eliminate barriers and improve upward mobility. As noted above, the October 2015 sinking of the El Faro has renewed focus on the Coast Guard's marine inspection workforce, but, as in the past, the age of ships in the U.S.-flag fleet has been raised as a corollary safety issue. Regarding the El Faro , the Coast Guard testified in 2018: We looked a little further beyond this particular incident, caused us to look at other vessels in the fleet and did cause us concern about their condition. And the findings indicate that it is not unique to the El Faro . We have other ships out there that are in substandard condition. You know, some of our fleet our fleet is almost three times older than the average fleet sailing around the world today. Just like your old car, those are the ones likely to breakdown. Those are the (inaudible) one the ones that are more difficult to maintain and may not start when I go out, turn the key. <4. Considerations in Realigning Marine Safety Functions> As the above history indicates, the measure most often proposed to increase the competence of marine safety personnel is to shift this mission to a civilian workforce in a civilian subagency, either under the Coast Guard or somewhere else in the executive branch with complementary maritime functions. While such a shift could have the advantages stated, one cannot necessarily expect it, in and of itself, to solve the issue completely. Civilian agencies with inspection workforces covering technically demanding industries also have had difficulty retaining experienced staff. For instance, the Federal Aviation Administration has been criticized for increasing its reliance on private-sector inspectors paid by industry rather than enhancing its in-house inspection workforce. The rationale for this reliance on private-industry inspectors is that the pace of technological development in aviation has overwhelmed the capability of government inspectors. Similarly, the Department of Transportation's Pipeline and Hazardous Materials Safety Administration, which regulates pipeline safety, has found that experienced inspectors are often hired away as safety compliance officers by pipeline companies. The Department of the Interior has voiced much the same concern with respect to the offshore oil rig inspection workforce of the Bureau of Safety and Environmental Enforcement. Even under a civilian agency, vessel inspectors would be subject to recruitment by private industry, as experienced inspectors are sought by ship owners, banks that finance ships, and insurers, all of which want to ensure ships are built to, and are being maintained to, safety standards. Inspectors are employed by private ship classification societies for this purpose. Another consideration with respect to realigning the government's marine safety function is the benefit of housing maritime-related missions in a single agency. As commandants have argued, there are synergies among these missions. For example, the knowledge of and familiarity with vessels and crews that safety inspectors gain via their interactions with them provide risk intelligence relevant to the agency's security mission. Personnel involved in the often perilous mission of search and rescue directly benefit from a competent and effective safety inspection workforce that can reduce the number of such missions. The vessel safety inspection function has synergies with vessel environmental inspections related to oil pollution, ballast water, and emissions. The marine safety function is also complimentary to the Coast Guard's responsibility for deploying and maintaining channel marker buoys and lights and breaking ice in winter. Fisheries enforcement has synergies with fishing safety and security missions. All of these missions require special knowledge for operating on the water, and most require a fleet to do so. Thus, there are both human resource and capital equipment synergies among these missions. Notwithstanding these factors, one can also rationalize dismantling parts of the Coast Guard and reorganizing them under other agencies. The Coast Guard has a close relationship with the Navy, even in peacetime. In 1982, Members of Congress sponsored bills to transfer the agency to the Navy or the Department of Defense ( H.R. 4996 , H.R. 5567 ). These proposals were partly in response to the Reagan Administration's proposal to drastically reduce the size of the Coast Guard, replace the commandant with a civilian administrator, and transfer the Coast Guard's aids to navigation mission to the Army Corps of Engineers. During the partial government shutdown in January 2019, when Coast Guard personnel were the only military personnel not paid, calls for shifting the Coast Guard to the Navy or Department of Defense were renewed. While some supporters hope that transferring the Coast Guard to the military might boost the agency's budget, others have argued that the Coast Guard's nondefense-related missions would suffer, as these missions are not a priority for the military. It would appear that such a transfer might not assist the Coast Guard in addressing the issue of rotating staff in the marine safety program. In addition to realigning marine safety functions, Congress has discussed rearranging navigation-related functions in the federal government more broadly. Some Members of Congress, dissatisfied with the Army Corps of Engineers' performance in the provision of navigation channel infrastructure, have proposed transferring that function to the Department of Transportation. The Trump Administration also has proposed this transfer as part of a larger reorganization plan involving multiple agencies. Congress has requested a National Academy of Sciences study related to this idea. If such a transfer were to occur, navigation infrastructure functions could be combined with a marine safety inspection and accident investigation within the Department of Transportation. This combination of safety and infrastructure provision parallels the primary missions of the department with respect to other transportation modes. However, Congress has shown reluctance to eliminate any of the Coast Guard's missions. Both in 1967, when the Department of Transportation was created and the Coast Guard was transferred there from the Department of the Treasury, and in 2003 after the Department of Homeland Security was created, and the agency was transferred there from the Department of Transportation, the Coast Guard was transferred as a distinct entity.

For at least four decades, Congress has been concerned about the Coast Guard's ability to maintain an adequate staff of experienced marine safety personnel to ensure that vessels meet federal safety standards. The 2015 sinking of the U.S.-flag cargo ship El Faro during a hurricane near the Bahamas with the loss of 33 lives renewed attention to the Coast Guard's persistent difficulty with hiring and training a marine safety workforce with technical knowledge of vessel construction and accident investigation, as the safety inspections of the vessel were found to have been inadequate. In the Hamm Alert Maritime Safety Act of 2018 ( P.L. 115-265 ), Congress directed the Coast Guard to brief congressional committees of jurisdiction on its efforts to enhance its marine inspections staff. In the Frank LoBiondo Coast Guard Authorization Act of 2018 ( P.L. 115-282 ), Congress requested a report from the Coast Guard detailing the courses and other training a marine inspector must complete to be considered qualified, including any courses that have been dropped from the training curriculum in recent years. Congress's concern about the Coast Guard's inspection staff comes at a time when the agency's vessel inspection workload is increasing by about 50% because towing vessels have been added to its responsibilities. Additionally, Congress has been increasing the agency's role in fishing vessel safety. Adding to the Coast Guard's safety responsibilities is the construction of several liquefied natural gas (LNG) export terminals as well as the increasing use of LNG as ship fuel. Vessel safety inspections are especially critical for the U.S.-flag fleet, like the El Faro , because a majority of it is much older than the 15 to 20 years of age at which ships in the foreign-flag worldwide oceangoing fleet are typically scrapped. Over half of the U.S.-flag commercial fleet is over 20 years old; the El Faro had been in service for 40 years. Vessels that transport cargo or passengers domestically (from one U.S. point to another U.S. point) must be built in the United States, as required by the Jones Act. The comparatively high cost of domestic ship construction encourages ship owners to keep Jones Act vessels in service well beyond their normal retirement age. In general, older vessels are believed to have a higher risk of structural defects and to require more intensive inspection. Currently, the Coast Guard's marine inspection staff consists of 533 military and 138 civilian personnel, while its accident investigation staff consists of 120 military staff and 38 civilians. As a military organization, the Coast Guard frequently rotates its staff among various duty stations, so personnel may not develop the knowledge and experience required of a proficient marine inspector or investigator. A common perception inside the agency that marine safety is an area that retards promotion also may be thwarting efforts to boost this mission's workforce. The Coast Guard recently has stated its intention to improve the quality of its inspection workforce and to make marine safety an attractive long-term career path by extending promotion potential. However, its recent statements are similar to statements made 10 years ago, when some Members of Congress advocated transferring the marine safety function to a civilian agency. It is unclear what the agency has accomplished over the last decade regarding its inspection workforce. Government audits dating to 1979 have been consistently critical of the proficiency level of Coast Guard inspectors and accident investigators. Reorganizing the marine safety function under a civilian agency, perhaps as an element of a larger reorganization of navigation functions in the federal government, might improve the quality of safety inspections and investigations, but other federal agencies with transportation-related safety inspection workforces have had similar issues with retaining experienced personnel.

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<1. Introduction> <1.1. North Macedonia and the United States1> The United States has been a steadfast supporter of North Macedonia since its independence from Yugoslavia in 1991 and strongly backs its European Union (EU) and NATO membership ambitions. (North Macedonia's constitutional name was "Republic of Macedonia" until February 2019.) Many Members of Congress have supported North Macedonia's aspirations for integration into Euro-Atlantic institutions. On multiple occasions, U.S. leadership was critical to defusing political crises and interethnic tensions in the country As North Macedonia moves closer to NATO membership, and potentially EU membership, the country shows signs of renewed stability following a political crisis from 2015 to 2017. The years 2019-2020, in which North Macedonia is expected to become NATO's 30 th member and the EU will likely determine whether to launch accession negotiations, are considered key to consolidating the country's recent breakthrough in its relations with Greece and sustaining its reform momentum. <1.2. Brief History> North Macedonia is a small, landlocked country in southeastern Europe (see Figure 1 ). For most of recorded history, its present-day territory was part of empires and kingdoms centered on or near the Balkan Peninsula. The Ottoman Empire ruled the area from the 14 th century until the 1912-1913 Balkan wars. Beginning in the 19 th century, this territory (and surrounding territory also referred to as "Macedonia") was claimed by Bulgaria, Greece, and Serbia, whose leaders regarded the local Orthodox Christian population as their own kin. After World War I, the territory of present-day North Macedonia was incorporated into the newly created Kingdom of Serbs, Croats, and Slovenes. Following World War II, Macedonia became one of six constituent republics of the Socialist Federal Republic of Yugoslavia. In 1991, it declared independence as the Republic of Macedonia, following Slovenia and Croatia, two other Yugoslav republics. For much of the 20 th and 21 st centuries, Macedonian identity and statehood have been challenged or denied by officials in its larger neighbors, including Serbia (until the creation of Yugoslavia), Greece, and Bulgaria. Some analysts believe that the comparatively small size of the population that identifies as Macedonian, coupled with external challenges to the legitimacy of Macedonian identity and statehood, imbues Macedonian nationalism with a sense of vulnerability. This, in turn, has made many Macedonian nationalists reluctant to make concessions on the country's name, most notably in the course of the country's nearly three-decade dispute with Greece (see "Rapprochement with Greece," below). <1.3. Ethnic Relations> Although North Macedonia largely avoided the conflict that devastated other parts of Yugoslavia in the 1990s, it has been destabilized by periods of tension between its Slavic Macedonian majority (nearly 65% of the population) and ethnic Albanian minority (25%). Tensions between Macedonians and Albanians partly reflect diverging views about whether North Macedonia should be the homeland of and for ethnic Macedonians or a multiethnic state with protections for its ethnolinguistic minority communities. Some Macedonian nationalists fear that extending further cultural rights or autonomy to Albanians would change the character of North Macedonia or result in its dismemberment. Many Albanians, on the other hand, fear marginalization. During the 1990s, Albanian leaders in North Macedonia criticized language, citizenship, education, and cultural policies that they believed made Albanians second-class citizens and contributed to their underrepresentation in the public administration. Interethnic clashes periodically occurred but stopped short of full-scale violence. In 2001, however, Albanian insurgents waged a months-long armed campaign against state security forces over what they viewed as systematic discrimination against Albanians. At the government's request, NATO deployed several peacekeeping missions to the country between 2001 and 2003. U.S. and EU officials helped broker the 2001 Ohrid Framework Agreement, which provides for partial devolution of power to municipalities, equal minority representation in the public administration, and greater rights to use the Albanian language and symbols in official settings. While interethnic relations have largely stabilized since 2001, political crises periodically created strain. <2. Politics and Economy> <2.1. Political System> North Macedonia is a parliamentary republic with a unicameral, 120-member legislature. The prime minister serves as head of government, while the directly elected president is mostly a ceremonial position. Since independence, political competition has largely centered on the rivalry between North Macedonia's two largest parties: the Social Democratic Union of Macedonia (SDSM) and the center-right, nationalist VMRO-DPMNE. Both parties are considered to be "ethnic Macedonian" parties in that they typically field ethnic Macedonian candidates and seek ethnic Macedonians' votes. Some observers contend that competition between SDSM and VMRO-DPMNE has often been a greater source of instability than interethnic tensions. Almost all governments have been led by either SDSM or VMRO-DPMNE, usually in coalition with one or more ethnic Albanian parties. Since 2017, Prime Minister Zoran Zaev has led a coalition government comprised of the SDSM, the Albanian Democratic Union for Integration (DUI), and several smaller parties. The coalition holds a slim majority of seats in parliament. The largest opposition party is VMRO-DPMNE. On May 5, 2019, Stevo Pendarovski (SDSM) was elected president of North Macedonia, replacing Gjorge Ivanov (VMRO-DPMNE), who had opposed many of the Zaev government's initiatives. In 2018, the Zaev government reached an agreement with Greece to resolve a nearly 30-year dispute (see below, "Rapprochement with Greece") and lift Greece's veto over North Macedonia's NATO and EU membership bids. North Macedonia signed its NATO accession protocol in February 2019, and the government has pledged to implement economic and political reforms required for EU membership. Some observers believe that North Macedonia's reform-oriented political climate could grow fragile if the EU delays the country's long-awaited accession negotiations beyond 2019 (see below, "NATO and EU Membership"). <2.1.1. Democratic Backsliding and 2015-2017 Political Crisis> North Macedonia's reform record and relative stability in the 1990s made it an early Western Balkan frontrunner for EU and NATO membership. Its NATO Membership Action Plan was launched in 1999. In 2004, it became the first Western Balkan country to have its Stabilization and Association Agreement with the EU considered a first step toward membership enter into force. North Macedonia became a candidate for EU membership the following year. In the late 2000s, however, the introduction and implementation of reforms began to lag and the country's democracy experienced setbacks. These trends culminated in a political crisis from 2015 to 2017. Some analysts believe Greece's veto of North Macedonia's NATO membership bid at the alliance's 2008 Bucharest Summit triggered this period of backsliding. According to the International Crisis Group, Nikola Gruevski (VMRO-DPMNE), who became North Macedonia's prime minister in 2006 and held the position for the following decade, responded to the "huge shock" of the veto by escalating a state-backed "antiquisation" campaign that promoted "an idiosyncratic view of [ethnic] Macedonians' glorious ancient past." The initiative alienated the country's Albanian population and widened the rift with Greece. In addition to Gruevski's controversial appeals to Macedonian nationalism, international and domestic NGOs expressed concern over setbacks in the rule of law, judicial independence, and media freedom. Corruption and the ruling party's reported abuse of public institutions also became problematic issues. As a result of these developments and Greece's continued veto threats, North Macedonia's EU and NATO membership bids lagged behind those of its neighbors: Croatia and Albania joined NATO in 2009 and Montenegro in 2017, Croatia became an EU member in 2013, and the EU launched accession negotiations for Montenegro and Serbia in 2012 and 2014, respectively. In 2015, a two-year political crisis was triggered when opposition parties, led by Zaev, accused the Gruevski government of orchestrating an illegal wiretapping network that targeted more than 20,000 individuals, including opposition and government officials, activists, diplomats, and journalists. Transcripts of allegedly wiretapped conversations implicated top government officials in abuses of office, including extortion, blackmail, and electoral fraud, among others. An EU-backed Senior Experts' Group viewed the recordings as the government's attempt to gain leverage over its rivals, judges and prosecutors, and its own officials. The scandal triggered pro- and anti-government protests that threatened to turn violent and renew interethnic tensions. The United States and the EU helped defuse the crisis by brokering the 2015 Przino Agreement, which established a timeline for early elections. These elections, held in 2016, had mixed results: Gruevski's VMRO-DPMNE and Zaev's SDSM were virtually tied with vote shares of 38% (51 seats) and 37% (49 seats), respectively. The SDSM ultimately reached a coalition agreement with the DUI and the Alliance for Albanians. However, the United States and the EU again intervened when President Ivanov refused to give Zaev the mandate to form a government and, shortly thereafter, when a violent mob assaulted SDSM lawmakers and allies in the parliamentary chamber. Several VMRO-DPMNE lawmakers were accused of aiding the attack. <2.1.2. Renewed Reform Momentum> In May 2017, the SDSM-led coalition formed a government under Zaev. Since then, the political situation in North Macedonia has largely stabilized. Local elections in October 2017 further cemented the SDSM's position: It won mayoral elections in 57 out of 81 municipalities, including most urban areas. The VMRO-DPMNE won just five mayoral elections. These poor results prompted Gruevski to resign as party leader. Hristijan Mickoski was elected to replace him. Prime Minister Zaev has pledged to enact reforms to meet EU and NATO membership requirements, with strong backing from the EU, NATO, and the United States. Zaev considered repairing North Macedonia's bilateral relations with Bulgaria and Greece EU and NATO members with veto power in both organizations as a key step to renewing progress toward Euro-Atlantic integration. In 2017, North Macedonia and Bulgaria agreed to a Friendship Treaty (ratified in 2018) that established a framework to improve bilateral relations, which were historically fraught due in part to Bulgaria's non-recognition of Macedonian language and identity. While most regarded the treaty as a positive development, resolving North Macedonia's dispute with Greece was generally considered a greater challenge. <2.1.2.1. Rapprochement with Greece> Greece strongly objected to North Macedonia's adoption of the name Republic of Macedonia upon its 1991 independence, viewing it as an implicit territorial claim to Greece's northern region bearing the same name as well as an appropriation of the cultural heritage of ancient Macedon. For nearly three decades, North Macedonia's goal of EU and NATO membership was stymied by Greece's veto threat in both organizations. The unresolved dispute adversely affected North Macedonia's Euro-Atlantic ambitions and undercut reform momentum. The Zaev government's EU and NATO accession platform, as well as receptiveness under Greek Prime Minister Alexis Tsipras, created an opening for a new round of negotiations. North Macedonia and Greece reached the historic Prespa Agreement in June 2018, whereby Macedonia would change its name to North Macedonia and Greece would lift its veto over North Macedonia's Euro-Atlantic integration, among other provisions. The agreement's final enactment, however, was far from certain. It required legislative action in Greece's and North Macedonia's parliaments, where both governments faced sharp challenges from nationalist opponents. To the surprise of some observers, in January 2019 parliaments in both countries passed the required measures, albeit with razor-thin vote margins. U.S. and EU officials have praised Zaev and Tsipras for demonstrating leadership by making concessions that were politically controversial but viewed as important for the long-term prosperity of both countries. Nevertheless, Zaev and Tsipras expended political capital in the process. Zaev's government accepted a controversial partial amnesty of individuals involved in the 2017 attack in parliament in exchange for the support of some VMRO-DPMNE lawmakers, while some Albanian parties made their support contingent on legislation to expand the official use of the Albanian language. Tsipras narrowly survived a no-confidence vote. In another sign of improved ties, in April 2019 Tsipras became the first Greek leader to visit North Macedonia. Analysts note, however, that improved bilateral relations could be tested by parliamentary elections due to be held in Greece by October 2019. Public opinion polls indicate that Tsipras could lose power. His most probable successor, Kyriakos Mitsotakis of the New Democracy party, opposed the Prespa Agreement. While Mitsotakis has since conceded that the agreement is binding and applies to North Macedonia's NATO accession, some observers expressed concern when he stated that a New Democracy led government would block North Macedonia's EU accession progress if Greek interests are threatened, including commercial interests for products from Greece's Macedonia region. <2.1.2.2. Domestic Reforms> Following the breakthrough in North Macedonia's bilateral relations with Bulgaria and Greece, U.S. and EU officials encouraged the Zaev government to implement political and economic reforms. Political instability, weak rule of law, corruption, a large shadow economy, and skilled labor shortages are viewed as impediments to improving conditions in North Macedonia. One of the key challenges will be surmounting the "deep-seated culture of state capture, cronyism, and corruption" that took root under previous governments. In 2015, the EU identified Urgent Reform Priorities for North Macedonia. These priorities, along with others from the EU-backed Senior Experts' Group, continue to guide the reform agenda. Priorities include improving judicial independence, implementing public administration and public financial oversight strategies to depoliticize appointments, updating the voters' list to improve trust in elections, and strengthening anticorruption institutions. Analysts believe that the governing coalition's slim majority in parliament may make it difficult to pass reforms without partial support from the opposition VMRO-DPMNE. <2.1.2.3. 2019 Presidential Election> On May 5, 2019, Stevo Pendarovski, a candidate backed by Zaev's SDSM, was elected president of North Macedonia. The presidency is a largely ceremonial office, but relations between the Zaev government and former President Gjorge Ivanov (2009-2019), an ally of former Prime Minister Gruevski, were fraught due to Ivanov's refusal to sign numerous laws backed by the Zaev government. He also opposed the Prespa Agreement. Pendarovski received 52% of the vote, while Gordana Siljanovska-Davkova, the candidate backed by VMRO-DPMNE, received 45%. Pendarovski's campaign centered on the government's progress in guiding North Macedonia to NATO membership, while Siljanovska-Davkova's criticized the Prespa Agreement and pledged to "use all legal means to prove that it is not in accordance with international law." Analysts viewed the presidential elections as a litmus test of public support for the government after the Prespa Agreement and amid broad dissatisfaction over corruption, high unemployment, and poverty. Despite Pendarovski's victory, SDSM officials reportedly believe that the results depict a narrowing pro-government support base. While foreign leaders herald the breakthrough with Greece, voters in North Macedonia are likely eager for the government to implement economic and political reforms that have a more tangible impact on their quality of life but have received less attention thus far. <2.2. Economy> North Macedonia was one of Yugoslavia's poorest and most underdeveloped regions. Its economy experienced sharp decline during the 1990s. In the 2000s and 2010s, its GDP growth rate fluctuated in response to political instability and global economic trends. With the 2015-2017 political crisis seemingly resolved, the International Monetary Fund projects real GDP growth to be 2% or slightly higher in 2019 and 2020. In its 2018 report on North Macedonia, the European Commission lauded the country's public finance transparency reforms but expressed concern over unemployment, infrastructure deficiencies, weak contract enforcement, and large informal economy. Renewed crisis is one of the greatest risks to economic health going forward. Unemployment decreased from over 30% in 2010 to just over 20% in 2018. However, youth unemployment is more than twice as high. Over 20% of the population lives below the poverty line. Unemployment and poverty contribute to high rates of emigration from North Macedonia. An estimated 20%-30% of the population (450,000-630,000 people) emigrated between 1994 and 2013, mostly to Western Europe. The EU is North Macedonia's most important economic partner. Of North Macedonia's total trade in 2017, 70% was with EU member states, while over 80% of North Macedonia's exports went to EU countries. Trade between the two is almost fully liberalized. Successive governments in North Macedonia have prioritized foreign direct investment, which has increased somewhat since the late 1990s due in part to a low corporate tax rate, low labor costs, and free trade zones. In 2017, the top five source countries of foreign direct investment in North Macedonia were EU member states. North Macedonia was rated 10 th in the World Bank's 2019 Ease of Doing Business rankings, the best ranking of any country in the Balkans and East-Central Europe and the fifth-highest in Europe. The Zaev government's 2018 Plan for Economic Growth includes incentives for foreign firms that operate in the country's free economic zones. <3. Foreign Relations and Security Issues> <3.1. NATO and EU Membership> Since independence, successive governments in North Macedonia have viewed NATO and EU membership as the country's top foreign policy priority. The United States strongly supports North Macedonia's prospective membership in both organizations, and U.S. and EU officials consider the Euro-Atlantic integration process to be a source of stability and a driver of political and economic reforms in North Macedonia. Anchoring North Macedonia in Euro-Atlantic institutions is viewed as a way to help prevent the emergence of a strategic vacuum in the Western Balkans. The fixed goal of EU and NATO membership has helped guide reforms under the Zaev government by establishing a reform framework and identifying policy priorities. North Macedonia appears likely to become NATO's 30 th member in late 2019 or early 2020. On February 6, 2019, following the finalization of the Prespa Agreement with Greece, North Macedonia signed its NATO accession protocol. For North Macedonia to join the alliance, all 29 NATO allies must first ratify the protocol in accordance with domestic procedures. On February 8, Greece became the first NATO member to ratify it. In the United States, the Senate is responsible for protocol ratification (by two-thirds majority). President Trump formally transmitted the protocol to the Senate on April 29, 2019. If all 29 NATO members approve the protocol, the NATO secretary general would formally invite North Macedonia to accede to the treaty. In the final step , North Macedonia would need to approve its NATO membership through a referendum or a parliamentary vote. North Macedonia launched its NATO Membership Action Plan in 1999. North Macedonia has contributed to NATO missions in Afghanistan and Kosovo. Its 2018 Strategic Defense Review establishes a timeline for increasing defense spending from its 2013-2017 average of 1.1% of GDP to NATO's 2% target by 2024. The government plans to reach 2% by annually increasing defense spending by 0.2%. The government includes equipment modernization and streamlining the armed forces from approximately 8,200 to 6,800 active personnel as reform priorities. North Macedonia's short-term prospects for EU membership are less certain. It has been an EU candidate since 2005, but its progress toward membership stalled largely due to the name dispute with Greece. Opinion polls indicate a strong base of popular support among Macedonians for EU membership in part due to the widespread belief that membership will improve their quality of life. Many observers, however, question whether there is unanimous support for enlargement among the leaders of the EU's 28 member states. The next step in North Macedonia's membership bid would be for the EU to open accession negotiations. (Montenegro and Serbia's accession negotiations were launched in 2012 and 2014, respectively.) This would begin the lengthy process of harmonizing North Macedonia's domestic legislation with the body of EU treaties, laws, and rules known as the acquis communautaire , which is subdivided into 35 thematic "chapters." In order to open North Macedonia's accession negotiations, leaders from all 28 EU member states must agree. Although the European Commission (the EU's executive) recommended launching accession negotiations with North Macedonia in 2018, France, Denmark, and the Netherlands were reportedly opposed, citing the need for continued reform progress in North Macedonia. As a result, EU leaders delayed launching negotiations and set 2019 as the target date for opening them. However, recent statements from French President Emmanuel Macron have prompted some observers to speculate that France may again seek to delay negotiations. Although the EU asserts that it is committed to further enlargement, analysts suggest that some European leaders and publics are wary amid various concerns about the EU's future and issues such as migration. Observers have expressed concern that another delay in opening accession negotiations could deflate the Zaev government's reform agenda, damage the EU's reputation in the country, and enable Zaev's critics to charge that he sacrificed the country's name without any reward from the EU. It would likely add to the sense of uncertainty as to whether the EU would admit North Macedonia even if it met all membership requirements. Some analysts cite the reform drift, corruption, and democratic setbacks that followed NATO's 2008 Bucharest Summit when Greece vetoed North Macedonia's membership invitation as evidence of the backsliding that can occur when EU and NATO membership are perceived as being beyond reach. As a candidate country, North Macedonia is eligible for assistance from the EU's Instrument for Pre-Accession Assistance II (IPA II). Between 2014 and 2020, North Macedonia is expected to receive 664 million ($744 million at current exchange rate) in IPA II allocations. Some EU members provide additional aid to North Macedonia through national assistance programs. <3.2. Relations with Russia> Many analysts believe that EU and NATO membership would help build resilience against Russian influence in North Macedonia. Russia, which opposes NATO enlargement in the Balkans, was critical of the Prespa Agreement. In July 2018, Greece expelled two Russian diplomats in response to accusations that the Kremlin was aiding anti-Prespa protests. Prime Minister Zaev likewise accused a Kremlin-linked businessmen of funding a campaign that urged voters to boycott a referendum on changing the country's name. Pro-boycott narratives were spread through social media. Intelligence officials in North Macedonia and the West reportedly attributed online disinformation campaigns to pro-Russia groups. A U.S. diplomat described the campaign as "an extraordinarily complex, organized, and toxic amount of disinformation." In September, then-U.S. Secretary of Defense James Mattis echoed these concerns during a visit to Skopje. Russia continues to challenge the legitimacy of the Prespa Agreement and push the narrative that the West "forced" North Macedonia into NATO. Russia's ability to exert influence in the aftermath of the Prespa Agreement's signing may have been facilitated by a reportedly years-long campaign to increase Russia's intelligence footprint in the country, project soft power through Russian-Macedonian friendship organizations and Kremlin-linked media such as Sputnik and RT , forge alliances with local anti-establishment politicians and groups, and propagate anti-Western narratives that tap into nationalist fears. Russian soft power draws on cultural kinship and shared Orthodox Christian religious tradition with ethnic Macedonians, although Russian-Macedonian ties are less established and historically grounded than Russian ties to other Orthodox Christian populations such as Greeks, Bulgarians, and Serbs. Analysts believe that Russia's goal was to sustain instability and widen political and social divisions in order to undermine North Macedonia's Euro-Atlantic integration. <3.3. Relations with China> U.S. and EU officials have voiced concern over China's growing economic clout in the Western Balkans. China has invested in regional infrastructure, energy initiatives, and other sectors as part of its Belt and Road Initiative, an ambitious transcontinental project to expand Chinese trade and investment. In 2016, China's state-owned COSCO Shipping acquired majority stakes in the Piraeus Port Authority in Greece, reportedly with ambitions of using it as an entry point for container shipping to Western Europe via the Balkans. Within the Belt and Road Initiative framework, China established the "16+1" group in 2012 (now 17+1) to convene EU and non-EU countries in the Balkans and Central Europe, including North Macedonia, through annual leader summits. China has not invested as heavily in North Macedonia as it has in other Western Balkan countries. The most significant investment thus far is a 2013 loan worth 580 million ($648 million at exchange current rate) from China's ExIm Bank to help fund two highway projects: Miladinovci-Stip (completed) and Kicevo-Ohrid (under construction). Chinese engineering and construction company Sinhydro was awarded the contract for construction, which began in 2014. Some observers caution that the highway segments may highlight potential perils of Chinese investment in the region. The projects have been mired in several controversies. North Macedonia's Special Prosecutor Office tasked with investigating abuses of office raised in the wiretapping scandal (see above) filed unlawful influence charges against Gruevski and the former transport minister for allegedly violating procurement rules by awarding the contract to Sinohydro despite receiving a lower bid from another contractor. Officials reportedly extorted millions of euros from an intentionally inflated project budget. Some of the recordings capture alleged conversations between top officials "discussing direct payments from" Sinohydro. Furthermore, the relative ease of receiving Chinese financing, as well as the requirement that the recipient government serve as loan guarantor, could lead to an untenable public debt burden, particularly when project costs unexpectedly increase. Highway construction was halted in 2017 due to planning errors. After the delay, the contract with Sinohydro was amended with a three-year extension, and the Chinese firm reportedly sought an additional $160 million to complete the Kicevo-Ohrid segment, raising the construction costs by 10% over the initial estimate. <4. U.S. Relations> The United States and North Macedonia enjoy good relations. The United States strongly supports North Macedonia's NATO and EU membership bids. After Greece blocked North Macedonia's NATO entry in 2008, the United States signed a "Declaration of Strategic Partnership and Cooperation" with North Macedonia to signal U.S. commitment to expeditiously securing North Macedonia's NATO membership. Furthermore, the United States has cooperated with the EU to defuse political crises in North Macedonia, most recently in 2017. The United States also assists North Macedonia with security challenges, including returned foreign fighters, trafficking, and cybersecurity. North Macedonia's Ministry of Interior estimates that 150 or more of its citizens fought with the Islamic State in Iraq and Syria, of which roughly 80 have since returned. The United States has cooperated with law enforcement and intelligence officials in North Macedonia to identify threats, provided training for judges and prosecutors involved in terrorism cases, and supported organizations that work toward countering violent extremism. The U.S. State Department classifies North Macedonia as a Tier 2 country with regard to trafficking in persons: Despite improvements in its efforts to combat trafficking, the government does not meet the State Department's minimum conditions for its elimination. Finally, U.S. Cyber Command, a unit in the Department of Defense, has worked with authorities in North Macedonia to improve cyber defense capabilities and is reportedly deploying one or more experts for on-site assistance. The United States has provided significant amounts of foreign assistance to North Macedonia. From the country's independence in 1991 through FY2015, the United States obligated about $819 million in aid to North Macedonia, according to the USAID Greenbook. In 2007, the NATO Freedom Consolidation Act ( P.L. 110-17 ) was passed, making North Macedonia eligible for assistance under the NATO Participation Act of 1994. As a candidate for EU and NATO membership, North Macedonia is eligible for assistance through the Countering Russian Influence Funds under the Countering America's Adversaries Through Sanctions Act enacted in 2017 ( P.L. 115-44 ). The United States provided $21.6 million in foreign assistance to North Macedonia in FY2017 and $15.3 million in FY2018. The Trump Administration's proposal to decrease foreign assistance levels, however, includes North Macedonia: The Administration requested $6.3 million for FY2019 and $5.7 million for FY2020. Many Members of Congress supported Greece and North Macedonia's negotiations to resolve their bilateral dispute. Resolutions were sponsored in both chambers to support North Macedonia's landmark agreement with Greece and back its NATO membership bid. On February 6, 2019, the chairman and ranking member of the House Committee on Foreign Affairs wrote an open letter to Secretary of State Mike Pompeo urging the Administration to back North Macedonia's accession. With growing concern over Chinese and Russian global influence, some Members have expressed concern over external influence in the Western Balkans region including North Macedonia. Finally, some observers contend that North Macedonia's strong desire for EU and NATO membership serves as a reminder to officials on both sides of the Atlantic of the worth of the transatlantic partnership, particularly at a time when it has grown strained. North Macedonia Foreign Minister Nikola Dimitrov has often remarked that "those on the inside forget how cold it is outside."

The United States has supported North Macedonia since its independence from Yugoslavia in 1991 and strongly backs its European Union (EU) and NATO ambitions. (The country's constitutional name was the Republic of Macedonia until February 2019, when it was renamed the Republic of North Macedonia.) On multiple occasions, the United States played a key role in defusing political crises and interethnic tensions in North Macedonia. For more than two decades, a U.S. diplomat led United Nations–brokered negotiations between Greece and then-Macedonia to resolve their bilateral dispute over the latter's use of the name Macedonia. With strong U.S. support, in 2018 North Macedonia and Greece reached the landmark Prespa Agreement, which resulted in the name change and resolved their bilateral dispute. Many Members of Congress have supported North Macedonia's integration into Euro-Atlantic institutions. In 2007, the NATO Freedom Consolidation Act (P.L. 110-17) was passed to affirm congressional support for enlargement and make North Macedonia eligible for assistance under the NATO Participation Act of 1994. Resolutions were also sponsored in both chambers in 2018 to support the Prespa Agreement with Greece and endorse North Macedonia's bid for NATO membership. Congressional interest in North Macedonia is also connected to broader policy concerns over the influence of Russia, China, and other external actors in the Western Balkans. In 2017, North Macedonia emerged from a destabilizing two-year crisis with a new government that pledged to redouble the country's Euro-Atlantic integration efforts and enact reforms to tackle the corruption and state capture that took root under previous governments. The Prespa Agreement removes Greece's veto over North Macedonia's NATO and EU membership bids. Many expect North Macedonia to become NATO's 30th member in 2019 or 2020 and the EU to decide in 2019 whether to launch formal accession negotiations with the country. Despite positive assessments of North Macedonia's progress, the forthcoming period is generally viewed as critical to consolidating North Macedonia's recent gains and implementing reforms to bolster economic growth, reduce unemployment, and depoliticize state institutions. Given U.S. and NATO involvement in conflicts in the Balkans in the 1990s, as well as the U.S. role in defusing crises in North Macedonia, Members of Congress may be interested in North Macedonia's stability during what many U.S. and EU officials consider to be a crucial, albeit fragile, opening for reforms. Members may also consider the role that external actors such as Russia and China have played in recent years or could play going forward, particularly if North Macedonia's EU accession negotiations are further delayed.

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<1. Introduction> This report provides an overview of FY2019 appropriations actions for accounts traditionally funded in the appropriations bill for the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS). This bill provides discretionary and mandatory appropriations to three federal departments: the Department of Labor (DOL), the Department of Health and Human Services (HHS), and the Department of Education (ED). In addition, the bill provides annual appropriations for more than a dozen related agencies, including the Social Security Administration (SSA). Discretionary funds represent less than one-fifth of the total funds appropriated in the LHHS bill. Nevertheless, the LHHS bill is typically the largest single source of discretionary funds for domestic nondefense federal programs among the various appropriations bills. (The Department of Defense bill is the largest source of discretionary funds among all federal programs.) The bulk of this report is focused on discretionary appropriations because these funds receive the most attention during the appropriations process. The LHHS bill typically is one of the more controversial of the regular appropriations bills because of the size of its funding total and the scope of its programs, as well as various related social policy issues addressed in the bill, such as restrictions on the use of federal funds for abortion and for research on human embryos and stem cells. Congressional clients may consult the LHHS experts list in CRS Report R42638, Appropriations: CRS Experts , for information on which analysts to contact at the Congressional Research Service (CRS) with questions on specific agencies and programs funded in the LHHS bill. <2. Report Roadmap and Useful Terminology> This report is divided into several sections. The opening section provides an explanation of the scope of the LHHS bill (and hence, the scope of this report) and an introduction to important terminology and concepts that carry throughout the report. Next is a series of sections describing major congressional actions on FY2019 appropriations and (for context) a review of the conclusion of the FY2018 appropriations process. This is followed by a high-level summary and analysis of enacted and proposed appropriations for FY2019, compared to FY2018 funding levels. The body of the report concludes with overview sections for each of the major titles of the bill: DOL, HHS, ED, and Related Agencies. These sections provide selected highlights from FY2019 enacted and proposed funding levels compared to FY2018. (Note that the distribution of funds is sometimes illustrated by figures, which in all cases are based on the FY2019 enacted version of the LHHS bill. ) Finally, Appendix A provides a summary of budget enforcement activities for FY2019. This includes information on the Budget Control Act of 2011 (BCA; P.L. 112-25 ) and sequestration, budget enforcement in the absence of an FY2019 budget resolution, provisional subcommittee spending allocations, and current-year spending levels. This is followed by Appendix B , which provides an overview of the LHHS-related floor amendments that were offered in the Senate during its consideration of H.R. 6157 , an appropriations measure that was amended to contain LHHS appropriations for FY2019. <2.1. Scope of the Report> In general, this report is focused strictly on appropriations to agencies and accounts that are subject to the jurisdiction of the Labor, Health and Human Services, Education, and Related Agencies subcommittees of the House and Senate appropriations committees (i.e., accounts traditionally funded via the LHHS bill). Department "totals" provided in this report do not include funding for accounts or agencies that are traditionally funded by appropriations bills under the jurisdiction of other subcommittees. The LHHS bill provides appropriations for the following federal departments and agencies: the Department of Labor; most agencies at the Department of Health and Human Services, except for the Food and Drug Administration (funded through the Agriculture appropriations bill), the Indian Health Service (funded through the Interior-Environment appropriations bill), and the Agency for Toxic Substances and Disease Registry (also funded through the Interior-Environment appropriations bill); the Department of Education; and more than a dozen related agencies, including the Social Security Administration, the Corporation for National and Community Service, the Corporation for Public Broadcasting, the Institute of Museum and Library Services, the National Labor Relations Board, and the Railroad Retirement Board. Note also that funding totals displayed in this report do not reflect amounts provided outside of the annual appropriations process. Certain direct spending programs, such as Social Security and parts of Medicare, receive funding directly from their authorizing statutes; such funds are not reflected in the totals provided in this report because they are not provided through the annual appropriations process (see related discussion in the " Important Budget Concepts " section). <2.2. Important Budget Concepts> <2.2.1. Mandatory vs. Discretionary Budget Authority2> The LHHS bill includes both discretionary and mandatory budget authority. While all discretionary spending is subject to the annual appropriations process, only a portion of mandatory spending is provided in appropriations measures. Mandatory programs funded through the annual appropriations process are commonly referred to as appropriated entitlements . In general, appropriators have little control over the amounts provided for appropriated entitlements; rather, the authorizing statute controls the program parameters (e.g., eligibility rules, benefit levels) that entitle certain recipients to payments. If Congress does not appropriate the money necessary to meet these commitments, entitled recipients (e.g., individuals, states, or other entities) may have legal recourse. Most mandatory spending is not provided through the annual appropriations process, but rather through budget authority provided by the program's authorizing statute (e.g., Social Security benefits payments). The funding amounts in this report do not include budget authority provided outside of the appropriations process. Instead, the amounts reflect only those funds, discretionary and mandatory, that are provided through appropriations acts. Note that, as displayed in this report, mandatory amounts for the Trump Administration's budget submission reflect current-law (or current services) estimates; they generally do not include the President's proposed changes to a mandatory spending program's authorizing statute that might affect total spending. (In general, such proposals are excluded from this report, as they typically would be enacted in authorizing legislation.) Note also that the report focuses most closely on discretionary funding. This is because discretionary funding receives the bulk of attention during the appropriations process. (As noted earlier, although the LHHS bill includes more mandatory funding than discretionary funding, the appropriators generally have less flexibility in adjusting mandatory funding levels than discretionary funding levels.) Mandatory and discretionary spending is subject to budget enforcement processes that include sequestration. In general, sequestration involves largely across-the-board reductions that are made to certain categories of discretionary or mandatory spending. However, the conditions that trigger sequestration, and how it is carried out, differ for each type of spending. This is discussed further in Appendix A . <2.2.2. Total Budget Authority Provided in the Bill vs. Total Budget Authority Available in the Fiscal Year> Budget authority is the amount of money a federal agency is legally authorized to commit or spend. Appropriations bills may include budget authority that becomes available in the current fiscal year, in future fiscal years, or some combination. Amounts that become available in future fiscal years are typically referred to as advance appropriations . Unless otherwise specified, appropriations levels displayed in this report refer to the total amount of budget authority provided in an appropriations bill (i.e., "total in the bill"), regardless of the year in which the funding becomes available. In some cases, the report breaks out "current-year" appropriations (i.e., the amount of budget authority available for obligation in a given fiscal year , regardless of the year in which it was first appropriated). As the annual appropriations process unfolds, the amount of current-year budget authority is measured against 302(b) allocation ceilings (budget enforcement caps for appropriations subcommittees that traditionally emerge following the budget resolution process). The process of measuring appropria tions against these spending ceilings takes into account scorekeeping adjustments , which are made by the Congressional Budget Office (CBO) to reflect conventions and special instructions of Congress. Unless otherwise specified, appropriations levels displayed in this report do not reflect additional scorekeeping adjustments. <3. Status of FY2019 LHHS Appropriations> Table 1 provides a timeline of major legislative actions for full-year LHHS proposals, which are discussed in greater detail below. <3.1. FY2019 Supplemental Appropriations for the Southern Border> On July 1, the President signed into law P.L. 116-26 , an FY2019 supplemental appropriations act focused primarily on humanitarian assistance and security needs at the southern border. The bill was passed by the House on June 27 and by the Senate on June 26. (An earlier version of the bill had passed the House on June 25. A related bill, S. 1900 , had been reported by the Senate Appropriations Committee on June 19; this bill was substantially similar to the final version of P.L. 116-26 .) As enacted, the FY2019 border supplemental contained nearly $2.9 billion in emergency-designated LHHS appropriations for the Refugee and Entrant Assistance account at HHS. These funds were primarily intended to support the Unaccompanied Alien Children (UAC) program, which provides for the shelter, care, and placement of unaccompanied alien children who have been apprehended in the United States. According to a letter to Congress from the Office of Management and Budget (OMB), as of May 1 the number of apprehensions referred to HHS had increased by almost 50% from the prior year. In this same letter, OMB requested about $2.9 billion in supplemental funds for the UAC program, noting that these funds would provide "critical child welfare services and high-quality shelter care." The letter estimated that these funds would allow HHS to increase shelter capacity to approximately 23,600 beds. Of the $2.9 billion appropriated to the UAC account, some funds were set aside for designated activities or purposes, such as state-licensed shelters (not less than $866 million); postrelease services, child advocates, and legal services (not less than $100 million); additional federal field specialists and increased case management and coordination services intended to place children with sponsors more expeditiously and reduce the length of stay in HHS custody (not less than $8 million); project officers/program staff and the development of a discharge rate improvement plan (not less than $1 million); and oversight activities conducted by the HHS Office of the Inspector General ($5 million). In addition to these reservations, the bill also placed a number of conditions on the use of the supplemental funds. For instance, the bill directed HHS to prioritize community-based residential care, state-licensed facilities, hard-sided dormitories, and shelter care other than large-scale institutional facilities ( 401); prohibited funds from being used for unlicensed facilities, except in limited circumstances (e.g., on a temporary basis due to a large influx of children) when specified conditions are met (e.g., comprehensive monitoring for an unlicensed facility operating for more than three consecutive months) ( 404); required HHS to ensure, when feasible, that certain types of children (e.g., children under age 13, children with special needs, pregnant or parenting teens) are not placed in unlicensed facilities ( 406); required HHS to reverse any reprogramming within the account that had been carried out pursuant to a notification submitted to the appropriations committees on May 16 (proviso within UAC appropriation); prohibited funds from being used to prevent a Member of Congress from visiting a UAC facility for oversight purposes ( 407); prohibited funds from being used by the Department of Homeland Security (DHS) to detain or remove sponsors (or potential sponsors) of unaccompanied children based on information provided by HHS as part of the sponsor's application, except when specified criteria are met ( 409); and prohibited funds from being used to reverse or change certain operational directives previously issued by HHS, except in limited circumstances ( 403). The bill also included a number of notification and reporting requirements associated with these funds. For instance, the bill required HHS to notify the appropriations committees within 72 hours of conducting a formal assessment of a facility for possible lease/acquisition and within seven days of any acquisition/lease of real property (proviso within UAC appropriation); submit to the appropriations committees a discharge rate improvement plan within 120 days of enactment (proviso within UAC appropriation); provide specific information to the appropriations committees at least 15 days before opening an unlicensed facility and provide the committees with monthly reports on the children placed at such facilities ( 405); submit to the appropriations committees (and make public) a monthly report on the number and ages of unaccompanied alien children transferred into HHS care after being separated from parents or legal guardians by DHS, along with the reasons for the separations ( 408); and submit to the appropriations committees a detailed spending plan of anticipated uses of funds within 30 days of enactment ( 410). <3.2. FY2019 Supplemental Appropriations for Disaster Relief> Over the course of FY2019, the 115 th and 116 th Congresses considered supplemental appropriations to several federal departments and agencies for expenses related to various recent wildfires, hurricanes, volcanic eruptions, earthquakes, typhoons, and other natural disasters or emergencies (e.g., H.R. 695 in the 115 th Congress; H.R. 268 , S.Amdt. 201 to H.R. 268 , and H.R. 2157 in the 116 th Congress). Each of these bills included appropriations for several accounts typically funded in the LHHS bill. Ultimately, on June 6, the President signed into law P.L. 116-20 , a supplemental appropriations act for FY2019. The bill was passed by the House on June 3 and by the Senate on May 23. (An earlier version of the bill had passed the House on May 10.) As enacted, the bill included roughly $611 million in emergency-designated LHHS appropriations for accounts at DOL, HHS, and ED. With limited exceptions, the bill explicitly directed the LHHS funds toward necessary expenses directly related to Hurricane Florence, Hurricane Michael, Typhoon Mangkhut, Super Typhoon Yutu, wildfires and earthquakes occurring in calendar year 2018, and tornadoes and floods occurring in calendar year 2019. The FY2019 supplemental provided the following definite LHHS appropriations: $50 million for the dislocated worker assistance national reserve at DOL, of which up to $1 million may be transferred to other DOL accounts for reconstruction and recovery needs and up to $500,000 is to be transferred to the DOL Office of the Inspector General for oversight activities. $30 million to the Child Care and Development Block Grant at HHS to support the costs of renovating, repairing, or rebuilding child care facilities. $90 million to the Children and Families Services Programs account at HHS for necessary expenses related to the disasters and emergencies referenced by the law. Of the total, $55 million is directed to Head Start programs, $25 million is directed to the Community Services Block Grant, $5 million is directed to the Stephanie Tubbs Jones Child Welfare Services program, and up to $5 million may be used for federal administrative expenses. $201 million for the Public Health and Social Services Emergency Fund at HHS for necessary expenses directly related to the disasters and emergencies referenced by the law. Of this amount, HHS is directed to transfer not less than $100 million to the Substance Abuse and Mental Health Services Administration (SAMHSA) Health Surveillance and Program Support account for grants, contracts, and cooperative agreements for behavioral health treatment, treatment of substance use disorders, crisis counseling and related helplines, and other similar programs to support impacted individuals; $80 million to the Health Resources and Services Administration (HRSA) federal health centers program for alteration, renovation, construction, equipment, and other capital improvements to meet the needs of affected areas; not less than $20 million to the Centers for Disease Control and Prevention (CDC) for CDC-Wide Activities and Program Support for response, recovery, mitigation, and other expenses; and up to $1 million to the Office of the Inspector General for oversight activities. $165 million for Hurricane Education Recovery at ED to assist in meeting the educational needs of affected individuals. Of the total, $2 million is to be transferred to the Office of the Inspector General for oversight activities and up to $1 million may be used for program administration. In addition, the supplemental provided a combination of definite and indefinite appropriations to the Medicaid program at HHS to support program costs in the Northern Mariana Islands, Guam, and American Samoa. <3.3. FY2019 LHHS Omnibus> During the 115 th Congress, on September 28, 2018, the President signed into law the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019 ( H.R. 6157 , P.L. 115-245 ). This was the first occasion since the FY1997 appropriations cycle that full-year LHHS appropriations were enacted on or before the start of the fiscal year (October 1). The House and Senate had previously agreed to resolve differences on the measure via a conference committee. (Conferees on the bill were named in the House on September 4 and in the Senate on September 6.) The conference report ( H.Rept. 115-952 ) was adopted by the Senate on September 18, and the House on September 26. LHHS discretionary appropriations in the FY2019 omnibus totaled $189.4 billion. This amount is 1.5% more than FY2018 enacted and 8.9% more than the FY2019 President's budget request. The omnibus also provided $869.8 billion in mandatory funding, for a combined LHHS total of $1.059 trillion. (Note that these totals are based only on amounts provided by the FY2019 LHHS omnibus and do not include the supplemental funds, which were provided in addition to the annual appropriations.) See Figure 1 for a breakdown of FY2019 discretionary and mandatory LHHS appropriations. <3.4. Earlier Congressional Action on an LHHS Bill> <3.4.1. FY2019 LHHS Action in the House> The House Appropriations Committee's LHHS subcommittee approved its draft bill on June 15, 2018. The full committee markup was held on July 11, 2018, and the bill was ordered to be reported that same day (30-22). The bill was subsequently reported to the House on July 23 ( H.R. 6470 , H.Rept. 115-862 ). It did not receive floor consideration in the House. As reported by the full committee, the bill would have provided $187.2 billion in discretionary LHHS funds, a 0.3% increase from FY2018 enacted levels. This amount would have been 7.6% more than the FY2019 President's request. In addition, the House committee bill would have provided an estimated $869.8 billion in mandatory funding, for a combined total of $1.057 trillion for LHHS as a whole. <3.4.2. FY2019 LHHS Action in the Senate> The Senate Appropriations Committee's LHHS subcommittee approved its draft bill on June 26, 2018. The full committee markup was held on June 28, 2018. The committee approved the bill (30-1) and reported it that same day ( S. 3158 , S.Rept. 115-289 ). Instead of taking up S. 3158 , the Senate chose to consider and pass H.R. 6157 on August 23, 2018, by a vote of 85-7. The bill was amended on the Senate floor to contain FY2019 LHHS appropriations in Division B. (Division A contained the appropriations act for the Department of Defense.) The text of Division B that was considered for amendment was the same as S. 3158 (with minor alterations). During floor consideration, the Senate also adopted 31 amendments to the new LHHS division of the bill (see Appendix B for a summary of these amendments). The Senate-passed bill would have provided $189.4 billion in discretionary LHHS funds. This would have been 1.5% more than FY2018, and 8.9% more than the FY2019 President's request. In addition, the Senate bill would have provided an estimated $869.8 billion in mandatory funding, for a combined total of $1.059 trillion for LHHS as a whole. <3.5. FY2019 President's Budget Request> On February 12, 2018, the Trump Administration released the FY2019 President's budget. The President requested $173.9 billion in discretionary funding for accounts funded by the LHHS bill, which would have been a decrease of 6.8% from FY2018 levels. In addition, the President requested $869.8 billion in annually appropriated mandatory funding, for a total of $1.044 trillion for LHHS as a whole. <3.6. Conclusion of the FY2018 Appropriations Process> On March 23, 2018, President Trump signed into law the Consolidated Appropriations Act, 2018 ( H.R. 1625 , P.L. 115-141 ). The bill was agreed to in the House on March 22 and in the Senate on March 23. The bill provided regular, full-year appropriations for all 12 annual appropriations acts, including LHHS (Division H). LHHS discretionary appropriations in the FY2018 omnibus totaled $186.5 billion (this total does not include emergency funding provided by an earlier supplemental appropriations act for FY2018, P.L. 115-123 ). This amount was 7.6% more than FY2017 levels and 25.3% more than the FY2018 budget request from the Trump Administration. The omnibus also provided $817.5 billion in mandatory funding, for a combined FY2018 LHHS total of $1.004 trillion. <4. Summary of FY2019 LHHS Appropriations> Table 2 displays FY2019 discretionary and mandatory LHHS budget authority provided or proposed, by bill title, along with FY2018 enacted levels. The amounts shown in this table reflect total budget authority provided in the bill (i.e., all funds appropriated in the bill, regardless of the fiscal year in which the funds become available), not total budget authority available for the current fiscal year. (For a comparable table showing current-year budget authority, see Table A-2 in Appendix A .) Figure 2 displays the FY2019 enacted discretionary and mandatory LHHS funding levels, by bill title. (While the dollars and percentages discussed in this section were calculated based on the FY2019 enacted amounts, they are generally also illustrative within several percentage points of the share of funds directed to each bill title in FY2018 and under the other FY2019 proposals.) As this figure demonstrates, HHS accounts for the largest share of total FY2019 LHHS appropriations: $899 billion, or 84.9%. This is due to the large amount of mandatory funding included in the HHS appropriation, the majority of which is for Medicaid grants to states and payments to health care trust funds. After HHS, ED and the Related Agencies represent the next-largest shares of total LHHS funding, accounting for 7.1% and 6.7%, respectively. (The majority of the ED appropriations each year are discretionary, while the bulk of funding for the Related Agencies goes toward mandatory payments and administrative costs of the Supplemental Security Income program at the Social Security Administration.) Finally, DOL accounts for the smallest share of total LHHS funds, 1.3%. However, the overall composition of LHHS funding is noticeably different when comparing only discretionary appropriations. HHS accounts for a comparatively smaller share of total discretionary appropriations (47.8%), while ED accounts for a relatively larger share (37.7%). Together, these two departments represent the majority (85.5%) of discretionary LHHS appropriations. DOL and the Related Agencies account for a roughly even split of the remaining 14.5% of discretionary LHHS funds. <5. Department of Labor (DOL)> Note that all amounts in this section are based on regular LHHS appropriations only. Amounts in this section do not include mandatory funds provided outside of the annual appropriations process (e.g., direct appropriations for Unemployment Insurance benefits payments). All amounts in this section are rounded to the nearest million or billion (as labeled). The dollar changes and percentage changes discussed in the text are based on unrounded amounts. For consistency with source materials, amounts do not reflect sequestration or reestimates of mandatory spending programs, where applicable. <5.1. About DOL> DOL is a federal department comprised of multiple entities that provide services related to employment and training, worker protection, income security, and contract enforcement. Annual LHHS appropriations laws direct funding to all DOL entities (see the text box). The DOL entities fall primarily into two main functional areas workforce development and worker protection. First, there are several DOL entities that administer workforce employment and training programs such as the Workforce Innovation and Opportunity Act (WIOA) state formula grant programs, Job Corps, and the Employment Service that provide direct funding for employment activities or administration of income security programs (e.g., for the Unemployment Insurance benefits program). Also included in this area is the Veterans' Employment and Training Service (VETS), which provides employment services specifically for the veteran population. Second, there are several agencies that provide various worker protection services. For example, the Occupational Safety and Health Administration (OSHA), the Mine Safety and Health Administration (MSHA), and the Wage and Hour Division (WHD) provide different types of regulation and oversight of working conditions. DOL entities focused on worker protection provide services to ensure worker safety, adherence to wage and overtime laws, and contract compliance, among other duties. In addition to these two main functional areas, DOL's Bureau of Labor Statistics (BLS) collects data and provides analysis on the labor market and related labor issues. <5.2. FY2019 DOL Appropriations Overview> Table 3 generally displays FY2019 discretionary and mandatory DOL budget authority provided or proposed, along with FY2018 enacted levels. The FY2019 LHHS omnibus decreased discretionary appropriations for DOL by 0.8% compared to the FY2018 enacted levels. Similarly, discretionary DOL appropriations would have decreased, compared to FY2018, under the FY2019 President's budget request (-11.1%), as well as the FY2019 House committee bill (-2.4%) and Senate-passed bill (-0.8%). Of the total funding provided in the bill for DOL, roughly 89% is discretionary. <5.3. Selected DOL Highlights> The following sections present highlights from FY2019 enacted and proposed appropriations compared to FY2018 enacted appropriations for selected DOL accounts and programs. Table 4 displays funding for DOL programs and activities discussed in this section. <5.3.1. Employment and Training Administration (ETA)> ETA administers the primary federal workforce development law, the Workforce Innovation and Opportunity Act (WIOA, P.L. 113-128 ). The WIOA, which replaced the Workforce Investment Act, was signed into law in July 2014 and authorizes appropriations for its programs through FY2020. WIOA's provisions went into effect in FY2015 and FY2016. Title I of WIOA, which authorizes more than half of all funding for the programs authorized by the four titles of WIOA, includes three state formula grant programs serving Adults, Youth, and Dislocated Workers. While the FY2019 LHHS omnibus provided the same funding for the three WIOA state formula grant programs compared to FY2018, the President's budget would have reduced funding for all three of the state formula grant programs by $80 million (-2.9%), compared to FY2018 enacted levels. The FY2019 LHHS omnibus provided $221 million for the Dislocated Workers Activities National Reserve (DWA National Reserve), which was the same level enacted in FY2018. The FY2019 President's budget and the House committee bill would have reduced funding for the DWA National Reserve by $75 million (-34.0%) and $21 million (-9.4%), respectively, while the Senate would have kept DWA National Reserve funding the same as FY2018. Finally, the FY2019 LHHS omnibus maintained a provision in that account (which had originated in the FY2018 omnibus) directing $30 million from the DWA National Reserve toward training and employment assistance for workers dislocated in both the Appalachian and lower Mississippi regions. The FY2019 LHHS omnibus provided $160 million for the Apprenticeship Grant program, which is $15 million (+10.3%) more than the level enacted in FY2018. The FY2019 President's budget would have increased funding for the Apprenticeship Grant program by $55 million (+37.9%) compared to the FY2018 enacted level. Finally, four ETA programs for which the FY2019 President's budget proposed no funding the Native Americans program, the Migrant and Seasonal Farmworkers program, the Community Service Employment for Older Americans (CSEOA) program, and the Workforce Data Quality Initiative received FY2019 appropriations at roughly the same level as FY2018. <5.3.2. Bureau of International Labor Affairs (ILAB)> The FY2019 LHHS omnibus provided the same funding, $86 million, for ILAB as was provided in FY2018. The Senate-passed bill would also have provided $86 million for ILAB. The FY2019 President's budget and the House committee bill each would have decreased funding by $68 million (-78.5%) for ILAB, which provides research, advocacy, technical assistance, and grants to promote workers' rights in different parts of the world. Language in the FY2019 President's budget indicated that the proposed reduction reflected a "workload decrease associated with the elimination of new grants as well as ILAB's refocusing of its efforts and resources on ensuring that U.S. trade agreements are fair for U.S. workers by monitoring and enforcing the labor provisions of Free Trade Agreements (FTAs) and trade preference programs." <5.3.3. Labor-Related General Provisions> Annual LHHS appropriations acts regularly contain general provisions related to certain labor issues. This section highlights selected DOL general provisions in the FY2019 LHHS omnibus. The FY2019 LHHS omnibus continued several provisions that have been included in at least one previous LHHS appropriations act, including provisions that direct the Secretary of Labor to accept private wage surveys as part of the process of determining prevailing wages in the H-2B program, even in instances in which relevant wage data are available from the Bureau of Labor Statistics (included since FY2016); exempt certain insurance claims adjusters from overtime protection for two years following a "major disaster" (included since FY2016); authorize the Secretary of Labor to provide up to $2 million in "excess personal property" to apprenticeship programs to assist training apprentices (included since FY2018); authorize the Secretary of Labor to employ law enforcement officers or special agents to provide protection to the Secretary of Labor and certain other employees and family members at public events and in situations in which there is a "unique and articulable" threat of physical harm (included since FY2018); and authorize the Secretary of Labor to dispose of or divest "by any means the Secretary determines appropriate" all or part of the real property on which the Treasure Island Job Corps Center is located (included since FY2018). <6. Department of Health and Human Services (HHS)> Note that all amounts in this section are based on regular LHHS appropriations only; they do not include funds for HHS agencies provided through other appropriations bills (e.g., funding for the Food and Drug Administration) or outside of the annual appropriations process (e.g., direct appropriations for Medicare or mandatory funds provided by authorizing laws, such as the Patient Protection and Affordable Care Act [ACA, P.L. 111-148 ]). All amounts in this section are rounded to the nearest million or billion (as labeled). The dollar changes and percentage changes discussed in the text are based on unrounded amounts. For consistency with source materials, amounts do not reflect sequestration or reestimates of mandatory spending programs, where applicable. <6.1. About HHS> HHS is a large federal department composed of multiple agencies working to enhance the health and well-being of Americans. Annual LHHS appropriations laws direct funding to most (but not all) HHS agencies (see text box for HHS agencies supported by the LHHS bill). For instance, the LHHS bill directs funding to five Public Health Service (PHS) agencies: the Health Resources and Services Administration (HRSA), Centers for Disease Control and Prevention (CDC), National Institutes of Health (NIH), Substance Abuse and Mental Health Services Administration (SAMHSA), and Agency for Healthcare Research and Quality (AHRQ). These public health agencies support diverse missions, ranging from the provision of health care services and supports (e.g., HRSA, SAMHSA), to the advancement of health care quality and medical research (e.g., AHRQ, NIH), to the prevention and control of infectious and chronic diseases (e.g., CDC). In addition, the LHHS bill provides funding for annually appropriated components of CMS, which is the HHS agency responsible for the administration of Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and consumer protections and private health insurance provisions of the ACA. The LHHS bill also provides funding for two HHS agencies focused primarily on the provision of social services: the Administration for Children and Families (ACF) and the Administration for Community Living (ACL). ACF's mission is to promote the economic and social well-being of vulnerable children, youth, families, and communities. ACL was formed with a goal of increasing access to community supports for older Americans and people with disabilities. Finally, the LHHS bill also provides funding for the HHS Office of the Secretary (OS), which encompasses a broad array of management, research, oversight, and emergency preparedness functions in support of the entire department. <6.2. FY2019 HHS Appropriations Overview> Table 5 displays enacted and proposed FY2019 funding levels for HHS, along with FY2018 levels. In general, discretionary funds account for about 10% of HHS appropriations in the LHHS bill. Compared to the FY2018 funding levels, the FY2019 LHHS omnibus increased HHS discretionary appropriations by 2.6%. The House committee bill would have increased HHS discretionary appropriations to a lesser degree, by 1.3%, whereas the Senate proposed a more substantial increase of 2.7%. In contrast, the President requested a 1.6% decrease in discretionary HHS funding. Figure 3 provides an HHS agency-level breakdown of FY2019 enacted appropriations. As this figure demonstrates, annual HHS appropriations are dominated by mandatory funding, the majority of which goes to CMS to provide Medicaid benefits and payments to health care trust funds. When taking into account both mandatory and discretionary funding, CMS accounts for $796.9 billion, which is 88.6% of all enacted appropriations for HHS. ACF and NIH account for the next-largest shares of total HHS appropriations, receiving about 4.2% apiece. By contrast, when looking exclusively at discretionary appropriations, funding for CMS constitutes about 4.9% of FY2019 enacted HHS appropriations. Instead, the bulk of discretionary appropriations went to the PHS agencies, which account for 63.5% of discretionary appropriations provided for HHS. NIH typically receives the largest share of all discretionary funding among HHS agencies (41.9% in FY2019), with ACF accounting for the second-largest share (25.6% in FY2019). <6.3. Special Public Health Funding Mechanisms> Annual appropriations for HHS public health service agencies are best understood in the context of certain HHS-specific funding mechanisms: the Public Health Service (PHS) Evaluation Set-Aside and the Prevention and Public Health Fund (PPHF). In recent years, LHHS appropriations have used these funding mechanisms to direct additional support to certain programs and activities. <6.3.1. Public Health Service Evaluation Tap> The PHS Evaluation Set-Aside, also known as the PHS Evaluation Tap, is a unique feature of HHS appropriations. It is authorized by Section 241 of the Public Health Service Act (PHSA), and allows the Secretary of HHS, with the approval of appropriators, to redistribute a portion of eligible PHS agency appropriations across HHS for program evaluation purposes. The PHSA limits the set-aside to not less than 0.2% and not more than 1% of eligible program appropriations. However, LHHS appropriations acts have commonly established a higher maximum percentage for the set-aside and have distributed specific amounts of "tap" funding to selected HHS programs. Since FY2010, and including in FY2019, this higher maximum set-aside level has been 2.5% of eligible appropriations. (While the House committee bill would also have maintained the set-aside at 2.5%, the Senate-passed bill and the President's budget each proposed to increase the set-aside to 2.6% and 2.9%, respectively.) Before FY2015, the PHS tap traditionally provided more than a dozen HHS programs with funding beyond their annual appropriations and, in some cases, was the sole source of funding for a program or activity. However, since FY2015 and including in FY2019, LHHS appropriations laws have directed tap funds to a smaller number of programs or activities within three HHS agencies (NIH, SAMHSA, and OS) and have not provided any tap transfers to AHRQ, CDC, and HRSA. This has been particularly notable for AHRQ, which had been funded primarily through tap transfers from FY2003 to FY2014, but has received discretionary appropriations since then. The House committee bill and the Senate-passed bill generally would have maintained the current distributional practice for FY2019. However, the President's budget proposed to expand the activities and agencies funded by the PHS tap to include the Public Health Scientific Services at the CDC, while simultaneously proposing to eliminate tap transfers to some other activities. Since FY2015, LHHS appropriations laws have directed the largest share of tap transfers to NIH. The FY2019 omnibus provided $1.1 billion in tap transfers to NIH, a $224 million (+24.3%) increase over the FY2018 level. The FY2019 House committee bill proposed that the NIH transfers be continued at FY2018 levels ($923 million), whereas the Senate-passed bill would have increased the transfer by $95 million (+10.3%). In contrast, the President's request proposed that the transfer be reduced by $182 million (-19.7%). <6.3.2. Prevention and Public Health Fund> The ACA both authorized and appropriated mandatory funding to three funds to support programs and activities within the PHS agencies. One of these, the Prevention and Public Health Fund (PPHF, ACA 4002, as amended), was given a permanent, annual appropriation that was intended to provide support each year to prevention, wellness, and related public health programs funded through HHS accounts. The ACA had appropriated $2 billion in mandatory funds to the PPHF for FY2019, but this amount has been reduced by subsequent laws that decreased PPHF funding for FY2019 and other fiscal years. Under current law, the FY2019 appropriation was $900 million. In addition, this appropriation was subject to a 6.2% reduction due to sequestration of nonexempt mandatory spending. (For more information on sequestration, see the budget enforcement discussion in Appendix A .) After sequestration, the total PPHF appropriation available for FY2019 was $844 million, an increase of $4 million relative to FY2018. Of this amount, the LHHS omnibus allocated $805 million to CDC, $12 million to SAMHSA, and $28 million to ACL. PPHF funds are intended to supplement (sometimes quite substantially) the funding that selected programs receive through regular appropriations. Although the PPHF authority instructs the HHS Secretary to transfer amounts from the fund to HHS agencies, since FY2014 provisions in annual appropriations acts and accompanying reports have explicitly directed the distribution of PPHF funds and prohibited the Secretary from making further transfers for those years. The CDC commonly receives the largest share of annual PPHF funds. The amount provided to the CDC for FY2019, $805 million, was a $4 million (+0.4%) increase relative to FY2018. The House committee bill and the Senate-passed bill each proposed increases to the CDC allocation (to $848 million and $808 million, respectively), while the President's request proposed eliminating the mandatory PPHF appropriation entirely. <6.4. Selected HHS Highlights by Agency> This section begins with a limited selection of FY2019 discretionary funding highlights by HHS agency. The discussion is largely based on the enacted and proposed appropriations levels for FY2019, compared to FY2018 enacted levels. These summaries are followed by a brief overview of significant provisions from annual HHS appropriations laws that restrict spending in certain controversial areas, such as abortion and stem cell research. The section concludes with two tables ( Table 6 and Table 7 ) presenting more detailed information on FY2018 enacted and FY2019 proposed and enacted funding levels for HHS. <6.4.1. HRSA> The FY2019 LHHS omnibus provided $6.9 billion in discretionary budget authority for HRSA. This was $107 million (+1.6%) more than HRSA's FY2018 discretionary funding level and $2.7 billion (-28.4%) less than the FY2019 President's budget request. In several cases, the FY2019 President's budget proposed new or increased discretionary budget authority for HRSA programs that had previously been funded exclusively or jointly with mandatory appropriations from authorizing laws, such as the health centers program, the National Health Service Corps, and the Maternal, Infant, and Early Childhood Home Visiting program. Simultaneously, the President's budget proposed to eliminate mandatory funding for these programs. However, authorizing law ultimately provided FY2019 mandatory appropriations for each of these programs and the FY2019 LHHS omnibus maintained discretionary appropriations for them at their FY2018 levels, where applicable. The FY2019 LHHS omnibus provided $286 million for Title X Family Planning, the same as FY2018. For the fourth year in a row, the House committee bill had proposed eliminating funding for Title X of the PHSA and also prohibiting the use of other HHS funds to carry out Title X. In contrast, the FY2019 Senate-passed bill and the FY2019 President's budget had proposed a flat funding level for Title X from FY2018, and no prohibition on the use of other HHS funds. The FY2019 LHHS omnibus also continued to fund the Rural Communities Opioids Response program within HRSA's Rural Health account. The program was created in FY2018 to support treatment and prevention of substance use disorders in high-risk rural communities. The omnibus appropriated $120 million for the program, an increase of $20 million (+20.0%) from FY2018. HRSA is directed to use this increase to establish three Rural Centers of Excellence on substance use disorders. The LHHS omnibus provided Healthy Start an increase of $12 million (+10.9%) from FY2018 as part of a new initiative to reduce maternal mortality and increased funding to support maternal mortality reduction efforts under the Maternal and Child Health Block Grant by $26 million (+4.0%). <6.4.2. CDC> The FY2019 LHHS omnibus provided $7.1 billion in discretionary budget authority for CDC. This was $117 million (-1.6%) less than CDC's FY2018 funding level and $1.6 billion (+28.3%) more than the FY2019 President's budget request. The FY2019 LHHS omnibus did not direct any PHS tap funds to the CDC, continuing the practice started in FY2015. (The FY2019 President's budget had requested $136 million in tap funds.) However, the FY2019 LHHS omnibus did supplement discretionary CDC appropriations with $805 million in PPHF transfers to the CDC, which was $4 million (+0.4%) more than FY2018. (Unlike FY2018, the FY2019 LHHS omnibus did not direct any transfers from the HHS Nonrecurring Expenses Fund (NEF) to the CDC.) A number of CDC accounts contained funding set aside to address the opioid crisis. For example, the HIV/AIDS, Viral Hepatitis, Sexually Transmitted Diseases and Tuberculosis Prevention account received an increase of $5 million (+0.4%) from FY2018; the conference report specified that the increase be used for a new initiative targeting infectious disease consequences of the opioid epidemic. With regard to the Injury Prevention and Control account, which was maintained at the FY2018 level of $649 million, the conference report directed HHS to reserve $476 million from this total for the CDC's Prescription Drug Overdose (PDO) activities, noting that these funds should be used to "advance the understanding of the opioid overdose epidemic and scale up prevention activities." In addition, $10 million in PDO funding was to be dedicated to a nationwide opioid awareness and education campaign. The Birth Defects and Developmental Disabilities account received an increase of $15 million (+10.7%), of which $10 million was to support monitoring of mothers and babies affected by the Zika virus as well as other emerging health threats, such as opioid use during pregnancy, and $2 million was reserved specifically for activities related to neonatal abstinence syndrome. <6.4.3. NIH> The FY2019 LHHS omnibus provided $37.9 billion in discretionary budget authority for NIH. This was $1.8 billion (+4.9%) more than FY2018 and $4.1 billion (+12.3%) more than the President's FY2019 budget request. In addition, the FY2019 LHHS omnibus directed $1.1 billion in PHS tap transfers to NIH, an increase of $224 million (+24.3%) from FY2018. The entirety of the tap transfer was provided to the National Institute of General Medical Sciences (NIGMS), and was paired with a discretionary appropriation of $1.7 billion. The discretionary appropriation was $137 million (-7.3%) less than FY2018, but when combined with the tap transfer, total funding for NIGMS increased by $87 million (+3.1%) from FY2018. When accounting for discretionary appropriations and PHS tap transfers, each of the NIH accounts in the LHHS bill received an increase from FY2018 levels. Compared to FY2018, the largest percentage increases went to the National Institute on Aging, which received a total of $3.1 billion (+19.8%), and the Buildings and Facilities account, which received $200 million (+55.2%). In line with recent practice, the conference report on the FY2019 LHHS omnibus directed NIH to reserve a specific amount ($2.34 billion) for Alzheimer's disease research, referring to it as an increase of $425 million from FY2018. Reserving a specific dollar amount for a particular disease or area of research at NIH is a relatively new practice and constitutes a significant departure from past precedent. The FY2019 LHHS omnibus appropriated $711 million to the NIH Innovation Account pursuant to the 21 st Century Cures Act ( P.L. 114-255 ), which was equal to the amount authorized to be appropriated in that act. The conference report also reiterated the purposes authorized in the act, directing that NIH transfer $400 million to the National Cancer Institute to support cancer research, and $57.5 million each to the National Institute of Neurological Disorders and Stroke and the National Institute of Mental Health to support the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative. The remaining $196 million was divided between the Precision Medicine Initiative ($186 million) and regenerative medicine research ($10 million). <6.4.4. SAMHSA> The FY2019 LHHS omnibus provided $5.6 billion in discretionary budget authority for SAMHSA. This amount was $584 million (+11.6%) more than SAMHSA's FY2018 funding level and $2.2 billion (+63.4%) more than the President's FY2019 budget request. In addition, the FY2019 LHHS omnibus also directed $134 million in PHS evaluation tap funding and $12 million in PPHF funding to SAMHSA, which was the same amount as FY2018. State Opioid Response Grants received $1.5 billion in FY2019, a $500 million (+50%) increase from FY2018, which was the first year in which funding was provided for this program. However, the State Targeted Response to the Opioid Crisis (STR) grants that were appropriated $500 million in each of FY2017 and FY2018 did not receive appropriations in FY2019. The FY2019 LHHS omnibus also included an increase of $50 million (+50.0%) from FY2018 for Certified Community Behavioral Health Centers. Mental Health Programs of Regional and National Significance (PRNS) and Substance Abuse Prevention PRNS each had a reduction of $43 million (-10.1% and -17.2%, respectively) from FY2018, while Substance Abuse Treatment PRNS had an increase of $55 million (+13.7) from FY2018. <6.4.5. CMS> The FY2019 LHHS omnibus provided $4.4 billion in discretionary budget authority for CMS. This was $20 million (+0.5%) more than FY2018 and $121 million (+2.8%) more than the FY2019 President's budget request. The LHHS omnibus appropriated $765 million for the CMS Health Care Fraud and Abuse Control (HCFAC) account, 2.7% more than FY2018, and slightly less (-0.6%) than the FY2019 President's request. Of the total amount appropriated for HCFAC, $454 million was effectively exempt from the discretionary budget caps. (See Appendix A for an explanation of the LHHS budget cap exemptions.) The LHHS omnibus provided the CMS Program Management account with a flat funding level of $3.7 billion. This account supports CMS program operations (e.g., claims processing, information technology investments, provider and beneficiary outreach and education, and program implementation), in addition to federal administration and other activities related to the administration of Medicare, Medicaid, the State Children's Health Insurance Program, and private health insurance provisions established by the ACA. The FY2019 appropriation was the same amount that was proposed by the Senate-passed bill, but more than the amounts proposed by the President's budget (+3.6%) and the House committee bill (+4.8%). The omnibus maintained a general provision ( 227), included in LHHS appropriations acts since FY2014, authorizing HHS to transfer additional funds into this account from Medicare trust funds. The terms of the provision required that such funds be used to support activities specific to the Medicare program, limited the amount of the transfers to $305 million, and explicitly prohibited such transfers from being used to support or supplant funding for ACA implementation. The House committee bill would have eliminated this provision. <6.4.6. ACF> The FY2019 LHHS omnibus provided $23.2 billion in discretionary budget authority for ACF. This was $357 million (+1.6%) more than FY2018 and $7.8 billion (+50.6%) more than the FY2019 President's budget request. The President's budget would have decreased ACF discretionary funding by roughly one-third relative to the prior year (-32.5%). The President's budget would have achieved much of its proposed reduction by eliminating certain programs within ACF, such as the Low Income Home Energy Assistance Program (LIHEAP), Preschool Development Grants (PDG), and the Community Services Block Grant (CSBG). Funding for these three programs was sustained or increased in the FY2019 LHHS omnibus: LIHEAP received $3.7 billion, PDG $250 million, and CSBG $725 million. The LHHS omnibus provided $1.9 billion for the Refugee and Entrant Assistance programs account, an increase of $40 million (+2.2%) relative to FY2018. The LHHS omnibus retained a provision, included in LHHS appropriations since FY2015, authorizing HHS to augment appropriations for the Refugee and Entrant Assistance account by up to 10% via transfers from other discretionary HHS funds. The conference report on the omnibus directed the majority of the appropriation for Refugee and Entrant Assistance programs toward the Unaccompanied Alien Children (UAC) program ($1.3 billion, the same as FY2018). The UAC program provides for the shelter, care, and placement of unaccompanied alien children who have been apprehended in the United States. The LHHS omnibus also included several new general provisions related to the UAC program. For instance, the law authorized HHS to accept donations for the care of UACs ( 232), required HHS to submit a report on reunification of children with parents who are no longer in the United States ( 233), and prohibited HHS appropriations from being used to prevent a Member of Congress from visiting a UAC facility for oversight purposes ( 234). In addition, the conference report on the LHHS omnibus expressed an expectation that HHS would adhere to certain general provisions that had been included in the House committee bill ( H.R. 6470 ), specifically provisions relating to sibling placement ( 235), monthly reporting ( 236), a report on preliterate children in custody ( 541), a report on the mental health needs of children separated from their parents ( 542), and a sense of the Congress that immigrant children should not be separated from their parents and should be reunited immediately ( 539). A number of new directives and reporting requirements on the UAC program were also included in the conference report itself, as well as reports on the earlier committee-reported FY2019 LHHS bills. The conferees noted that HHS was expected to adhere to the requirements laid out in all three reports (unless a particular requirement in a committee report had been superseded by the LHHS omnibus or its conference report). These requirements addressed a range of topics related to, for instance, the administration of medication, questioning children about religion, sharing information on the whereabouts of children and parents, protecting genetic material, the provision of qualified and independent legal counsel, and expectations for communication with appropriations committees on various UAC issues. <6.4.7. AHRQ> The FY2019 LHHS omnibus provided $338 million in discretionary budget authority to AHRQ. This was 1.2% more than the FY2018 level of $334 million. The FY2019 LHHS omnibus did not direct any PHS tap transfers to AHRQ, which is in keeping with practices since FY2015 but contrasts with earlier years (FY2003-FY2014) in which AHRQ had been funded primarily with tap transfers. The FY2019 omnibus continued to fund AHRQ as its own operating division, declining the President's proposal to consolidate AHRQ into NIH. The FY2019 President's request had proposed zero funding for AHRQ, proposing instead to continue funding many of AHRQ's activities through a new National Institute for Research on Safety and Quality (NIRSQ) in the NIH. <6.4.8. ACL> The FY2019 LHHS omnibus provided $2.2 billion in discretionary budget authority for ACL. This was $25 million (+1.2%) more than FY2018. In addition, the FY2019 LHHS omnibus directed $28 million in PPHF transfers to ACL, the same as FY2018. The FY2019 LHHS omnibus specified that the PPHF transfers were for the Alzheimer's Disease Program, Chronic Disease Self-Management, and Elder Falls Prevention. The FY2019 LHHS omnibus did not adopt the President's budget proposals to consolidate Chronic Disease Self-Management and Elder Falls Prevention into the Preventive Health Services Program, or to eliminate funding for the State Health Insurance Program, the Paralysis Resource Center, and the Limb Loss Resource Center. The conference report on the FY2019 LHHS omnibus called on ACL to use a portion of the $181 million reserved for Family Caregiver Support Services to establish and carry out activities for two newly authorized advisory councils. Specifically, the report recommended that ACL dedicate $300,000 to the Family Caregiving Advisory Council authorized under the RAISE Family Caregivers Act ( P.L. 115-119 ) and $300,000 to the Advisory Council to Support Grandparents Raising Grandchildren authorized under the Supporting Grandparents Raising Grandchildren Act ( P.L. 115-196 ). In addition, the conference report on the FY2019 LHHS omnibus called for a $5 million (+40.1%) increase under Aging Network Support Activities for a new Care Corps grants program. Care Corps grants are intended to support public agencies and nonprofits in placing volunteers to provide nonmedical care to help family caregivers, seniors, and individuals with disabilities to maintain independence. <6.5. Restrictions Related to Certain Controversial Issues> Annual LHHS appropriations measures regularly contain broad restrictions related to certain controversial issues. For instance, annual LHHS appropriations acts commonly include provisions limiting the use of federal funds for abortions, the use of human embryos for research, needle exchange programs, and gun control advocacy. Abortions: Since FY1977, annual LHHS appropriations acts have included provisions limiting the circumstances under which LHHS funds (including Medicaid funds) may be used to pay for abortions. Early versions of these provisions applied only to HHS, but since FY1994 most provisions have applied to the entire LHHS bill. Under current provisions, (1) abortions may be funded only when the life of the mother is endangered or in cases of rape or incest; (2) funds may not be used to buy a managed care package that includes abortion coverage, except in cases of rape, incest, or endangerment; and (3) federal programs and state and local governments that receive LHHS funding are prohibited from discriminating against health care entities that do not provide or pay for abortions or abortion services. The FY2019 omnibus retained these existing restrictions ( 506 and 507). In addition, the House committee bill proposed a new provision that was not enacted ( 534) based on the Conscience Protection Act ( H.R. 644 , 115 th Congress). Among other things, this provision would have amended the Public Health Service Act to generally prevent federal, state, and local governments from penalizing or discriminating against health care providers who choose not to perform, pay for, or sponsor coverage of abortions. However, the provision was not included in the LHHS omnibus. Human Embryo Research: Since FY1996, annual LHHS appropriations have included a provision prohibiting any LHHS funds (including NIH funds) from being used to create human embryos for research purposes or for research in which human embryos are destroyed. The FY2019 omnibus retained these existing restrictions ( 508). Needle Exchange Programs: Since FY1990, annual LHHS appropriations have generally included a provision prohibiting any LHHS funds from being used for needle exchange programs (i.e., programs in which sterile needles or syringes are made available to injection drug users in exchange for used needles or syringes to mitigate the spread of related infections, such as Hepatitis and HIV/AIDS). Starting in FY2016, the provision was modified to allow funds to be used for needle exchange programs under the following conditions: (1) federal funds may not be used to purchase the needles, but may be used for other aspects of such programs; (2) the state or local jurisdiction must demonstrate, in consultation with CDC, that they are experiencing, or at risk for, a significant increase in hepatitis infections or an HIV outbreak due to injection drug use; and (3) the program must be operating in accordance with state and local law. The FY2019 omnibus retained these existing restrictions and conditions ( 529). Gun Control: Since FY1997, annual LHHS appropriations have included provisions prohibiting the use of certain funds for activities that advocate or promote gun control. Early versions of these provisions applied only to CDC; since FY2012, annual appropriations acts also have included HHS-specific restrictions, in addition to restrictions that apply to all LHHS funds (including funds transferred from the PPHF). The FY2019 omnibus retained these existing restrictions ( 210 [HHS] and 503(c) [all LHHS, plus PPHF transfers]). Restrictions on ACA Implementation: Since FY2011, annual LHHS appropriations have included provisions limiting or altering the ability of HHS to implement various aspects of the ACA. The content and scope of these provisions has evolved over time. The FY2019 House committee bill contained two provisions related to this topic that were not included in the FY2018 omnibus. First, the FY2019 House committee bill ( 528) would have prohibited any funds appropriated in the bill from being used for health insurance "navigator" programs required by Section 1311 of the ACA. (Navigators conduct public education activities to help consumers and small businesses make informed decisions about insurance.) Further, the House committee bill would have prohibited LHHS appropriations from being used to "implement, administer, enforce, or further" any provision of the ACA, with limited exceptions ( 527). The Senate bill did not include comparable provisions. <7. Department of Education (ED)> Note that amounts in this section are based on regular LHHS appropriations only. They do not include mandatory funds provided outside of the annual appropriations process (e.g., direct appropriations for the Federal Direct Student Loan program and the mandatory portion of the Federal Pell Grant program). Amounts are rounded to the nearest million or billion (as labeled). The dollar and percentage changes discussed are based on unrounded amounts. For consistency with source materials, amounts do not reflect sequestration or reestimates of mandatory spending programs, where applicable. <7.1. About ED> Federal policymakers established the U.S. Department of Education (ED) in 1980. Its mission is to "promote student achievement and preparation for global competitiveness by fostering educational excellence and ensuring equal access." Typically, about three-quarters of ED's discretionary appropriations go either to local educational agencies which primarily use the funds to provide educational and related services for economically disadvantaged students and students with disabilities or to low-income postsecondary students in the form of Pell Grants, which help pay for college. The remainder of ED's discretionary budget provides for a wide range of activities, including (but not limited to) support for minority-serving institutions; educational research; and career, technical, and adult education. The federal government provides roughly 7% of overall funding for elementary and secondary education in the United States. The majority of school funding about 83% comes from states and local districts, which have primary responsibility for the provision of elementary and secondary education. With regard to higher education, the federal government provided roughly 61% of undergraduate and graduate student aid in academic year (AY) 2017-2018. <7.2. FY2019 ED Appropriations Overview> Table 8 displays FY2019 discretionary and mandatory ED budget authority provided and proposed, along with FY2018 enacted levels. Discretionary funds represent the majority of ED's annual appropriations, accounting for roughly 95% of the FY2018 and FY2019 enacted levels. The FY2019 enacted discretionary ED appropriations were 0.8% higher than FY2018 levels. Proposed discretionary ED appropriations for FY2019 compared to FY2018 would have decreased under the President's budget (-10.8%) and increased slightly under the Senate floor and House committee bills (+0.8 and +0.2, respectively). <7.3. Selected ED Highlights> The following sections highlight FY2019 appropriations for selected ED accounts and programs. Table 9 tracks funding levels for major ED budget and appropriations accounts. <7.3.1. Career and Technical Education> The FY2019 LHHS omnibus appropriated nearly $1.3 billion for career and technical education, a 5.8% increase from the FY2018 level of $1.2 billion. The President's budget requested approximately $1.1 billion for CTE. The Senate bill would have kept CTE funding at the FY2018 level, whereas the House committee bill would have appropriated just over $1.3 billion. The Carl D. Perkins Career and Technical Education Act (Perkins Act) is the primary federal law aimed at developing and supporting career and technical education (CTE) programs at the secondary and postsecondary educational levels. Recipients of Perkins funds are required to use those funds for a variety of purposes that help CTE students attain technical skills and earn an industry-recognized credential, certificate, or a postsecondary degree. Prior to the 115 th Congress, the Perkins Act had most recently been reauthorized in 2006 by the Carl D. Perkins Career and Technical Education Act of 2006 (Perkins IV; P.L. 109-270 ). In 2018, the Perkins Act was comprehensively reauthorized once again through the passage of the Strengthening Career and Technical Education for the 21 st Century Act (Perkins V; P.L. 115-224 ). Perkins V was signed into law by President Trump on July 31, 2018, and went into effect on July 1, 2019. <7.3.2. Student Financial Assistance> The Pell Grant program within the Student Financial Assistance account provides need-based financial aid primarily to low-income undergraduate students to help them cover the cost of higher education. Pell Grants are the largest single source of federal grant aid for undergraduate students; they are projected to provide approximately $30 billion in aid to roughly 7.6 million undergraduate students in the 2019-2020 award year. The FY2019 enacted discretionary appropriation of $22.5 billion provided level funding compared to FY2018. The President's budget, the Senate bill, and the House committee bill all proposed level funding. The FY2019 LHHS omnibus increased the discretionary maximum Pell Grant award level to $5,135, which is $100 higher than the FY2018 level. The Senate bill recommended that same amount. The House committee bill did not recommend an increase. The President's budget, which was released before the FY2018 appropriations were finalized, requested the same discretionary maximum Pell Grant award level as in FY2017: $4,860. The total maximum Pell Grant award is the sum of the discretionary maximum award level and the mandatory add-on award level. The discretionary award program costs may be funded through (1) annual discretionary appropriations; (2) a permanent, definite mandatory appropriation; and (3) the Pell Grant program surplus. The mandatory add-on award program costs are funded by a permanent, indefinite mandatory appropriation. Both mandatory appropriation sources are provided outside the annual appropriations process, are authorized by and funded in the Higher Education Act (HEA), and do not appear in Table 9 . As a result of Pell Grant award rules established in the HEA, the increase in the discretionary maximum Pell Grant award level increases FY2019 program costs, assuming no other changes. In order to pay for the estimated increase in FY2019 mandatory add-on award program costs, the LHHS omnibus reduced the FY2019 definite mandatory appropriation from $1.409 billion to $1.370 billion ( 311). The Senate bill would have reduced the FY2019 definite mandatory appropriation by the same amount, while the House committee bill would not have reduced it. (The President's budget also proposed a reduction in the FY2019 definite mandatory appropriation, but that reduction was to fund a policy proposal that was subsequently implemented by the FY2018 appropriations act.) The FY2019 LHHS omnibus implemented another provision related to the Pell Grant program surplus: it rescinded $600 million of the surplus, which offset the cost of appropriations in the act. <7.3.3. Free Application for Federal Student Aid (FAFSA)> ED collects and processes information from prospective postsecondary students to determine eligibility for federal loans, grants, and other types of financial aid using the Free Application for Federal Student Aid (FAFSA). Through the FAFSA, students provide information on income, assets, and other characteristics. The Higher Education Act (HEA) permits student information from the FAFSA to be shared with state agencies and institutions of higher education to help determine federal and nonfederal aid. The FY2019 LHHS omnibus included a general provision authorizing institutions of higher education to share, with the applicant's explicit written consent, information collected from the FAFSA with a scholarship granting organization or an organization assisting the applicant in applying for and receiving federal, state, local, or tribal assistance ( 312). The omnibus prohibits organizations that receive such information from selling or otherwise sharing it. The omnibus specifies that this provision is to remain in effect until Title IV of the HEA is reauthorized. <8. Related Agencies> Note that all amounts in this section are based on regular LHHS appropriations only; they do not include funds provided outside of the annual appropriations process (e.g., mandatory appropriations for Social Security benefit payments). All amounts in this section are rounded to the nearest million or billion (as labeled). The dollar changes and percentage changes in the text are based on unrounded amounts. For consistency with source materials, amounts do not reflect sequestration or reestimates of mandatory spending programs, where applicable. <8.1. FY2019 Related Agencies Appropriations Overview> Table 10 displays FY2019 proposed and enacted funding levels for LHHS related agencies, along with FY2018 enacted levels. In general, discretionary funds constitute about 20% of total appropriations for LHHS related agencies each year. The FY2019 omnibus increased discretionary appropriations for related agencies by about 0.1% compared to FY2018. The President's budget and the House committee bill would have decreased discretionary appropriations for related agencies by about 14.0% and 2.2%, respectively, while the Senate-passed bill would have increased such appropriations by 0.5%. The largest share of funding appropriated to related agencies in the LHHS bill consistently goes to the Social Security Administration (SSA). When taking into account both mandatory and discretionary funding, SSA usually represents roughly 97% of total appropriations to related agencies in the LHHS bill. The bulk of mandatory funding provided to SSA from the LHHS bill supports the Supplemental Security Income (SSI) program, which provides means-tested cash assistance to disabled adults and children and to seniors aged 65 or older. When looking exclusively at discretionary funding, SSA received 84.7% of discretionary appropriations for LHHS related agencies in the FY2019 LHHS omnibus. After SSA, the next-largest related agency in terms of appropriations is usually the Corporation for National and Community Service (CNCS), which accounted for about 1.5% of total appropriations and 7.1% of discretionary appropriations to LHHS related agencies in FY2019. Typically, each of the remaining related agencies receives less than $1 billion from the annual LHHS appropriations bill. For more information, see Table 11 . <8.2. Selected Related Agencies Highlights> The following sections highlight FY2019 appropriations issues for selected related agencies. Table 11 tracks funding levels for these related agencies. <8.2.1. SSA Limitation on Administrative Expenses (LAE)> The SSA LAE account consists mainly of funds that are used by SSA to administer the Social Security and SSI programs and to support CMS in administering portions of Medicare. The account also contains funds that are specifically set aside for certain program integrity activities, such as continuing disability reviews (CDRs) and SSI nonmedical redeterminations. The FY2019 LHHS omnibus provided $12.9 billion to the LAE account, which was a slight increase (+$2 million) over the FY2018 enacted level. The President's request would have provided about $482 million less (-3.7%) for the LAE account relative to FY2018. The Senate-passed bill would have increased LAE funding by $77 million (+0.6%) compared to FY2018, while the House committee bill would have decreased LAE funding by $318 million (-2.5%). Of the $12.9 billion provided to the LAE account for FY2019, nearly $1.7 billion (13.1%) was dedicated to program integrity activities. The program integrity portion of the LAE account included $273 million in "base" funding subject to the discretionary spending caps established by the Budget Control Act of 2011, as well as additional funding that was effectively exempt from those caps and subject to an annual limit ("cap adjustment funding"; see Appendix A for further information). The FY2019 LHHS omnibus provided $1.4 billion in cap adjustment funding, which was the maximum amount permitted for FY2019. However, because federal law allowed more cap adjustment funding for FY2018 than for FY2019, the combined amount of program integrity funding enacted for FY2019 was $52 million (-3.0%) less than the combined amount enacted for FY2018. All three proposals would have also provided the maximum amount of cap adjustment funding permitted for FY2019. <8.2.2. Corporation for National and Community Service> The CNCS is an independent federal agency that administers a variety of national and community service programs, such as AmeriCorps and the National Senior Volunteer Corps. The FY2019 LHHS omnibus provided $1.1 billion in total CNCS funding, a $19 million (+1.8%) increase over the FY2018 enacted level. The FY2019 President's budget had requested $123 million (-88.5%) for CNCS, noting that these funds would be used to execute an orderly shutdown of CNCS operations, with the agency's closure slated to be complete by the end of FY2019. Both the House committee bill and the Senate-passed bill declined the President's proposal, with the House proposing to retain CNCS funding at its FY2018 level of $1.1 billion (0.0%), while the Senate-passed bill would have modestly reduced agency funding by $6 million (-0.5%). <8.2.3. National Labor Relations Board (NLRB)> The NLRB is an independent board that enforces provisions in the National Labor Relations Act (NLRA). The FY2019 LHHS omnibus maintained the FY2018 funding levels for the NLRB of $274 million. The FY2019 President's budget and the House committee bill would have decreased funding for the NLRB by $25 million (-9.2%) and by $13 million (-4.7%), respectively, while the Senate-passed bill would have provided the same amount as FY2018. The FY2019 LHHS omnibus retained a provision that has been included in the LHHS bill since FY2012 that prohibits any funds appropriated to the NLRB in the bill, or any prior appropriations act, from being used to issue a directive or regulation to provide employees a means of voting through any electronic method in an election determining representation for collective bargaining ( 407). The FY2019 LHHS omnibus, however, did not include two NRLB-related provisions proposed by the House committee bill that would have prohibited any funds made available by the bill from being used to issue, enforce, or litigate any administrative action related to changing the interpretation or application of the "joint employer" standard in effect as of January 1, 2014 ( 408 of H.R. 6470 ) ; and prohibited any funds made available by the bill from being used to enforce the NLRA against any Indian tribe ( 409 of H.R. 6470 ). Appendix A. Budget Enforcement Activities The framework for budget enforcement under the congressional budget process has both statutory and procedural elements. The statutory elements include the discretionary spending limits and mandatory spending sequester derived from the Budget Control Act of 2011 (BCA; P.L. 112-25 ) and the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA; P.L. 99-177 ). The procedural elements are primarily associated with the budget resolution and limit both total discretionary spending and spending under the jurisdiction of each appropriations subcommittee. Readers should note that the statutory budget enforcement requirements that apply to FY2019 discretionary spending under the BCA were altered the prior fiscal year by the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ), which was enacted on February 9, 2018. This law increased the defense and nondefense discretionary spending limits for FY2018 and FY2019, and extended mandatory spending sequestration through FY2027. Budget Control Act and Sequestration The BCA provides budget process mechanisms to reduce mandatory spending and further reduce discretionary spending over an extended period. For mandatory spending, reductions are to occur through sequestration in each of fiscal years between FY2013-FY2027. For discretionary spending, reductions occurred through sequestration in FY2013, but are to be achieved through lower discretionary spending limits for each of the fiscal years between FY2014-FY2021. The BCA does not require a sequester of discretionary spending in FY2014-FY2021 unless one or both of the statutory discretionary spending limits (defense and nondefense) is breached. Only discretionary spending subject to a given spending limit is affected by a breach of that limit, and the LHHS bill only includes funding in the nondefense category. FY2019 On February 12, 2018, concurrent with the release of the President's budget, President Trump issued the required FY2019 sequestration order, calling for nonexempt mandatory spending to be reduced on October 1, 2018. The Office of Management and Budget (OMB) estimated that the FY2019 sequestration percentages would equal 2% of nonexempt Medicare spending and 6.2% of other nonexempt nondefense mandatory spending, for a total reduction of $19 billion in FY2019. (OMB also estimated an 8.7% reduction, totaling $809 million, in nonexempt defense mandatory spending, which does not affect LHHS funds.) With regard to discretionary spending, the FY2019 statutory spending limits as specified in BBA 2018 were $647 billion for defense spending and $597 billion for nondefense spending; each of these levels was $18 billion more than their respective FY2018 limits. Once all annual appropriations acts were enacted for FY2019 and allowable adjustments to the spending limits were made, OMB determined that those appropriations did not violate either the defense or the nondefense limit. Cap Adjustments, Exemptions, and Special Rules The BCA allows for certain adjustments to the discretionary spending limits for FY2012-FY2021. For LHHS, the BCA as originally enacted allowed increases to the nondefense limit (up to a point) to accommodate new budget authority for specified program integrity initiatives at HHS and the Social Security Administration (SSA). The Bipartisan Budget Act of 2015 ( P.L. 114-74 ) amended the list of SSA activities that may be covered by this "cap adjustment" to include costs associated with work-related continuing disability reviews, Cooperative Disability Investigations, and fraud prosecutions by Special Assistant U.S. Attorneys. The Bipartisan Budget Act of 2015 also revised the amount of the allowable SSA adjustment amounts to be more generous in FY2017-FY2019 compared to what was previously allowed, but less generous in FY2021. The BBA 2018 added a new cap adjustment that also involves a LHHS activity. This new cap adjustment allows increases to the nondefense limit (up to a point) to accommodate new budget authority for the DOL to help fund the reemployment services and eligibility assessments conducted by the states related to unemployment compensation. Separate from these cap adjustments, the 21 st Century Cures Act (Cures Act, P.L. 114-255 ), which was enacted on December 13, 2016, included additional budget enforcement procedures related to the discretionary spending limits. These procedures originally applied to two accounts within the scope of the LHHS bill: the NIH Innovation Account and the Account for the State Response to the Opioid Abuse Crisis. For FY2019, the NIH Innovation Account was the only LHHS funding to be subject to the Cures Act budget enforcement procedures. The Cures Act created the NIH Innovation and State Response to the Opioid Abuse Crisis accounts and authorized appropriations from them for specific fiscal years (FY2017-FY2026 for the NIH Innovation Account and FY2017-FY2018 for the Account for the State Response to the Opioid Abuse Crisis). The Cures Act further provided that subsequent discretionary appropriations from these accounts (up to the amounts authorized for each fiscal year) are to be subtracted from any cost estimates provided for purposes of budget controls. The Cures Act ensured that appropriations from these accounts will not count against any spending limits, such as the statutory discretionary spending limits imposed by the BCA; that is, the amounts appropriated from these accounts will be considered to be outside those limits. An additional set of statutory exemptions and special rules that apply to sequestration are relevant for the LHHS bill. The LHHS bill contains several programs that are exempt from sequestration, including Medicaid, payments to health care trust funds, Supplemental Security Income, Special Benefits for Disabled Coal Miners, retirement pay and medical benefits for commissioned Public Health Service officers, foster care and adoption assistance, and certain family support payments. The LHHS bill also contains several programs that are subject to special rules under sequestration, such as unemployment compensation, certain student loans, health centers, and portions of Medicare. Budget Resolution and 302(b) Suballocations The procedural elements of budget enforcement generally stem from requirements under the Congressional Budget Act of 1974 ( P.L. 93-44 ) that are associated with the adoption of an annual budget resolution. Through this 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 Appropriations Committee subsequently divides this allocation among its 12 subcommittees. These subcommittee-level spending limits 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 its jurisdiction, effectively acting as a cap on each of the 12 regular appropriations bills. Enforcement of the 302(a) allocation and 302(b) suballocations occurs through points of order. For the FY2019 appropriations cycle, the House and the Senate did not adopt a budget resolution. Instead, the House and Senate both used authority granted in the BBA 2018 for the Budget Committee chair in each chamber to file enforceable budgetary levels for FY2019. In line with these budgetary levels, the House Appropriations Committee adopted its initial suballocations on May 10, 2018 ( H.Rept. 115-710 ), while the Senate Appropriations Committee adopted its initial suballocations on May 24, 2018 ( S.Rept. 115-260 ). (As the FY2019 appropriations process was underway, both committees periodically updated these suballocations to align them with changing congressional priorities.) For current-year LHHS discretionary funding, Table A-1 displays FY2018 enacted levels, the House and the Senate FY2019 initial suballocations, and enacted FY2019 LHHS appropriations. The table shows that the House initially would have kept regular LHHS appropriations at a flat level compared to the prior fiscal year, whereas the Senate would have increased those appropriations by about $2.1 billion relative to FY2018 (+1%). Ultimately, final enacted appropriations were a little less than $1 billion higher than the prior fiscal year. The table also displays funding for which adjustments may be made to the discretionary spending limits under the BCA, including funding for certain LHHS program integrity activities and emergency requirements, where applicable. The "adjusted appropriations" total includes this funding. Note that compliance with discretionary spending allocations is evaluated based on budget authority available in the current fiscal year , adjusted for scorekeeping by CBO. As such, totals shown in this table may not be comparable to other totals shown in this report. Current-year budget authority totals exclude advance appropriations for future years, but include advance appropriations from prior years that become available in the current year. (Advance appropriations are provided to selected LHHS accounts, generally in order to manage specific planning concerns and ensure continuity of operations at the start of a new fiscal year.) Current-Year Budget Authority Table A-2 displays the total LHHS current-year budget authority, by title. The amounts shown in this table reflect total budget authority available for obligation in the fiscal year, regardless of the year in which it was first appropriated. Amounts in the FY2018 enacted column include FY2018 budget authority provided by the FY2016 omnibus ( P.L. 114-113 ) and FY2017 omnibus ( P.L. 115-31 ). Similarly, the FY2019 President's budget, House committee, Senate floor, and enacted columns include FY2019 budget authority provided by the FY2017 and FY2018 omnibuses. (For a comparable table showing total budget authority in the bill, rather than current-year budget authority, see Table 2 in this report.) As mentioned above, it is current-year budget authority (adjusted for scorekeeping by CBO) that is used to determine compliance with discretionary spending allocations. Appendix B. Senate Floor Amendments Offered to H.R. 6157 While the Senate committee-reported version of the LHHS bill ( S. 3158 ) did not receive floor consideration, the text of this measure (with minor alterations) was included in a different appropriations vehicle ( H.R. 6157 ) that was amended on the floor and passed by the Senate on August 23, 2018. Prior to Senate floor consideration, H.R. 6157 contained the text of the FY2019 Department of Defense appropriations only. On the floor, that bill was amended into an omnibus measure that contained appropriations for both the Department of Defense and LHHS. The Senate proceeded to consider H.R. 6157 by unanimous consent on August 16, 2018. At that point, Senator Shelby (the chair of the Senate Appropriations Committee) offered an amendment in the nature of a substitute containing Department of Defense appropriations in Division A, and LHHS appropriations in Division B ( S.Amdt. 3695 ). On August 21, a cloture motion on the measure was presented in the Senate, but a subsequent unanimous consent agreement provided, among other matters, for the Senate to adopt a manager's package comprised of dozens of amendments to the substitute amendment, adopt the substitute amendment (as amended), and then proceed to a vote without the need to invoke cloture. The Senate passed the bill, as amended, by a vote of 85-7. Over the course of Senate floor consideration, a total of 32 LHHS amendments were offered to Division B. Twenty-nine of these were adopted by unanimous consent en bloc as part of the manager's package. Of the three that received recorded votes, two were adopted and one was rejected. These amendments and their dispositions are listed in Table B-1 below.

This report offers an overview of actions taken by Congress and the President to provide FY2019 appropriations for accounts funded by the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS) appropriations bill. This bill includes all accounts funded through the annual appropriations process at the Department of Labor (DOL) and Department of Education (ED). It also provides annual appropriations for most agencies within the Department of Health and Human Services (HHS), with certain exceptions (e.g., the Food and Drug Administration is funded via the Agriculture bill). Finally, the LHHS bill provides funds for more than a dozen related agencies, including the Social Security Administration (SSA). FY2019 Supplemental Appropriations for the Southern Border : During the 116 th Congress, on July 1, 2019, the President signed into law P.L. 116-26 , a supplemental appropriations act for FY2019 focusing primarily on the provision of humanitarian assistance and security at the southern border. The bill was passed by the House on June 27 and by the Senate on June 26. (An earlier version of the bill had passed the House on June 25. A related bill, S. 1900 , had passed the Senate on June 19; this bill was substantially similar to the final version of P.L. 116-26 .) As enacted, the bill contained nearly $2.9 billion in emergency-designated LHHS appropriations for the Refugee and Entrant Assistance account at HHS. The FY2019 enacted levels presented throughout this report are based on amounts provided by the FY2019 LHHS omnibus ( P.L. 115-245 , see below) and do not include these supplemental funds, which were provided in addition to the annual appropriations. FY2019 Supplemental Appropriations for Disaster Relief : During the 116 th Congress, on June 6, 2019, the President signed into law P.L. 116-20 , a supplemental appropriations act for FY2019 focusing primarily on certain expenses arising from hurricanes, typhoons, wildfires, earthquakes, tornadoes, floods, and other natural disasters or emergencies. The bill was passed by the House on June 3 and by the Senate on May 23. (An earlier version of the bill had passed the House on May 10.) As enacted, the bill included roughly $611 million in emergency-designated LHHS appropriations for accounts at DOL, HHS, and ED. The FY2019 enacted levels presented throughout this report are based on amounts provided by the FY2019 LHHS omnibus ( P.L. 115-245 ) and do not include these supplemental funds, which were provided in addition to the annual appropriations. FY201 9 LHHS Omnibus: During the 115 th Congress, on September 28, 2018, the President signed into law the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019 ( H.R. 6157 , P.L. 115-245 ). This law contained full-year LHHS appropriations in Division B. This is the first occasion since the FY1997 appropriations cycle that full-year LHHS appropriations were enacted on or before the start of the fiscal year (October 1). The FY2019 LHHS omnibus contained discretionary appropriations totaling $189.4 billion. This amount is 1.5% more than FY2018 enacted levels and 8.9% more than the FY2019 President's budget request. The omnibus also provided $869.8 billion in mandatory funding, for a combined LHHS total of $1.059 trillion. The distribution of discretionary funding was as follows: DOL: $12.1 billion, 0.8% less than FY2018. HHS: $90.5 billion, 2.6% more than FY2018. ED: $71.4 billion, 0.8% more than FY2018. Related Agencies: $15.3 billion, 0.1% more than FY2018. FY2019 LHHS Senate Action: The Senate Appropriations Committee reported its version of the FY2018 LHHS appropriations bill on June 28, 2018, by a vote of 30-1 ( S. 3158 ). Instead of taking up the committee-reported vehicle, the Senate chose to take up a different appropriations vehicle ( H.R. 6157 ) and amend it to contain FY2019 LHHS appropriations as well. (Those LHHS appropriations, which were added as Division B of H.R. 6157 , were substantially the same as S. 3158 .) During floor consideration of H.R. 6157 , the Senate also adopted 31 amendments to the new LHHS division of the bill (see Appendix B for a summary of these amendments). The Senate passed an amended H.R. 6157 by a vote of 85-7 on August 23, 2018. The Senate-passed bill would have provided $189.4 billion in discretionary LHHS funds. This would have been 1.5% more than FY2018, and 8.9% more than the FY2019 President's request. In addition, the Senate-passed bill would have provided an estimated $869.8 billion in mandatory funding, for a combined total of $1.059 trillion for LHHS as a whole. The distribution of discretionary funding would have been as follows: DOL: $12.1 billion, 0.8% less than FY2018. HHS: $90.5 billion, 2.7% more than FY2018. ED: $71.4 billion, 0.8% more than FY2018. Related Agencies: $15.4 billion, 0.5% more than FY2018. FY2019 LHHS House Action: The House Appropriations Committee's version of the FY2019 LHHS appropriations bill was ordered reported by the full committee on July 11, 2018, by a vote of 30-22, and reported to the House on July 23 ( H.R. 6470 ). This bill would have provided $187.2 billion in discretionary LHHS funds, a 0.3% increase from FY2018 enacted levels. This amount would have been 7.6% more than the FY2019 President's request. In addition, the House committee bill would have provided an estimated $869.8 billion in mandatory funding, for a combined total of $1.057 trillion for LHHS as a whole. The distribution of discretionary funding would have been as follows: DOL: $11.9 billion, 2.4% less than FY2018. HHS: $89.3 billion, 1.3% more than FY2018. ED: $71.0 billion, 0.2% more than FY2018. Related Agencies: $15.0 billion, 2.2% less than FY2018. The House committee-reported version of the LHHS bill did not receive floor consideration. FY2019 President's Budget Request: On February 12, 2018, the Trump Administration released the FY2019 President's budget. The President requested $173.9 billion in discretionary funding for accounts funded by the LHHS bill, which would have been a decrease of 6.8% from FY2018 levels. In addition, the President requested $869.8 billion in annually appropriated mandatory funding, for a total of $1.044 trillion for LHHS as a whole. The distribution of discretionary funding was as follows: DOL: $10.9 billion, 11.1% less than FY2018. HHS: $86.7 billion, 1.6% less than FY2018. ED: $63.2 billion, 10.8% less than FY2018. Related Agencies: $13.2 billion, 14.0% less than FY2018.

crs_R45793

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<1. Introduction> The detection of certain per- and polyfluoroalkyl substances (PFAS) in some public water supplies has generated public concern and increased congressional attention to the U.S. Environmental Protection Agency's (EPA) efforts to address these substances. Over the past decade, EPA has been evaluating several PFAS under the Safe Drinking Water Act (SDWA) to determine whether national drinking water regulations may be warranted. EPA has not issued SDWA regulations for any PFAS but has taken various actions to address PFAS contamination. Using SDWA authorities, in 2016, EPA issued non-enforceable health advisories for two PFAS perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS) in drinking water. The 116 th Congress has held hearings on PFAS and passed legislation to address PFAS contamination issues through various authorities and departments and agencies. The National Defense Authorization Act (NDAA) for Fiscal Year 2020 ( P.L. 116-92 ) includes several PFAS provisions involving the Department of Defense (DOD) and other federal agencies. Of the EPA provisions related to drinking water, Title LXXIII, Subtitle A, directs EPA to require public water systems to conduct additional monitoring for PFAS and establishes a grant program for public water systems to address PFAS and other emerging contaminants. On January 10, 2020, the House passed H.R. 535 , a broad PFAS bill that would direct EPA and other federal agencies to take numerous actions to address PFAS. Among its provisions, H.R. 535 would amend SDWA to direct EPA to regulate PFAS in drinking water and would authorize grants for communities for treatment technologies. Other bills would variously direct EPA to take regulatory and other actions under several environmental statutes, including SDWA. Similar to H.R. 535 , multiple SDWA bills would require EPA to establish final or interim drinking water regulations for some or all PFAS, require monitoring for more of these substances, or authorize grants to assist communities in treating PFAS in drinking water. (See Table 1 .) PFAS are a large, diverse group of fluorinated compounds, some of which have been used for decades in a wide array of commercial, industrial, and U.S. military applications. Since the 1940s, more than 1,200 PFAS compounds have been used in commerce, and about 600 are still in use today. The chemical characteristics of PFAS have led to the widespread use of these substances for beneficial purposes (such as firefighting) and in the processing and manufacture of many commercial products, such as nonstick cookware, food wrapper coatings, stain-resistant carpets, waterproof clothing, and food containers. The two PFAS most frequently detected in water supplies are PFOA and PFOS. Since 2002, U.S. manufacturers have phased out the production and most uses of PFOS. In coordination with EPA, manufacturers completed the phase-out of PFOA production by 2015. EPA reports that food and consumer products represent a large portion of exposure to PFOA and PFOS, while drinking water can be an additional source in the small percentage of communities with contaminated water supplies. Among the thousands of different PFAS, few have sufficient health effects studies for determining a threshold at which adverse effects are not expected to occur. Most studies of potential health effects of PFAS have focused on PFOA and PFOS because of their predominant historical use. For those PFAS for which scientific information is available, animal studies suggest that exposure to particular substances above certain levels may be linked to various health effects, including developmental effects; changes in liver, immune, and thyroid function; and increased risk of some cancers. A discussion of these studies and their results is beyond the scope of this report. In 2016, EPA reported that public water systems in 29 states had detected at least one PFAS in their water supplies. In total, 63 public water systems serving approximately 5.5 million people reported detections of PFOA and PFOS (separately or combined) above EPA's health advisory level of 70 parts per trillion (ppt). EPA has reported that PFAS contamination of drinking water "is typically localized and associated with a specific facility." According to the Agency for Toxic Substances and Disease Registry, PFAS may have been released to surface or ground water from manufacturing sites, industrial use, use and disposal of PFAS-containing consumer products (e.g., unlined landfills), fire/crash training areas, wastewater treatment facilities, and the spreading of contaminated biosolids. A discussion of PFAS use, including at U.S. military installations, and PFAS disposal is not included in this report. Uncertainty about potential health effects that may be associated with exposure to specific PFAS above particular concentrations combined with the absence of a federal health-based drinking water standard has posed challenges and created uncertainty for states, water suppliers and their customers, homeowners using private wells, and others regarding treatment or other potential responses. State drinking water regulators and others have called for greater federal leadership to address these substances through several federal laws and, specifically, have urged EPA to set federal drinking water standards for one or more PFAS under SDWA. Representatives of public water systems have supported EPA's commitment to follow the statutory process for regulating contaminants in drinking water, which prioritizes regulating those that occur at levels and frequency of public health concern. SDWA provides EPA with several authorities to address emerging contaminants in public water supplies and drinking water sources. These include the authority to (1) issue health advisories, (2) regulate contaminants in water provided by public water systems, and (3) issue enforcement orders in certain circumstances. For more than a decade, EPA has been using SDWA authorities to evaluate several PFAS particularly PFOA and PFOS to determine whether national drinking water regulations may be warranted. To date, EPA has not promulgated drinking water regulations for any PFAS but has taken a number of related actions. In February 2019, EPA issued a PFAS Action Plan, which identifies and discusses the agency's current and proposed efforts to address PFAS through several statutory authorities, including SDWA. These actions range from potential regulatory actions to public outreach on PFAS. Many of these actions support EPA's evaluation of PFAS for potential regulation under SDWA. These include research and development of analytical methods needed to accurately measure substances in drinking water, development of additional toxicity information to increase understanding of potential health risks associated with exposures to different PFAS, and research on drinking water treatment effectiveness and costs for various PFAS. EPA also plans to generate occurrence data for more PFAS to determine their frequencies and concentrations in public water supplies. Further, EPA is working with federal, state, and tribal partners to develop risk communication materials on PFAS and plans to develop an interactive map on potential PFAS sources and occurrence. Table A-1 includes EPA's selected actions and associated timelines relevant to addressing PFAS in drinking water. The challenges of regulating individual substances or categories of PFAS in drinking water are multifaceted and may raise several policy and scientific questions. Technical issues involve availability of data, detection methods, and treatment techniques for related but diverse contaminants. Scientific questions exist about health effects attributed to many individual PFAS and whether health effects can be generalized from one or a category of PFAS to others. Policy and regulatory considerations may involve setting priorities among numerous unregulated contaminants, the value of establishing uniform national drinking water standards, and the ability to demonstrate the relative risk-reduction benefits compared to compliance costs to communities associated with regulating individual or multiple PFAS. The absence of a federal health-based standard can pose challenges for states and communities with PFAS contamination. State drinking water regulators have noted that many states may face significant obstacles in setting their own standards. This report provides an overview of EPA's ongoing and proposed actions to address PFAS under SDWA authorities, with particular focus on the statutory process for evaluating PFAS particularly PFOA and PFOS for potential regulation. It also reviews PFAS-related legislation introduced in the 116 th Congress, with emphasis on bills that would amend SDWA. This report does not address the status of scientific research on health effects that may be associated with exposure to one or more PFAS, nor does it discuss federal actions regarding other environmental statutes, such as the Toxic Substances Control Act (TSCA) and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). <2. Addressing PFAS Using SDWA Authorities> SDWA provides EPA with several authorities to address emerging contaminants in drinking water supplies and sources. The act authorizes EPA to promulgate regulations that include enforceable standards and monitoring requirements for contaminants in water provided by public water systems. For contaminants that are not regulated under the act, SDWA authorizes EPA to issue contaminant-specific health advisories that include technical guidance and identify concentrations that are expected to be protective of sensitive populations. In addition, if the appropriate state and local authorities have not acted to protect public health, SDWA authorizes EPA to take actions to abate an imminent and substantial endangerment to public health from "a contaminant that is present in or is likely to enter a public water system or an underground source of drinking water." <2.1. Evaluating Emerging Contaminants for Regulation> SDWA specifies a multistep process for evaluating contaminants to determine whether a national primary drinking water regulation is warranted. The evaluation process includes identifying contaminants of potential concern, assessing health risks, collecting occurrence data (and developing reliable analytical methods necessary to do so), and making determinations as to whether or not regulatory action is needed for a contaminant. To make a positive determination that a national drinking water regulation is warranted for a contaminant, EPA must find that a contaminant may have an adverse health effect; it is known to occur or there is a substantial likelihood that it will occur in public water systems with a frequency and at levels of public health concern; and in the sole judgment of the EPA Administrator, regulation of the contaminant presents a meaningful opportunity for health risk reduction for persons served by water systems. <2.1.1. Identifying Contaminants That May Warrant Regulation> SDWA Section 1412(b) requires EPA to publish, every five years, a list of contaminants that are known or anticipated to occur in public water systems and may require regulation under the act. Before publishing a final contaminant candidate list (CCL), EPA is required to provide an opportunity for public comment and consult with the scientific community, including the Science Advisory Board. In 2009, EPA placed PFOA and PFOS on the third such list (CCL 3) for evaluation. In preparing the CCL 3, EPA considered over 7,500 chemical and microbial contaminants and screened these contaminants based on their potential to occur in public water systems and potential health effects. EPA selected 116 of the contaminants on the proposed CCL based on more detailed evaluation of occurrence, health effects, expert judgement, and public input. In 2016, EPA published the fourth list, CCL 4, which carried over many CCL 3 contaminants, including PFOA and PFOS. EPA carried forward these contaminants to continue evaluating health effects, gathering national occurrence data, and developing analytical methods. <2.1.2. Monitoring for Emerging Contaminants in Public Water Systems> To generate data on the nationwide occurrence of emerging contaminants in public water supplies, EPA is required to administer a monitoring program for unregulated contaminants. SDWA directs EPA to promulgate, every five years, an unregulated contaminant monitoring rule (UCMR) that requires public water systems to test for no more than 30 contaminants. Only a representative sample of systems serving 10,000 or fewer people is required to conduct monitoring. EPA uses data collected through UCMRs to estimate whether the occurrence of the contaminant in public water supplies is local, regional, or national in scope. UCMRs set a minimum reporting level (MRL) for each contaminant. MRLs are not health based; rather, they establish concentrations for reporting and data collection purposes. EPA makes the UCMR monitoring results available to the public and reports the number of detections above the MRL and also detections above EPA's health-based reference levels (discussed below), where available. The act includes an authorization of appropriations to cover monitoring and related costs for small systems (serving 10,000 persons or fewer). However, large systems pay UCMR monitoring and laboratory costs. In 2012, EPA issued the third UCMR (UCMR 3), under which 4,864 public water systems tested their drinking water for six PFAS including PFOA and PFOS between January 2013 and December 2015. Among these systems, EPA reported the following monitoring results for PFOA and PFOS: 117 of the public water systems reported detections of PFOA at levels above the MRL of 20 ppt, and 95 reported detections of PFOS at concentrations above the MRL of 40 ppt. Overall, 63 of the 4,864 (1.3%) water systems that conducted PFAS monitoring reported at least one sample with PFOA and/or PFOS (separately or combined) concentrations exceeding EPA's health advisory level of 70 ppt for PFOA and PFOS. Actual exposures among individuals served by these systems would be expected to vary depending on water use and consumption. EPA estimates that these 63 water systems serve approximately 5.5 million individuals. Of the 63 systems: 9 reported detections of both PFOS and PFOA above 70 ppt; 4 reported detections of PFOA above 70 ppt; 37 reported detections of PFOS above 70 ppt; and 13 reported detections of PFOA and PFOS (combined but not separately) above 70 ppt. Systems with PFOA or PFOS detections above 70 ppt were located in 21 states, the Pima-Maricopa Indian community, and 2 U.S. territories. EPA's PFAS Action Plan notes that the agency intends to propose monitoring requirements for other PFAS when it proposes the next UCMR (UCMR 5) in 2020. As of January 2020, EPA has developed an analytical method to detect 29 PFAS in drinking water supplies. The plan states that the agency would use the monitoring data gathered through UCMR 5 to evaluate the national occurrence of additional PFAS. The agency is currently working to develop analytical methods to support monitoring for additional PFAS. <2.1.3. Regulatory Determinations> SDWA requires EPA, every five years, to make a regulatory determination a determination of whether or not to promulgate a national primary drinking water regulation for at least five contaminants on the CCL. To consider a contaminant for a regulatory determination (RD), EPA requires, at a minimum, a peer-reviewed risk assessment and nationally representative occurrence data. In selecting contaminants for an RD, SDWA requires EPA to give priority to those that present the greatest public health concern while considering a contaminant's health effects on specified subgroups of the population (e.g., infants, children, pregnant women) who may be at greater risk of adverse health effects due to exposure to a contaminant. As noted above, to make a positive determination to regulate a contaminant, EPA must find that (1) a contaminant may have an adverse health effect; (2) it is known to occur or there is a substantial likelihood that it will occur in public water systems with a frequency and at levels of public health concern; and (3) in the sole judgment of the EPA Administrator, regulation of the contaminant presents a meaningful opportunity for health risk reduction for persons served by water systems. SDWA directs EPA to publish a preliminary determination and seek public comment prior to making an RD. EPA may also make RDs for contaminants not listed on the CCL if EPA finds that the statutory criteria regarding health effects and occurrence are satisfied. EPA has issued RDs for CCL 1 through CCL 3. EPA published final determinations that no regulatory action was appropriate or necessary for nine contaminants on CCL 1 (2003) and 11 contaminants (including perchlorate) on CCL 2 (2008). In the most recent RD (2016), EPA determined that regulation was not needed for four of the 116 contaminants listed on CCL 3. EPA delayed a determination on a fifth contaminant, strontium, "in order to consider additional data and decide whether there is a meaningful opportunity for health risk reduction by regulating strontium in drinking water." In 2014, when EPA published preliminary RDs for contaminants on CCL 3 (including PFOA and PFOS), UCMR 3 monitoring was underway and national occurrence data were not available. EPA did not include any PFAS among the contaminants selected for the third RD. In November 2016, EPA included PFOA and PFOS on the agency's list of unregulated contaminants for which sufficient health effect and occurrence data were available to make RDs. The next round of RDs is scheduled for 2021, although SDWA does not prevent EPA from making determinations outside of that five-year cycle. In the Fall 2019 Unified Regulatory Agenda , EPA expected to propose preliminary determinations for two PFAS PFOA and PFOS by the end of 2019, followed by final determinations by January 2021. <2.1.4. Developing Regulations and Standards for Emerging Contaminants> Once the Administrator makes a determination to regulate a contaminant, SDWA allows EPA 24 months to propose a "national primary drinking water regulation" and request public comment. EPA is required to promulgate a final rule within 18 months after the proposal. SDWA authorizes EPA to extend the deadline to publish a final rule for up to nine months, by notice in the Federal Register . For each contaminant that EPA determines to regulate, EPA is required to establish a non-enforceable maximum contaminant level goal (MCLG) at a level at which no known or anticipated adverse health effects occur and which allows an adequate margin of safety. An MCLG is based solely on health effects data and does not reflect cost or technical feasibility considerations. EPA derives an MCLG based on an estimate of the amount of a contaminant that a person can be exposed to on a daily basis that is not anticipated to cause adverse health effects over a lifetime. This amount is derived using the best available peer-reviewed studies and incorporates uncertainty factors to provide a margin of protection for sensitive subpopulations. In developing an MCLG, EPA also estimates the general population's exposure to a contaminant from drinking water and other sources (e.g., food, dust, soil, and air). After considering other exposure routes, EPA estimates the proportion of exposure attributable to drinking water (i.e., the relative source contribution). When exposure information is not available, EPA uses a default assumption that 20% of exposure to a contaminant is attributable to drinking water. EPA applies the relative source contribution to ensure that an individual's total exposure from all sources remains within the estimated protective level. The MCLG provides the basis for calculating a drinking water standard. Thus, EPA's ability to develop a drinking water regulation for a contaminant is dependent, in part, on the availability of peer-reviewed scientific studies. Drinking water regulations generally specify a maximum contaminant level (MCL) an enforceable limit for a contaminant in public water supplies. SDWA requires EPA to set the MCL as close to the MCLG as feasible. When assessing feasibility, the law directs EPA to consider the best available (and field-demonstrated) treatment technologies, taking cost into consideration. If the treatment of a contaminant is not feasible technologically or economically EPA may establish a treatment technique in lieu of an MCL. Each regulation also establishes associated monitoring, treatment, and reporting requirements. These regulations can cover multiple contaminants and, generally, establish an MCL for each contaminant covered by the regulation. Regulations generally take effect three years after promulgation. EPA may allow up to two additional years if the Administrator determines that more time is needed for public water systems to make capital improvements. (States have the same authority for individual water systems. ) The law directs EPA to review and if necessary revise each regulation every six years and requires that any revision maintain or provide greater health protection. <2.2. Health Advisories> For emerging contaminants of concern, data may be limited, particularly regarding a contaminant's potential health effects and occurrence in public water supplies. SDWA authorizes EPA to issue health advisories for contaminants in drinking water that are not regulated under the act. These advisories provide information on a contaminant's health effects, chemical properties, occurrence, and exposure. They also provide technical guidance on identifying, measuring, and treating contaminants. Health advisories include non-enforceable levels for concentrations of contaminants in drinking water. EPA sets health advisories at levels that are expected to protect the most sensitive subpopulations (e.g., nursing infants) from any deleterious health effects, with a margin of protection, over specific exposure durations (e.g., one-day, 10-day, or lifetime). These non-regulatory levels are intended to help states, water suppliers, and others address contaminants for which federal (or state) drinking water standards have not been established. Some states may use health advisories to inform their own state-specific drinking water regulations. Health advisories may be used to address various circumstances: to provide interim guidance while EPA evaluates a contaminant for possible regulation, to provide information for contaminants with limited or localized occurrence that may not warrant regulation, and to address short-term incidents or spills. EPA has issued health advisories for more than 200 contaminants to address different circumstances and subsequently established regulations for many of these contaminants. In May 2016, EPA issued health advisory levels for lifetime exposure to PFOA and PFOS in drinking water. EPA established the Lifetime Health Advisory level for PFOA and PFOS at 70 ppt, separately or combined. In calculating the health advisory level, EPA applied a relative source contribution of 20% (i.e., an assumption that 20% of PFOS and/or PFOA exposure is attributable to drinking water and 80% is from diet, dust, air or other sources). These levels are intended to protect the most sensitive subpopulations (e.g., nursing infants), with a margin of safety, over a lifetime of daily exposure. The Lifetime Health Advisories replaced Provisional Health Advisories that EPA issued in 2009 to address short-term exposures to PFOA and PFOS. <2.3. Emergency Powers Orders> SDWA Section 1431 grants EPA "emergency powers" to issue orders to abate an imminent and substantial endangerment to public health from "a contaminant that is present in or is likely to enter a public water system or an underground source of drinking water" and if the appropriate state and local authorities have not acted to protect public health. This authority is available to address both regulated and unregulated contaminants. The EPA Administrator "may take such actions as he may deem necessary" to protect the health of persons who may be affected. Actions may include issuing orders requiring persons who caused or contributed to the endangerment to provide alternative water supplies or to treat contamination. When using this authority, EPA generally coordinates closely with states. EPA reports that it has used its emergency powers under Section 1431 to require responses to PFOA and/or PFOS releases and related contamination of drinking water supplies at four sites, three of which involved the Department of Defense (DOD). Warminster Naval Warfare Center, Pennsylvania. In 2014, EPA issued an administrative enforcement order directing the U.S. Navy to address PFOS in three drinking water supply wells at and near this National Priorities List site. Former Pease Air Force Base, New Hampshire. In August 2015, EPA issued an administrative enforcement order to require the U.S. Air Force to design and construct a system to treat water systems contaminated from releases of PFOA and PFOS at the former Pease Air Force Base in New Hampshire. Horsham Air Guard Station/Willow Grove, Pennsylvania . In 2015, EPA issued an order directing the Air Guard/Air Force to treat onsite drinking water wells and to provide treatment for private offsite wells. Chemours Washington Works Facility , West Virginia/Ohio. EPA issued three emergency orders to this facility in 2002, 2006, and 2009 and amended the 2009 order in 2017 to incorporate the 2016 Lifetime Health Advisory level requiring DuPont and Chemours to offer water treatment, connection to a public water system, or bottled water where PFOA concentrations exceeded 70 ppt. <3. Related Legislation in the 116th Congress> In the 116 th Congress, more than 40 bills have been introduced to address PFAS through a broad range of actions and federal agencies. The NDAA for FY2020 (P.L 116-92) and House-passed H.R. 535 include provisions to reduce exposures to PFAS in drinking water and to prevent or remediate the contamination of groundwater, surface water, and drinking water supplies from releases of these substances. This discussion focuses primarily on legislation that amends the Safe Drinking Water Act (SDWA) or otherwise affect public water systems. Table 1 briefly describes relevant provisions of such bills offered in the 116 th Congress. In the context of SDWA, congressional attention has focused primarily on whether EPA might set drinking water standards (MCLs) for PFOA, PFOS, and/or other PFAS. SDWA directs EPA to follow a regulatory development process for contaminants, which includes consideration of technical feasibility and the assessment of health risk reduction benefits and costs, among other factors. On occasion, Congress has directed EPA to promulgate a regulation for a particular contaminant within a specified time frame. Congress has used this approach to prompt EPA to regulate certain contaminants already under review and/or to specify a deadline for issuing regulations under development. In the case of PFAS, representatives of public water systems and others have cautioned against bypassing SDWA's science-based and risk-driven process. As regulatory compliance costs are borne by communities, public water suppliers have urged that regulations be data-driven to better ensure risk reduction benefits. Others have urged "federal leadership" to provide more certainty to states and communities with contaminated water supplies. State drinking water regulators have noted that some states may lack the resources to assess and/or the authority to regulate drinking water contaminants that are not federally regulated, including PFAS. As with certain other contaminants, some states have urged EPA to set national standards. A further concern is that state-by-state actions could create public confusion regarding the safety of drinking water. <3.1. National Defense Authorization Act> Enacted December 20, 2019, the NDAA for FY2020 ( P.L. 116-92 ) contain PFAS provisions specific to DOD, EPA, and several other federal agencies. Some NDAA provisions involve the use of aqueous film forming foam, while others address DOD remediation of PFAS-contaminated drinking water, groundwater, and surface water. Among the EPA provisions, the NDAA addresses drinking water as follows: Section 7311 requires EPA to add to UCMR 5 all PFAS or categories of PFAS with validated test methods. Section 7312 amends SDWA to establish a grant program within the Drinking Water State Revolving Fund to assist water systems in addressing emerging contaminants with an emphasis on PFAS. Section 7312 authorizes appropriations of $100 million annually for FY2020-FY2024 for this purpose. <3.2. House-Passed H.R. 535> On January 10, 2020, the House passed H.R. 535 , a broad PFAS bill. H.R. 535 contains a range of provisions that would address PFAS using multiple authorities, including several EPA-administered laws. Regarding drinking water, the bill includes several specific provisions, some of which would amend SDWA: Section 5 would amend SDWA to require EPA, within two years of enactment, to promulgate a national primary drinking water regulation for PFAS with standards for PFOA and PFOS at a minimum. It would establish a separate regulatory process for PFAS to accelerate EPA's promulgation of drinking water standards. Among other provisions, this section would require EPA to propose a regulation for a PFAS within 18 months (rather than 24 months) of making a determination to regulate it. This section would allow EPA, when developing regulations, to rely on health risk information for one PFAS to make reasoned extrapolations regarding the health risks of other PFAS. It would also direct EPA to issue a health advisory within a year of finalizing a toxicity value for a single PFAS or class of PFAS. Section 6 would prohibit EPA (but not states) from imposing penalties for violations of PFAS drinking water regulations until five years after the date of promulgation (to allow systems time to make capital improvements as needed for compliance). Section 7 would add SDWA Section 1459E to direct EPA to establish a competitive grant program to assist community water systems with installing treatment technologies to address PFAS contamination. To support this program, Section 7 would authorize annual appropriations of $125 million for FY2020 and FY2021 and $100 million for FY2022-FY2024. EPA would be required to give funding priority to community water systems that (1) serve a "disadvantaged community or a disproportionately exposed community," (2) provide at-least a 10% cost share, or (3) demonstrate the capacity to maintain the treatment technology. Other bills introduced in the 116 th Congress would variously require EPA to establish an MCL for specific PFAS or for PFAS as a group. These include S. 1507 (as reported), S. 1473 , and H.R. 2377 . Additionally, S. 1507 and H.R. 2800 would require public water systems to conduct monitoring for more PFAS in drinking water. Several bills including S. 1507 , H.R. 2533 / H.R. 2741 (Title II), and H.R. 1417 / S. 611 would authorize grants for public water systems and/or households to treat PFAS in drinking water. In contrast, H.R. 2570 would direct EPA to establish PFAS manufacturing fees to support the "PFAS Treatment Trust Fund." Amounts in the trust fund would be available to EPA, without further appropriation, to make grants to community water systems and municipal wastewater treatment works for costs associated with PFAS removal. <3.2.1. Appendix. Selected Drinking-Water-Related Actions by EPA>

Per- and polyfluoroalkyl substances (PFAS) are fluorinated chemicals that have been used in an array of commercial, industrial, and U.S. military applications for decades. Some of the more common applications include nonstick coatings, food wrappers, waterproof materials, and fire suppressants. Detections of some PFAS in drinking water supplies and uncertainty about potential health effects associated with exposure to particular PFAS above certain concentrations have increased calls for the U.S. Environmental Protection Agency (EPA) to address these substances in public water supplies. For those few PFAS for which scientific information is available, animal studies suggest that exposure to particular substances above certain levels may be linked to various health effects, including developmental effects; changes in liver, immune, and thyroid function; and increased risk of some cancers. In 2009, EPA listed certain PFAS for formal evaluation under the Safe Drinking Water Act (SDWA) to determine whether regulations may be warranted. EPA has not issued drinking water regulations for any PFAS but has taken various actions to address PFAS contamination. In the 116 th Congress, Members have introduced more than 40 bills to address PFAS through various means. The National Defense Authorization Act (NDAA) for FY2020, P.L. 116-92 , includes multiple PFAS provisions regarding primarily the Department of Defense (DOD), but several involve EPA and other federal agencies. Among the EPA provisions, Title LXXIII, Subtitle A, directs EPA to require public water systems to conduct additional monitoring for PFAS and creates a grant program for public water systems to address PFAS and other emerging contaminants. The House of Representatives passed H.R. 535 , a broad PFAS bill, on January 10, 2020. Among SDWA provisions, H.R. 535 would direct EPA to issue drinking water regulations for at least two PFAS within two years and establish a separate standard-setting process for PFAS. In February 2019, EPA released its PFAS Action Plan, which discusses the agency's current and proposed actions to address these substances under its various statutory authorities. Regarding SDWA, the plan notes that EPA is following the statutory process for evaluating PFAS—particularly perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS)—to determine whether national primary drinking water regulations are warranted. The Fall 2019 Regulatory Agenda indicated that EPA planned to propose preliminary regulatory determinations for PFOA and PFOS by the end of 2019 and finalize determinations by January 2021. The absence of a national health-based drinking water standard for any PFAS has increased interest in the SDWA process for regulating contaminants. The statute prescribes a risk- and science-based process for evaluating and regulating contaminants in drinking water. The evaluation process includes identifying contaminants of potential concern, assessing health risks, collecting occurrence data (and developing reliable analytical methods necessary to do so), and making determinations as to whether a national drinking water regulation is warranted for a contaminant. PFAS include thousands of diverse chemicals, and setting drinking water standards for individual or groups of PFAS raises technical and scientific challenges. For example, SDWA requires EPA to make determinations and set standards using the best available peer-reviewed science and occurrence data. However, data on the potential health effects and occurrence are available for few of these substances. Further, EPA may face challenges in developing test methods and identifying treatment technologies for a diverse array of PFAS. Contamination of drinking water by PFAS can pose challenges for states and communities, and some have called for EPA to establish enforceable standards. State drinking water regulators have noted that many states may face significant obstacles in setting their own standards. For contaminants not regulated under SDWA, EPA is authorized to issue non-enforceable health advisories, which provide information on health effects, testing methods, and treatment techniques for contaminants of concern. In 2016, EPA established health advisory levels for PFOA and PFOS in drinking water at 70 parts per trillion (separately or combined). SDWA also authorizes EPA to take actions it deems necessary to abate an imminent and substantial endangerment to public health from a contaminant present in or likely to enter a public water system or an underground source of drinking water. Actions may include issuing orders requiring persons who caused or contributed to the endangerment to provide alternative water supplies or to treat contamination. Since 2002, EPA has used this authority to require responses to PFOA and/or PFOS contamination of water supplies associated with four sites, including three DOD sites.

crs_R46148

crs_R46148_0

<1. Introduction: How did the United States and Iran get here?1> Relations between Iran and the United States have been mostly confrontational since 1979, when Iran's Islamic Revolution removed from power the U.S.-backed government of the Shah and replaced it with a Shia-cleric dominated system. Successive U.S. administrations have treated Iranian policies as a threat to U.S. interests in the Middle East, particularly Iran's support for terrorist and other armed groups and, after 2002, its nuclear program. Following its 2018 withdrawal from the 2015 multilateral nuclear agreement with Iran (Joint Comprehensive Plan of Action, JCPOA), the Trump Administration has taken several steps in its campaign of applying "maximum pressure" on Iran. These steps include designating the Islamic Revolutionary Guards Corps-Qods Force (IRGC-QF) as a Foreign Terrorist Organization (FTO), ending a U.S. sanctions exception for the purchase of Iranian oil to bring Iran's oil exports to "zero," and deploying additional U.S. military assets to the region. Tensions have increased significantly since May 2019, as Iran (and Iran-linked forces) have apparently responded by attacking and seizing commercial ships, posing threats to U.S. forces and interests (including downing a U.S. unmanned aerial vehicle), causing destruction to some critical infrastructure in the Arab states of the Persian Gulf, and reducing compliance with the provisions of the JCPOA. On December 27, 2019, a rocket attack on a base near Kirkuk in northern Iraq killed a U.S. contractor and wounded four U.S. servicemembers and two Iraqi servicemembers. Two days later, the United States launched retaliatory airstrikes on five facilities (three in Iraq, two in Syria) used by the Iran-backed Iraqi armed group Kata'ib Hezbollah (KH), a U.S.-designated FTO to which the United States attributed the December 27 and other attacks. On December 31, 2019, supporters of Kata'ib Hezbollah and other Iran-backed Iraqi militias surrounded the U.S. Embassy in Baghdad, forcing their way into the compound and setting some outer buildings on fire. No U.S. personnel were reported harmed at the Embassy, but Secretary of Defense Mark Esper announced the deployment of an additional infantry battalion "in response to increased threat levels against U.S. personnel and facilities, such as we witnessed in Baghdad." President Trump tweeted that Iran, which "orchestrat[ed the] attack," would "be held fully responsible for lives lost, or damage incurred, at any of our facilities. They will pay a very BIG PRICE!" On January 2, 2020, the U.S. Department of Defense announced in a statement that the U.S. military had killed IRGC-QF Commander Major General Qasem Soleimani in a "defensive action." The statement cited Soleimani's responsibility for "the deaths of hundreds of Americans and coalition servicemembers" and his approval of the embassy blockade in Baghdad, and asserted that he was "actively developing plans to attack American diplomats and servicemembers in Iraq and throughout the region." According to subsequent media reports and Administration statements, Soleimani was killed in a U.S. drone strike while leaving Baghdad International Airport early on the morning of January 3 local time; KH founder and Iraqi Popular Mobilization Forces (PMF) leader Abu Mahdi Al Muhandis and other Iranian and Iraqi figures also were killed in the strike. <2. Who was Qasem Soleimani and why did the U.S. military kill him?5> Soleimani was widely regarded as one of the most powerful and influential figures in Iran, perhaps second only to Supreme Leader Ali Khamene'i, to whom Soleimani reportedly had a direct channel. As head of the IRGC-QF, Soleimani was the driving force behind Iran's external military operations, including the campaign to keep the Asad government in power in Syria. Some analysts argue that his death is likely to have a dramatic impact on Iran's capabilities, with one expert describing him as "the military center of gravity of Iran's regional hegemonic efforts" and "an operational and organization genius who likely has no peer in the upper ranks of the Islamic Revolutionary Guard Corps." Others contend that while Soleimani was undoubtedly important, "he was only the agent of a government policy that preceded him and will continue without him." U.S. officials have explained the timing and rationale behind the strike in a number of ways. Administration officials claim that Soleimani posed a direct threat and that he was involved in planning an "imminent" attack that would put U.S. lives at risk. Some Members of Congress have challenged that assertion, publicly contesting the evidence presented by the Administration in a classified setting. President Trump said in a January 10 interview that he believed Soleimani was involved in planning "large-scale attacks" on "four embassies," while Secretary Esper said on January 12 that he "didn't see" specific intelligence indicating such a threat. Some Members of Congress have also challenged this rationale in light of reports that another IRGC-QF commander was targeted in Yemen on the same day as the Soleimani strike (see below). The Administration has also argued that striking Soleimani was an attempt to deter future Iranian aggression. Striking Soleimani would appear to be of greater magnitude than previous U.S. responses, such as additional troop deployments, that were carried out with the stated intention of deterring Iran. Those responses arguably did not do so (given the December 27 rocket strike and other Iranian actions). This killing thus may be an attempt to alter Iran's decision-making calculus. Some have suggested that the December 27 death of the American contractor in Iraq and the subsequent embassy blockade compelled President Trump to order the strike. Secretary of State Mike Pompeo has underscored that the United States is not seeking further escalation. <3. How has Iran reacted?15> Iran's leaders, including Supreme Leader Khamene'i and President Hassan Rouhani, have vowed revenge for Soleimani's killing. Khamene'i declared three days of public mourning, and large crowds, estimated in the hundreds of thousands in some cases, attended funeral processions for Soleimani across Iran. One analyst argues that, because of Soleimani's personal popularity across the Iranian political spectrum, his death "will create a rally to the flag," likely strengthening hardliners in advance of legislative elections scheduled for February 2020. Others caution that the crowds, brought about in part by government coercion, are also "images that are destined for domestic consumption but more so for foreign consumption to display popular support for the regime." Early on January 8, 2020 (Iraq local time), in its first action since Soleimani's death, Iran launched several ballistic missiles targeting at least two Iraqi military bases where U.S. forces are located. The U.S. Department of Defense said the missiles, of which there were more than a dozen, were launched from Iran. Both the U.S. and Iraqi militaries reported no casualties. President Trump appeared to downplay the attack, tweeting that "All is well!" and "So far, so good!" Iranian officials conveyed different messages about the strike and whether it represented the entirety of Iran's response. Iranian Foreign Minister Javad Zarif tweeted that Iran "took & concluded proportionate measures," while Supreme Leader Khamene'i tweeted that "such military actions are not enough." Debate remains about whether Iran intended to inflict casualties in the attack: an Iranian general said that Iran "did not intend to kill," while Chairman of the Joints Chief of Staff Army General Mark Milley and Secretary Pompeo have said that Iran did have that intention. Some outside analysts contend that Iran was seeking to demonstrate its ability to kill Americans while stopping short of doing so. Further Iranian response could take several forms. Possible Iranian retaliatory measures could include mobilizing militias it supports to attack U.S. forces deployed in Iraq, Syria, and/or Afghanistan; conducting strikes on oil production facilities or tankers, U.S. military installations, or other targets in the Gulf; activating proxies and operatives to execute "more asymmetric or unconventional-style hits" through Europe, South America, or elsewhere; cyber attacks; or other responses. The confrontation also could heighten the prospect of additional Iranian steps in breach of the JCPOA (see below), perhaps dealing a "fatal blow" to the accord and international attempts to preserve it. Regarding the threat posed by possible Iranian retaliation, Secretary Pompeo said on January 5 that "there is a real likelihood that Iran will make a mistake and make a decision to go after some of our forces," while also maintaining that, "There is less risk today to American forces in the region as a result of" Soleimani's death. Iranian options may be constrained by increased domestic upheaval in the wake of its January 8, 2020, downing of a civilian airliner. Several hours after Iranian forces launched missiles at Iraqi bases, a Ukraine International Airlines passenger flight crashed shortly after taking off from Tehran, killing all 176 on board. The Iranian government stated that the crash was caused by a mechanical failure and pledged to investigate the incident, which it described as unrelated to the missile launch. However, international pressure grew in light of evidence that the plane had been shot down by the Iranian military, and after Canada (which had 57 citizens killed in the crash) and several other countries publicly charged Iran with downing the plane, the Iranian government admitted that the plane had been shot down by a Russian-made Tor-M1 (or SA-15) surface-to-air missile, attributing the firing to "human error." Demonstrators subsequently gathered in Tehran and elsewhere to demand accountability and condemn the government, with President Trump warning Iranian leaders, via Twitter, "Do not kill your protesters" and "the world is watching." <4. Is the United States considering new sanctions on Iran?29> In May 2018, President Trump signed National Security Presidential Memorandum 11, "ceasing U.S. participation in the JCPOA [Joint Comprehensive Plan of Action] and taking additional action to counter Iran's malign influence and deny Iran all paths to a nuclear weapon." The action set in motion a reestablishment of U.S. unilateral economic sanctions that affect U.S. businesses and include secondary sanctions that target commerce originating in other countries that engage in trade with and investment in Iran. On January 10, 2020, the President, as promised in the immediate aftermath of the U.S. drone strike that killed Soleimani, announced new sanctions to curtail international trade, transactions, and financing in Iran's construction, mining, manufacturing, and textile sectors. The Secretary of the Treasury, on the same day, announced that eight "senior Iranian regime officials who have advanced the regime's destabilizing objectives" were made subject to sanctions, and 17 Iranian metals producers, mining companies, and three partners in China and the Seychelles that facilitated trade in Iran's metal products were also now designated for economic restrictions. The sanctions authority announced on January 10, like the authority used to target those engaged in Iran's metals and mining sectors, can be used to target individuals and entities including financial institutions in third countries (secondary sanctions) that are found to operate in or engage in the sector, or materially assist, sponsor, or provide "financial, material, or technological support for, or goods or services to or in support of" any entity subject to sanctions for its participation in Iran's construction, mining, manufacturing, and textile sectors. Foreign financial institutions, in particular, could be subject to being denied the means to operate in the United States. No designations have been made yet under this new sanctions authority. <5. Has the strike changed Iran's approach to the JCPOA?31> Following the Trump Administration's May 2018 announcement that the United States would no longer participate in the JCPOA, Iran threatened to exceed the agreement's limits on the country's nuclear activities. In July 2019, the International Atomic Energy Agency (IAEA) verified that some of Iran's nuclear activities were exceeding these limits; the Iranian government has since increased the number of such activities, such as exceeding JCPOA-mandated limits on its heavy water stockpile. The Iranian government announced on January 5, 2020, what an official news agency report described as "the fifth and final step in reducing" Tehran's JCPOA commitments. The statement explains that Iran "will set aside the final operational restrictions under the JCPOA which is 'the restriction on the number of centrifuges,'" but provides no further details. Tehran has stated that the government will continue to cooperate with the IAEA and abide by the JCPOA's monitoring and inspections provisions. The January 5 announcement adds that "[i]n case of the removal of sanctions and Iran benefiting from the JCPOA," Iran "is ready to resume its commitments" pursuant to the agreement. This announcement does not mention Soleimani's death and is consistent with a timeline described in a November 5, 2019, speech by Iranian President Hassan Rouhani speech, in which he said, "In the next two months, we still have a chance for negotiations." <6. Which groups does Iran support in the region?37> Iran's support for armed factions in the region is a key instrument of its policy. Iran's operations in support of its allies (identified below) are carried out by the IRGC-QF, formerly headed by Soleimani. IRGC leaders generally publicly acknowledge operations in support of regional allies, although they often characterize Iran's support as humanitarian aid or protection for Shia minority populations or religious sites. Iran supplies weaponry to its allies including specialized anti-tank systems, artillery rockets, mortars, short-range ballistic missiles, and cruise missiles. Estimates of the dollar value of material support that Iran provides to its allies and proxies vary widely and are difficult to corroborate. Information from official U.S. government sources sometimes provides broad dollar figures without breakdowns or clear information on how those figures were derived. For example, the State Department's September 2018 report "Outlaw Regime: A Chronicle of Iran's Destructive Activities" asserts that Iran has spent over $16 billion since 2012 "propping up the Assad regime and supporting [Iran's] other partners and proxies in Syria, Iraq, and Yemen." However, that report appears to cite an outside estimate that does not explain how the estimates were derived. <6.1. Hezbollah41> The State Department has described Hezbollah, a Lebanon-based militia and U.S.-designated Foreign Terrorist Organization (FTO) that plays a major role in Lebanese politics, as "Iran's primary terrorist proxy group;" Iran provides Hezbollah with significant funding, training and weapons. In June 2018, Treasury Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker estimated that Iran provided Hezbollah with more than $700 million per year. According to the State Department, Iran provides Hezbollah with thousands of rockets, short-range missiles, and small arms, and has trained "thousands" of Hezbollah fighters at camps in Iran. Israeli security officials have also expressed concern that Iran may be assisting Hezbollah to develop an indigenous rocket and missile production capability. <6.2. Pro-Asad Government Forces (Syria)> Since violence broke out in Syria in 2011, Iran has provided technical assistance, training, and financial support to both the Syrian government and to pro-regime Shia militias operating in Syria. The U.S. Department of the Treasury has designated for sanctions the Iranian Ministry of Intelligence and Security (MOIS), the IRCG-QF, and Iran's national police pursuant to Executive Order 13572 (April 2011), for assisting the Syrian government in its violent crackdown on protestors. Iran also has facilitated the travel of Shia militia fighters from Iraq, Afghanistan, and Pakistan into Syria to bolster the Asad government. Iran has directly backed the activities of these militia fighters with armored vehicles, artillery, and drones. Iran also has provided Syria with billions of dollars in credit to purchase oil, food, and import goods. In mid-2019, the United States imposed sanctions on Iranian ships and shipping facilitators involved in Iranian oil shipments to Syria. <6.3. Iraqi Militias> Iran supports a number of armed groups in Iraq, including U.S. designated terrorist organizations such as Kata'ib Hezbollah (KH), Asa'ib Ahl al Haq (AAH), and Harakat Hezbollah al Nujaba. Iran-linked groups in Iraq directly targeted U.S. forces from 2003 through 2011, and U.S. officials blame Iran-linked Iraqi groups for a series of indirect fire attacks on U.S. and Iraqi facilities hosting U.S. civilian and military personnel since 2018. The 115 th and 116 th Congresses have 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. On January 3, 2020, the State Department designated the AAH as a Foreign Terrorist Organization and two of the group's leaders, Qa'is Khazzali and his brother Laith, as Specially Designated Global Terrorists under E.O.13224, as amended by E.O. 13886. These designations follow action taken by the Department of the Treasury on December 6, 2019, to designate the brothers pursuant to E.O. 13818 for their involvement in serious human rights abuses in Iraq, notably approving lethal force against protestors. Several Iraqi militia forces have vowed revenge against the United States and stated their renewed commitment to expelling U.S. forces from Iraq, but some others have called for a measured approach and disavowed potential attacks on non-military targets as a means of fulfilling their stated objectives. For example, Kata'ib Hezbollah released a statement in the aftermath of the Iranian missile attack on Iraq saying "emotions must be set aside" to further the project of expelling the United States. On January 8, Qa'is al Khazali said that the response to the killing of Soleimani and Muhandis "will be no less than the size of the Iranian response. That is a promise." Later Khazali denied responsibility for a January 8 rocket attack targeting the U.S. Embassy while insisting on U.S. military withdrawal and vowing an "earthshattering" response. Iran has sometimes intervened militarily 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. <6.4. Houthis (Yemen)> Iranian leaders have not historically identified Yemen as a core Iranian security interest, but they have given some material support to the Shia Houthi rebels that are fighting Saudi Arabia and the coalition that it leads in support of the Yemeni government. In response to the Saudi-led air campaign in Yemen, the Houthis have fired ballistic missiles on sites within Saudi Arabia on several occasions; Saudi Arabia, with U.S. backing, accuses Iran of providing those missiles. The increasingly sophisticated nature of Iran's support for the Houthis could suggest that Iran perceives the Houthis as a potential proxy to project power on the southwestern coast of the Arabian Peninsula. On the other hand, Special Representative for Iran and Senior Advisor to the Secretary of State Brian Hook stated on December 5, 2019, that Iran's continued involvement in the conflict amidst a nascent Saudi-Houthi de-escalation process since September 2019 shows that "Iran clearly does not speak for the Houthis . Iran is trying to prolong Yemen's civil war to project power." In December 2019, the U.S. government offered up to $15 million for information concerning Yemen-based IRGC-QF leader Abdul Reza Shahla'i. Shahla'i reportedly was targeted by a strike or raid in Yemen on January 3, 2020, the day of Soleimani's killing. Unnamed U.S. officials reportedly confirmed the operation, which was unsuccessful, on January 10, leading some analysts and some Members of Congress to question the Administration's assertion that the Soleimani strike was justified by an "imminent threat." <6.5. Other groups> In addition to the entities above, the U.S. government alleges that Iran provides support to other regional groups, including Palestinian groups Hamas and Islamic Jihad, the Bahraini group Al Ashtar Brigades, and the Afghan Taliban. <7. How have Iraqis reacted and how does this impact Iraqi policy and government formation?58> Iraqi officials protested the December 29 U.S. airstrikes on KH personnel as a violation of Iraqi sovereignty, and, days later, KH members and other figures associated with Iran-linked militias and PMF units marched to the U.S. Embassy in Baghdad and damaged property, setting outer buildings on fire. Iraqi officials and security forces reestablished order outside the embassy, but tensions remained high, with KH supporters and other pro-Iran figures threatening further action and vowing to expel the United States from Iraq by force if necessary. As noted, along with Soleimani, the U.S. airstrike that hit his convoy also killed KH founder and PMF leader Jamal Ja'far al Ibrahimi (commonly referred to as Abu Mahdi al Muhandis). Muhandis was one of the key Iraqi leaders aligned with Iran who worked with Soleimani to develop and maintain Iran's ties to armed groups in Iraq over the last 20 years; Soleimani long served as a leading Iranian emissary to Iraqi political and security figures. The death of Al Muhandis is expected to require renegotiation in the relationships among Iran-aligned Iraqi militias and shape the PMF's future. The U.S. operation was met with shock in Iraq, and Prime Minister Adel Abd al Mahdi and President Barham Salih issued statements condemning the strike as a violation of Iraqi sovereignty. The prime minister called for and then addressed a special session of Iraq's unicameral legislature, the Council of Representatives (COR), on January 5, recommending that the quorum of legislators present vote to direct his government to ask all foreign military forces to leave the country. Most Kurdish and Sunni COR members reportedly boycotted the session. Those COR members present adopted by voice vote a parliamentary decision directing the Iraqi government to withdraw its request to the international anti-IS coalition for military support; remove all foreign forces from Iraq and end the use of Iraq's territory, waters, and airspace by foreign militaries; protest the U.S. airstrikes as breaches of Iraqi sovereignty at the United Nations and in the U.N. Security Council; and investigate the U.S. strikes and report back to the COR within seven days. On January 6, Prime Minister Abd al Mahdi met with U.S. Ambassador to Iraq Matthew Tueller and informed him of the COR's decision, requesting that the United States begin working with Iraq to implement the COR decision. In a statement, the prime minister's office reiterated Iraq's desire to avoid war, to resist being drawn into conflict between outsiders, and to maintain cooperative relations with the United States based on mutual respect. Amid subsequent reports that some U.S. military forces in Baghdad are repositioning for force protection reasons and potentially "to prepare for onward movement," Secretary Esper stated, "There has been no decision made to leave Iraq, period." On January 9, Prime Minister Abd al Mahdi asked Secretary of State Michael Pompeo to "send delegates to Iraq to prepare a mechanism to carry out the parliament's resolution regarding the withdrawal of foreign troops from Iraq." On January 10, the State Department released a statement saying "At this time, any delegation sent to Iraq would be dedicated to discussing how to best recommit to our strategic partnership, not to discuss troop withdrawal, but our right, appropriate force posture in the Middle East." Secretary of State Michael Pompeo said that Prime Minister Abd al Mahdi's office had not characterized their conversation accurately, and said We are happy to continue the conversation with the Iraqis about what the right structure is. Our mission set there is very clear: We've been there to perform a training mission to help the Iraqi security forces be successful and to continue the campaign against ISIS, the counter-Daesh campaign. We're going to continue that mission. But as the as times change and we get to a place where we can deliver upon what I believe and the President believes is our right structure, with fewer resources dedicated to that mission, we will do so. Prime Minister Abd al Mahdi's December 2019 resignation marked the beginning of what may be an extended political transition period in Iraq that reopens several contentious issues for debate and negotiation. Principal political decisions now before Iraqi leaders concern (1) identification and endorsement of a caretaker prime minister and cabinet, (2) implementation of adopted electoral system reforms, and (3) the proposed holding of parliamentary and provincial government elections in 2020. Following any national elections, government formation negotiations would recur, taking into consideration domestic and international developments over the interim period, including the fate of foreign military efforts in Iraq and the state of U.S.-Iran-Iraq relations. Leaders in Iraq's Kurdistan Regional Government have endorsed the continuation of foreign military support for Iraq, but may be wary of challenging the authority of the national government if Baghdad issues departure orders to foreign partners. On January 7, Kurdistan Democratic Party leader and former KRG President Masoud Barzani said, "we cannot be involved in any proxy wars." Prime Minister Abd al Mahdi traveled to Erbil to consult with Barzani on January 11, generating speculation that Abd al Mahdi may be seeking support for a re-nomination as prime minister. <8. What is the diplomatic basis for the U.S. military presence in Iraq? 66> In 2014, the Iraqi government submitted two requests to the United Nations Security Council asking for international training, advice, and military assistance in combatting the threats posed by the Islamic State organization. These invitational letters have provided the underlying diplomatic basis for the presence of most U.S. and other international military forces in Iraq since 2014. Supplementary bilateral agreements between the Iraqi government and troop contributing countries set terms for the continued deployment of foreign forces in Iraq, and the presence of U.S. troops contributing to Operation Inherent Resolve (the U.S.-led international coalition to defeat the Islamic State), related training, and advisory support is governed by an exchange of diplomatic notes agreed to in 2014. According to former Special Presidential Envoy for the Global Coalition to Counter ISIL Brett McGurk, the 2014 U.S.-Iraq diplomatic notes, which are not public, contain a one year cancelation clause. The executive authority of the Iraqi government (the Prime Minister) may seek to amend or revoke requests for international assistance submitted to the United Nations or reached with other governments at its discretion: Iraq's constitution does not require the Iraqi executive to seek the approval of legislators in the Council of Representatives. As noted above, Prime Minister Abd al Mahdi and Secretary of State Pompeo have had initial conversations regarding the future of the U.S. presence in Iraq. <9. Is the United States considering sanctions on Iraq? 69> President Trump has threatened to impose sanctions on Iraq, if Iraq forces U.S. troops to withdraw on unfriendly terms. Depending on the form such sanctions might take, they could elicit reciprocal hostility from Iraq and could complicate Iraq's economic ties to its neighbors and U.S. partners in Europe and Asia. If denied opportunities to build economic ties to the United States and U.S. partners, Iraqi leaders could instead mover closer to Iran, Russia, and/or China with whom they have already established close ties. Since 2018, Iraqi leaders have sought and received temporary relief from U.S. sanctions on Iran, in light of Iraq's continuing dependence on purchases of natural gas and electricity from Iran. The Trump Administration has serially granted temporary permissions for these transactions to continue, while encouraging Iraq to diversify its energy relationships with its neighbors and to become more energy independent. The Administration's most recent such sanction exemption for Iraq is set to expire in February 2020. Some press reporting suggests that Administration officials have begun preparing to implement the President's sanctions threat if necessary and considering potential effects and consequences. On May 19, 2019, the Trump Administration renewed the national emergency with respect to the stabilization of Iraq declared in Executive Order 13303 (2003) as modified by subsequent executive orders. Sanctions could be based on the national emergency declared in the 2003 Executive Order, or the President could declare that recent events constitute a new, separate emergency under authorities stated in the National Emergency Act and International Emergency Economic Powers Act (NEA and IEEPA, respectively). Sanctions under IEEPA target U.S.-based assets and transactions with designated individuals; while a designation might not reap significant economic disruption, it can send a significant and purposefully humiliating signal to the international community about an individual or entity. The National Emergencies Act, at 50 U.S.C. 1622, provides a legislative mechanism for Congress to terminate a national emergency with enactment of a joint resolution of disapproval. Short of declaring a national emergency, however, the President has broad authority to curtail foreign assistance (throughout the Foreign Assistance Act of 1961 (22 U.S.C. 2151 et seq.), and related authorizations and appropriations), sales and leases of defense articles and services (particularly Section 3 of the Arms Export Control Act; 22 U.S.C. 2753), and entry into the United States of Iraqi nationals (Immigration and Nationality Act; particularly at 8 U.S.C. 1189). <10. How might the strike and Iraqi reactions impact the U.S. military presence in Iraq and the U.S.-led counter-ISIS campaign (Operation Inherent Resolve)?74> <10.1. Iraq> More than 5,000 U.S. military personnel and hundreds of international counterparts remain in Iraq at the Iraqi government's invitation, subject to bilateral executive-to-executive agreements. Since Soleimani's death, Canada and Germany have announced withdrawal of some of their training forces from Iraq. Combined Joint Task Force Operation Inherent Resolve (CJTF-OIR) announced on January 5 that U.S. training and counter-IS operations were being temporarily paused to enable U.S. forces to focus on force protection measures. U.S. officials have reported that through October 2019, the Islamic State group in Iraq continued "to solidify and expand its command and control structure in Iraq, but had not increased its capabilities in areas where the Coalition was present." CJTF-OIR judged that IS fighters "continued to regroup in desert and mountainous areas where there is little to no local security presence" but were "incapable of conducting large-scale attacks." Iraqi Security Forces (ISF), Counter Terrorism Service (CTS) and Popular Mobilization Forces (PMF) continue to conduct clearance, counterterrorism, and hold missions against IS fights across northern, central, and western Iraq. Some of these operations are conducted without U.S. and coalition support, while others are partnered with U.S. and coalition forces or supported by U.S. and coalition forces. In its latest public oversight reporting, CJTF-OIR described the Iraqi Security Forces as lacking sufficient personnel to hold and constantly patrol remote terrain. According to CJTF-OIR reporting to the DOD inspector general, Iraq's Counterterrorism Service (CTS) has "dramatically improved" its ability "to integrate, synchronize, direct, and optimize counterterrorism operations," and some CTS brigades are able to sustain unilateral operations. According to U.S. officials, ISF units are capable of conducting security operations in and around population centers and assaulting identified targets but many lack the will and capability to "find and fix" targets or exploit intelligence without assistance from coalition partners. According to November 2019 reporting CJTF-OIR said that most commands within the ISF will not conduct operations to clear ISIS insurgents in mountainous and desert terrain without Coalition air cover, intelligence, surveillance, and reconnaissance (ISR), and coordination. Instead, ISF commands rely on the Coalition to monitor "points of interest" and collect ISR for them. Despite ongoing training, CJTF-OIR said that the ISF has not changed its level of reliance on Coalition forces for the last 9 months and that Iraqi commanders continue to request Coalition assets instead of utilizing their own systems. These conditions and trends suggest that while the capabilities of IS fighters remain limited at present, IS personnel and other armed groups could exploit persistent weaknesses in ISF capabilities to reconstitute the threats they pose to Iraq and neighboring countries. This may be particularly true with regard to remote areas of Iraq or under circumstances where security forces remain otherwise occupied with crowd control or force protection measures. A reconstituted IS threat might not reemerge rapidly under these circumstances, but the potential is evident. U.S. and coalition training efforts have shifted to a train-the-trainer and Iraqi ownership approach under the auspices of OIR's Reliable Partnership initiative and the NATO Training Mission in Iraq. Reliable Partnership was redesigned to focus on building a minimally viable counterterrorism capacity among Iraqi forces, with other outstanding capability and support needs to be reassessed after September 2020. In the days following the Soleimani killing, Coalition and NATO training efforts were temporarily suspended, and some countries announced plans to withdraw forces participating in Coalition and NATO training programs. If such trends continue, they could accelerate an already planned transition to greater Iraqi ownership of training efforts and an international reassessment of Iraq's needs and terms for longer-term partnership. <10.2. Syria> The January 5 CJTF-OIR statement that announced the pause in counter-IS operations in Iraq following Soleimani's death, referenced above, did not mention the status of U.S. operations against the Islamic State in Syria, where roughly 600 U.S. forces are currently based. Various observers have argued that the absence of ongoing U.S. counterterrorism pressure is likely to provide the Islamic State with the operational space necessary to reconstitute itself in the region. U.S. forces in Syria have at times come into direct conflict with Iran-backed militia forces. In 2017, U.S. forces in Syria conducted strikes against pro-Asad militia fighters that infiltrated the de-confliction area around the U.S. garrison at At Tanf. In late 2019, U.S. forces targeted the Iran-backed militia Kata'ib Hezbollah in Iraq and eastern Syria, in response to an attack by the group on U.S. forces in Kirkuk. U.S. personnel in Syria may be vulnerable to additional attacks by Iran-backed forces. <11. Under what authority did the U.S. military carry out the strike on Soleimani?80> On January 4, 2020, President Trump submitted a notification to the Speaker of the House and President Pro Tempore of the Senate of the Soleimani drone strike, as required by Section 4(a) of the War Powers Resolution ( P.L. 93-148 ; 50 U.S.C. 1543(a)(1)), which requires notification within 48 hours of U.S. forces being introduced into conflict or into a situation that could lead to conflict. That notification, pursuant to the War Powers Resolution, also is to set out the constitutional and legislative authority for the action. According to a media report, citing "congressional officials," the notification was classified in its entirety by the Trump Administration, and its contents therefore have not been made publicly available. Speaker Nancy Pelosi criticized the decision to classify the notification in its entirety as "highly unusual." In statements after the strike, National Security Adviser Robert O'Brien asserted that the Authorization for Use of Military Force Against Iraq Resolution of 2002 ("2002 AUMF"; P.L. 107-243 ) provided the President authority to direct the strike against General Soleimani in Iraq. Congress enacted the 2002 AUMF prior to the 2003 U.S. invasion of Iraq that toppled the government of Saddam Hussein, authorizing the President to use the U.S. military to enforce United Nations Security Council resolutions targeting the Hussein regime and to "defend the national security of the United States against the continuing threat posed by Iraq." The Obama Administration had asserted that U.S. military action after 2014 against the Islamic State in Iraq and Syria was authorized pursuant to the 2002 AUMF as well as the post-September 11, 2001 Authorization for Use of Military Force ("2001 AUMF"; P.L. 107-40 ). In a March 2018 report to Congress, the Trump Administration argued that the 2002 AUMF "has always been understood to authorize the use of force for the related dual purposes of helping to establish a stable, democratic Iraq and for the purpose of addressing terrorist threats emanating from Iraq." Speaking in the context of the campaign against the Islamic State, the report stated that the 2002 AUMF "contains no geographic limitation," and asserted that the statute permits the use of military force to protect Iraq outside the territory of Iraq itself if necessary. In a June 2019 letter, the State Department explained that it determined that 2002 AUMF authority permitted the use of military force against Iran "as may be necessary to protect U.S. and partner forces engaged in counterterrorism operations or operations to establish a stable, democratic Iraq." To the extent the Administration considers the actions of Soleimani and the IRGC (designated by President Trump in April 2019 as a terrorist organization) as creating a threat to Iraq's stability or a threat of terrorism, as well as a necessity to protect U.S. or partner forces, this interpretation of the 2002 AUMF would seem to authorize operations such as the Soleimani drone strike both within and outside Iraq. <12. How have Members of Congress responded legislatively or otherwise?85> Reaction from Members of Congress to the drone strike has been divided, with some Members praising the decision as a blow to Iran's operations placing U.S. and partner forces at risk of attack, and others criticizing the President's decision as possibly precipitating armed conflict between the United States and Iran, and increasing the risk of broader instability in the Middle East. Some Members, including Speaker Nancy Pelosi, have decried the President's failure to inform and consult with Congress prior to the strike, and have questioned the President's authority to conduct such military action. In response to the strike, Senators Tim Kaine and Richard Durbin introduced a joint resolution ( S.J.Res. 63 ) to "direct the removal of United States Armed Forces from hostilities against the Islamic Republic of Iran that have not been authorized by Congress." The resolution states that neither the 2002 AUMF nor the 2001 AUMF provide specific authority to the President to use military force against Iran, and that Congress has not provided such specific authority in any legislation. The resolution further finds that there exists a "conflict between the United States and the Islamic Republic of Iran" that constitutes, pursuant to Section 4(a)(1) of the War Powers Resolution ( P.L. 93-148 ; 50 U.S.C. 1543(a)(1)), "hostilities or a situation where imminent involvement in hostilities is clearly indicated by the circumstances," into which U.S. armed forces have been introduced without authorization. The resolution therefore directs the President to remove U.S. armed forces from hostilities with Iran, "or any part of its government or military," within 30 days of the resolution's enactment. The resolution was introduced pursuant to Section 1013 of the Department of State Authorization Act, Fiscal Years 1984 and 1985 (50 U.S.C. 1546a), which permits expedited consideration in the Senate of a joint resolution that "requires the removal of United States Armed Forces engaged in hostilities" without specific congressional authorization. On January 7, 2020, Representative Ilhan Omar introduced H.J.Res. 82 , the text of which is identical to S.J.Res. 63 . After indicating that he had agreed to some changes to S.J.Res. 63 , Senator Kaine introduced an amended version of his original proposal, S.J.Res. 68 , on January 9, 2020. Instead of directing the President to "remove" U.S. armed forces from hostilities with Iran, S.J.Res. 68 would direct the President to "terminate the use of U.S. armed forces for hostilities" with Iran. This change might be a reflection of concern that requiring "removal" of U.S. armed forces might precipitate changes in current deployments, including possible withdrawal of U.S. armed forces in Iraq. The new proposal also eliminates references to Trump Administration statements and policy with regard to Iran. On January 3, 2020, Representative Ro Khanna and Senator Bernie Sanders indicated their intent to introduce legislation to prohibit funding for the U.S. use of military force against Iran. Representative Khanna introduced his bill, H.R. 5543 , with 47 cosponsors, on January 7. The bill would state that neither the 2002 AUMF nor 2001 AUMF, nor any other existing provision of law, may be construed to provide authority to use military force against Iran, and would prohibit the use of federal funds to use force against Iran without such specific authorization. The proposed legislation is identical to an amendment adopted in the House version of the National Defense Authorization Act for Fiscal Year 2020, but that was not included in the final version of the act. Senator Sanders introduced a similar bill, S. 3159 , on January 8, 2020. On January 8, 2020, Senator Jeff Merkley introduced S.J.Res. 64, which consists of a provision specifying that neither the Authorization for Use of Military Force Against Iraq Resolution of 2002 ("2002 AUMF"; P.L. 107-243 ), nor the post-September 11, 2001 Authorization for Use of Military Force ("2001 AUMF"; P.L. 107-40 ) "may be interpreted as a statutory authorization for the use of military force against the Islamic Republic of Iran." On January 8, 2020, Representative Elissa Slotkin introduced, pursuant to Section 5(c) of the War Powers Resolution (50 U.S.C. 1544(c)), a concurrent resolution ( H.Con.Res. 83 ) "to terminate the use of United States Armed Forces to engage in hostilities in or against Iran." This resolution would state that Congress has not enacted an authorization for the President to use military force against Iran, and that any decision to use force against Iran should be explained both to Congress, as required by Section 3 of the War Powers Resolution, and the American people. It explains, however, that the "United States has an inherent right to self-defense against imminent armed attacks." In the operative provision, it would therefore directs the President "to terminate the use of United States Armed Forces to engage in hostilities in or against Iran or any part of its government or military," unless Congress specifically authorizes such use of the armed forces, or if such force is necessary and appropriate to defend the United States or its armed forces against "imminent attack." Senator Tom Udall introduced a companion resolution in the Senate, S.Con.Res. 33 , on January 9, 2020. The House debated H.Con.Res. 83 on January 9, 2020. During debate, proponents of the resolution argued that the President had taken military action that made wider conflict with Iran more likely, and that it was the constitutional duty of the Congress to require the President to obtain specific legislative authorization for any further military action against Iran only after the Congress had a full opportunity to debate such authorization. Opponents of the measure stated that the President's strike on Soleimani was lawful and necessary to protect the national security of the United States and the safety of U.S. armed forces in Iraq and the Middle East region, and that congressional action to limit the President from carrying out further military action was divisive and would embolden Iran and other enemies of the United States. After general debate, the House voted to adopt H.Con.Res. 83 by a 224-194 roll call vote. The measure will now move to the Senate, where it is to be referred to the Senate Foreign Relations Committee. As a Section 5(c) concurrent resolution receiving privileged consideration pursuant to Section 7 of the War Powers Resolution (50 U.S.C. 1546), the Committee is required to report the measure to the full Senate for consideration no later than 15 calendar days after referral, upon which the measure becomes the pending business of the Senate and shall be voted upon in the Senate within three calendar days, unless the Senate votes to alter the timeframe by the yeas and nays. <13. Are the resolutions limiting military action against Iran binding on the President?> Regarding concurrent resolutions. H.Con.Res. 83 was introduced pursuant to Section 5(c) of the War Powers Resolution (50 U.S.C. 1544(c)), which sets out a process by which Congress can direct termination of an unauthorized presidential use of military force through concurrent resolution, adopted in both houses of Congress but not presented to the President for signature. It has been argued that this provision constitutes an unconstitutional "legislative veto," essentially a legislative action that is intended to have the effect of enacted law but without the step of presentment to the President. In invalidating an unrelated statute as constituting a "legislative veto," the Supreme Court in INS v. Chadha determined that all "legislative acts" are subject to the bicameralism and presentment requirements of Article I, 7. The Court defined a legislative act as any action "properly [] regarded as legislative in its character and effect" or taken with "the purpose and effect of altering the legal rights, duties and relations of persons ... outside the Legislative Branch." The courts, however, have not ruled expressly on the constitutionality of Section 5(c), and it is not settled that Section 5(c) resolutions necessarily involve congressional reversal of executive branch action by a simple or concurrent resolution, when such decisions were taken pursuant to a previous congressional delegation of authority to such agency by legislation. It could be argued that Congress adopting a concurrent resolution directing withdrawal from unauthorized hostilities is not a legislative act to repeal existing authority previously delegated by Congress. Congress in the War Powers Resolution has not purported to delegate use of military force decision making authority to the President, setting a legislative veto to reverse such decisions when it sees fit. Nor has it delegated authority to the President to order any specified use of military force. Instead, it can be argued that Congress is indicating its will to formally disapprove an originally unauthorized use of military force, which arguably would not alter the legal rights or duties of the President. Such a resolution would act to reiterate Congress's position, stated in Section 2 of the War Powers Resolution, that the Constitution grants only Congress, not the President, the authority to introduce U.S. armed forces into hostilities in all cases except defense against an armed attack on the United States, its possessions, or U.S. armed forces. Regarding Joint Resolutions. A concurrent resolution evidencing the will of Congress to direct the President to withdraw from hostilities that the War Powers Resolution asserts is already unauthorized may nonetheless have less than the desired effect, as it is in one conception merely a reiteration of congressional interpretation of the limits of presidential war powers, an interpretation already rejected in most instances by the President. Using a joint resolution rather than a concurrent resolution as a vehicle to direct the President to cease action against Iran, S.J.Res. 63 (for example) was introduced under Section 1013 of the Department of State Authorization Act, Fiscal Years 1984 and 1985 (50 U.S.C. 1546a). Congress enacted Section 1013 in the wake of the Chadha decision to provide a separate process by which Congress could expedite consideration of a joint resolution that would require presentment to the President rather than using an expedited Section 5(c) resolution. Utilization of this provision might be preferred by some Members of Congress, as it avoids the legislative veto issue, and perhaps provides a more forceful vehicle by which to require an end to unauthorized presidential introduction of U.S. armed forces into hostilities. On the other hand, such joint resolutions presented to the President are likely to receive a presidential veto, requiring two-thirds majorities in both Houses if such resolutions are to become law. This was a situation Congress sought to avoid when enacting the War Powers Resolution, as it placed a severe test on Congress to act to preserve its role in determining whether the United States would enter a military conflict. <14. How has the State Department responded to protect its overseas personnel and posts in the Middle East and elsewhere from possible Iranian retaliation?95> Secretary Pompeo has said that although U.S. personnel in the Middle East are safer following the removal of Soleimani from the battlefield, there remains "an enormous set of risks in the region" and that the United States is "preparing for each and every one of them." Secretary Pompeo has also remarked that the United States will ensure that its overseas diplomatic facilities are as "hardened as we can possibly get them" to defend against possible Iranian action. Following the December 31 blockade of the U.S. Embassy in Baghdad, 100 Marines assigned to the Special Purpose Marine Air-Ground Task Force, Crisis Response Central Command (SPMAGTF-CR-CC) were deployed at the State Department's request to reinforce the Embassy. Analysts note that this Task Force, which was created after the 2012 attack on a U.S. post in Benghazi, is capable of providing compound defense through the use of air, ground, and, when necessary, amphibious operations. These additional forces augment the Marine Security Guard (MSG) detachment and other security personnel already present at the Embassy. MSGs have worked with the State Department to protect and safeguard U.S. overseas posts for over 60 years. Neither the State Department nor the Department of Defense disclose the number of MSGs serving at each overseas post. General Milley has expressed confidence regarding Embassy Baghdad's security, stating that it is unlikely to be overrun and warning that air and ground capabilities there mean that anyone who attempts to do so "will run into a buzzsaw." Some analysts maintain that because Iran and its proxies have previously demonstrated their capability to perpetrate attacks throughout the world, the State Department must mitigate risks to the safety of U.S. personnel not only in the Middle East but worldwide. State Department regulations enable the Principal Officer at each overseas post (at an embassy, this would be the ambassador), Regional Security Officer (or RSO, the senior Diplomatic Security Service special agent serving at post), and the post's Emergency Action Committee, with the support of Bureau of Diplomatic Security personnel in Washington, DC, to evaluate threats and develop and implement security policies and programs. Some analysts have suggested that past Iranian behavior indicates that the State Department should give special consideration to the threat posed by kidnapping or attacks focused on so-called "soft targets," which include buildings such as schools, restaurants, or other public spaces that often are frequented by diplomats or their families. The State Department could also choose to close or change the status of an overseas post in response to evolving threat assessments. This occurred previously in Iraq, when in September 2018 the State Department announced that the U.S. Consulate General in Basrah would be placed on ordered departure, meaning that all U.S. personnel would be evacuated from post. Secretary Pompeo has stated that the State Department is continuing to evaluate the appropriate overseas diplomatic posture for the United States given the Iranian threat. <15. How does the killing of Qasem Soleimani impact Israel and its security?105> As policymakers and analysts consider how Iran might respond to the killing of Soleimani, the situation clearly has implications for the state of Israel. Israel and Iran are already engaged in low-level conflict. Since 2017, this has reportedly included periodic cross-border exchanges of fire between Israel and Iran-supported groups in Syria and Lebanon, as well as numerous Israeli air strikes against Iran-linked targets in both countries and Iraq. Israel has indicated that Iranian transfers of precision-guided rockets and missiles to groups, such as Hezbollah in Lebanon, and Iran's presence in Syria, have made the situation on its northern front one of the top threats to Israel's national security (alongside Iran's nuclear program). As a result of Soleimani's killing, the Israel Defense Forces have been placed on high alert. Israel has an extensive network of missile defense systems, and Congress annually appropriates funds for joint U.S.-Israeli missile defense research, development, and production. On January 6, the United States Embassy in Israel released a travel advisory, warning of the possibility of rocket fire against the country. However, that same day, senior Israeli military officials held a security cabinet meeting in which they expressed doubt that Iran would target Israel. Prime Minister Binyamin Netanyahu praised President Trump in connection with Soleimani's killing, stating, "Just as Israel has the right of self-defense, the United States has exactly the same right." Beyond Israel, there is some concern that Iran could retaliate against Jewish targets worldwide. In 1994, 85 people were killed in a bombing of a Jewish community center in Buenos Aires, Argentina. In 2012, a suicide bomber killed five Israeli tourists in Bulgaria. Various sources have linked Hezbollah and Iran to these attacks. <16. What has been the European reaction and are there implications for transatlantic relations?115> Differences over Iran have strained U.S.-European relations during the Trump Administration. The EU opposes the Administration's decision to withdraw from the JCPOA, and has sought to work with Iran and other signatories to prevent its collapse. The EU shares other U.S. concerns about Iran, however, including those related to Iran's ballistic missile program and support for terrorism. On January 6, 2020, French President Emmanuel Macron, German Chancellor Angela Merkel, and UK Prime Minister Boris Johnson released a joint statement asserting that We have condemned the recent attacks on coalitions [sic] forces in Iraq and are gravely concerned by the negative role Iran has played in the region, including through the IRGC and the Al-Qods force under the command of General Soleimani. There is now an urgent need for de-escalation. We call on all parties to exercise utmost restraint and responsibility. The current cycle of violence in Iraq must be stopped. We specifically call on Iran to refrain from further violent action or proliferation, and urge Iran to reverse all measures inconsistent with the JCPOA. The statement additionally expressed concern about security and stability in Iraq and emphasized the importance of continuing to combat the Islamic State. In a subsequent statement following a meeting of NATO countries, NATO Secretary General Jens Stoltenberg reiterated many of these points, similarly expressing concern about Iran's destabilizing behavior and calling for de-escalation. European countries are significant contributors to Global Coalition to Defeat ISIS and the NATO training and advisory mission in Iraq, both of which suspended operations following the Soleimani strike. Germany and several other European nations reportedly began moving troops out of Iraq in the days after Soleimani's death. Additionally, in recent years, European countries have stepped up criticism of Iran for alleged Iranian plots to assassinate dissidents in Europe. The U.S. State Department said in a 2018 report that Iranian-sponsored terrorist attacks in Europe, after a "brief lull in the 1990s and early 2000s," are "on the rise." In January 2019, in response to a Dutch letter linking Iran to assassinations of Dutch nationals of Iranian origin in 2015 and 2017, the EU imposed sanctions on the internal security unit of Iran's Intelligence ministry and two Iranian operatives for sponsoring acts of terrorism. <17. What is the U.S. military force posture in the region?123> Since May 2019, the United States has added forces and military capabilities in the region, beginning with the accelerated deployment of the USS Abraham Lincoln (which was relieved in December 2019 by the USS Harry S. Truman Carrier Strike Group). The additional deployments as of October 2019 had added approximately ten thousand U.S. military personnel to a baseline of between 60,000-80,000 U.S. forces in and around the Persian Gulf, which include those stationed at military facilities in the Arab states of the Gulf Cooperation Council (GCC: Saudi Arabia, Kuwait, UAE, Qatar, Oman, and Bahrain), and those in Iraq and Afghanistan. DOD officials indicated that the additional deployments are prudent defensive measures, allowing the U.S. to respond to aggression, if necessary. Other key recent deployments include the following: On December 31, 2019, DOD announced deployment to Kuwait of an infantry battalion from the Immediate Response Force (IRF) of the 82 nd Airborne Division, with 750 soldiers to deploy immediately and additional forces from the IRF (about 3,000 military personnel) to deploy thereafter. A small (likely platoon-size) element of the 173 rd Brigade is also deploying to the region, possibly to Lebanon. On January 5, 2020, DOD officials announced that a task force of U.S. Special Operations Forces, including Rangers, was deployed to the Middle East. On January 6, 2020, reports indicated that the 26 th Marine Expeditionary Unit was being directed to the Mediterranean. On January 6, 2020, it was reported that DOD would be sending six B-52 Stratofortress bombers to Diego Garcia in the Indian Ocean, to be available for operations in Iran, if ordered. <18. How do recent regional deployments align with broader U.S. strategy?131> According to key Trump Administration documents, including the 2017 National Security Strategy and 2018 National Defense Strategy, effectively competing economically, diplomatically, and militarily with China and Russia is the key national security priority facing the United States today. Accordingly, activities that can bolster the United States within this competition are, at least in theory, to be prioritized over other strategic challenges including countering violent extremist groups, a long-standing and critical challenge in the CENTCOM area of responsibility (AOR). Some observers contend that a shift in U.S. resources away from the CENTCOM AOR and towards Europe and Asia is therefore necessary. CENTCOM Commander General Kenneth McKenzie noted in his questions for the record associated with his December 2018 confirmation hearing: The 2018 National Defense Strategy (NDS) will reduce U.S. force posture in the Central Region and realign resources to goals with higher priority in the NDS. The shift of U.S. resources away from USCENTCOM presents a challenge to the command's ability to provide deterrence with forward stationed combat credible forces. This will require USCENTCOM to develop new concepts and strengthen its relationships with regional partners and allies. Additionally, reduced U.S. presence provides an opportunity for competitors to potentially increase their influence with our partners. As stated earlier, this creates increased risk if USCENTCOM also loses funding which will likely be taken from engagement and security cooperation programs necessary to offset our reposturing-both real and perceived. Despite this intended strategic reprioritization, Iran has long been viewed as a central challenge to the United States and U.S. allies and interests in the CENTCOM AOR. General McKenzie argued in his confirmation hearing that "The long term, enduring most significant threat in the U.S. CENTCOM AOR is Iran," which will "require [CENTCOM] to adopt innovative new techniques to maintain deterrence against Iran, because the underpinning of everything else that will go on in the theater is the ability to deter Iran and respond if required to." These developments have led some observers to question whether the proposed strategic reprioritization of threats, including the redirection of assets and capabilities away from the CENTCOM AOR, is feasible. Others contend that despite recent developments with Iran, the region should still figure as a less important U.S. strategic priority given the scale of the challenges posed by China and Russia. Still others contend that force planning concepts like Dynamic Force Employment that is, the rapid and unpredictable shift of key U.S. military assets from one theater to another mitigate some of the risk associated with diverting resources away from CENTCOM. <19. What is the potential impact of recent deployments on U.S. military readiness and global basing?136> While the commitment of additional U.S. troops has been relatively modest since May 2019, other threats and contingencies could create a demand for additional U.S. forces that is not currently forecasted and that could create pressures on the U.S. military. Ultimately, any troops that are deployed to CENTCOM, as well as those training to replace them, would be taken out of the "pool" of forces available and ready to respond to other possible contingencies. U.S. military forces are a finite resource; the deployment of assets to the CENTCOM AOR would necessarily impact the availability of forces for other theaters and contingencies. U.S. expeditionary operations are enabled by a network of American bases and facilities that are hosted in other allied and partner countries. Yet basing of U.S. troops on foreign soil is a sensitive matter for host countries due to the fact that such deployments of American military forces which are subject to U.S. rather than host nation legal jurisdiction are inherently in tension with a host nation's sovereignty. As a result, the political-military dynamics with the countries that host U.S. troops require careful management. Recent events, including the Soleimani strike and Iranian counter-strikes, could complicate bilateral negotiations on U.S. forward bases, both in Iraq as well as in other parts of the world, discussions that are already sensitive due to burden-sharing issues. <20. Is the U.S. Government adequately prepared for hybrid and irregular warfare?> While the aftermath of the January 8, 2020, Iranian missile counterstrikes is still evolving, many practitioners and experts note that the United States has, at times in recent decades, engaged in hybrid, irregular conflict with Iran (with U.S.-Iran naval clashes during the 1980-1988 Iran-Iraq War being a notable exception). Hybrid and irregular warfare are commonly understood to be instances in which belligerents, to varying extents, collaborate with proxies (including, but not limited to, militias, other countries, criminal networks, corporations, and hackers) and deliberately sow confusion as to what constitutes "civilian" versus "military" activities in order to create plausible deniability for a given action. Some scholars maintain that Iran relies heavily on proxy forces to achieve its objectives: [Iran's nonstate] network is the cornerstone of Iranian national security strategy It is in large part because of this extensive network that the United States considers Iran a threat to national security and a destabilizing force in the region. Iran's network of nonstate partners enables the country to project power and increase its influence outside its borders while antagonizing the United States and its regional partners. In turn, these groups pursue a range of malign activities to sow instability, complicate ongoing conflicts, and undermine the interests of the United States and its partners, all while remaining under the threshold of war which Tehran tries to avoid at all costs as its conventional forces lack the capabilities to match those of the United States. Many observers expect that U.S.-Iranian conflict will return to a state of mostly irregular/hybrid warfare. However, given the Trump Administration's overall strategic guidance to prioritize great power competition, some are concerned that insufficient attention and resources are now being dedicated toward preparing U.S. forces to wage the kind of irregular/hybrid warfare that may be an enduring feature of strategic dynamics, both in the Persian Gulf and in other parts of the world. Still others express concern that other national security and foreign policy institutions such as the State Department with nonmilitary capabilities and authorities that could be useful for effectively prosecuting U.S. irregular /hybrid warfare strategies (as well as countering such tactics from adversaries) are insufficiently organized and resourced relative to the scope and scale of the challenges.

The January 2, 2020, U.S. killing in Iraq of Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) Commander Qasem Soleimani, generally regarded as one of the most powerful and important officials in Iran, has potentially dramatic implications for the United States. For Congress, it raises possible questions about U.S. policy in the Middle East, broader U.S. global strategy, U.S. relations with partners and allies, the authorization and legality of U.S. military action abroad, U.S. measures to protect its servicemembers and diplomatic personnel, and congressional oversight of these and related issues. This report provides background information in response to some frequently asked questions related to the strike and its aftermath, including Who was Qasem Soleimani and why did the U.S. military kill him? How have Iranians reacted? How have Iraqis reacted and how does this impact Iraqi policy and government formation? How might the strike and Iraqi reactions impact the U.S. military presence in Iraq and the U.S.-led counter-ISIS campaign (Operation Inherent Resolve)? How does the killing of Soleimani impact Israel and its security? What has been the European reaction? Under what authority did the U.S. military carry out the strike? How have Members of Congress responded legislatively or otherwise? What is the U.S. force posture in the region? How do recent regional developments align with broader U.S. strategy? The information contained in this report, which will be updated periodically as events warrant, is current as of January 13, 2020. The following CRS products provide additional background and analysis of issues discussed in this report: CRS Report R44017, Iran's Foreign and Defense Policies , by Kenneth Katzman; CRS Report R45795, U.S.-Iran Conflict and Implications for U.S. Policy , by Kenneth Katzman, Kathleen J. McInnis, and Clayton Thomas; CRS In Focus IF11403, The 2019-2020 Iran Crisis and U.S. Military Deployments , by Kathleen J. McInnis; CRS In Focus IF10404, Iraq and U.S. Policy , by Christopher M. Blanchard; CRS Report R42699, The War Powers Resolution: Concepts and Practice , by Matthew C. Weed; CRS Report RL34544, Iran's Nuclear Program: Status , by Paul K. Kerr; and CRS In Focus IF11338, Diplomatic Security and the Role of Congress , by Cory R. Gill and Edward J. Collins-Chase.

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<1. Introduction> The 116 th Congress is considering multiple proposed changes to U.S. mineral policy. Currently certain types of mineral production on federal lands provide the federal government and some states and industries with sources of revenue, while other production does not generate similar revenue. Proposed changes to federal mineral policy could impact these revenue streams, industries, and states in a variety of ways. The North American Industry Classification System (NAICS) defines the term mining to "include ore extraction, quarrying, and beneficiating (e.g., crushing, screening, washing, sizing, concentrating, and flotation), customarily done at the mine site." Mineral mining in the United States had a value added of $60.6 billion in 2018, which was about 0.3% of total U.S. value added (i.e., GDP). The value-added contribution to total economic output of minerals mined on federal lands is not known, as not all of the underlying data are recorded by the Bureau of Land Management (BLM) or reported by mine operators. Using available data, the U.S. Department of the Interior (DOI) estimates that coal and solid minerals mined on federal lands supported $13.9 billion in value added, $24.2 billion in economic output, and 81,700 jobs in FY2018. This report offers an introduction to the framework created by federal statutes applicable to mining on federal lands. It also highlights some topics in the mining sector that may be relevant to the issue of mining on federal lands for the 116 th Congress, such as the availability of mineral production data; royalties assessed on federal minerals; federal land withdrawals; and critical minerals on federal lands. While the focus of this report is on mining on federal lands, some related topics and concepts are included within this focus. <2. Statutory Framework for Mining on Federal Lands> The statutory framework applicable to mining on federal lands is a combination of mineral laws, land laws, and laws that impact mining directly or indirectly. These combinations can be complex when discussing specific minerals and mineral topics, as the statutes applying to one situation may be different for another situation. This introduction to the statutory framework is presented in four subsections: " Laws Establishing Mineral Categories ," " Land Laws Applicable to Mining ," " Laws That Apply to Mining on Federal and Non-Federal Lands ," and " Selected Federal Laws That May Impact Mining on Federal Lands ." This section presents the statutory framework for mining on federal lands; the section " Processes Related to Mining on Federal Lands " presents more detail on the regulated processes to mine the different categories of minerals on federal lands. <2.1. Laws Establishing Mineral Categories> <2.1.1. General Mining Law of 1872> The present regulatory framework applicable to mining on federal lands generally places minerals into three categories: locatable (or hardrock ), leasable , and salable . The latter two categories stem from two major changes to the General Mining Law of 1872, which encompassed all mineral deposits on federal lands that were considered valuable. The mining of leasable minerals requires lease and royalty payments; salable minerals generally only require a payment for the quantity purchased. The laws that define the leasable and salable categories are explained in the next two subsections. Locatable minerals originally included all minerals, but now this category includes only those minerals not covered by other laws: a locatable mineral is a mineral that is not leasable or salable. Locatable minerals are typically high-value minerals; some examples include gold, copper, lead, gypsum, and gemstones. An otherwise locatable mineral is a leasable mineral if it is on acquired land (see " Mineral Leasing Act for Acquired Lands "). Locatable minerals mined on federal lands are not subject to federal royalties. <2.1.2. Mineral Leasing Act of 1920> Leasable minerals are defined by the Mineral Leasing Act of 1920, and include minerals such as coal, phosphate, potassium, and sodium. Pursuant to this act, mining of these minerals on federal land is conducted under a statutory and regulatory framework similar to that of producing oil and natural gas, including lease payments and production royalties. The leasing process may be competitive, and the resulting leases are required to obtain fair market value for the public. <2.1.3. Materials Act of 1947> Salable minerals (or mineral materials) are defined by the Materials Act of 1947, and include low-value, common minerals and materials (i.e., not considered locatable minerals due to their low value), such as sand, gravel, and pumice. Salable minerals from federal lands are sold to the public at fair market value from community pits, common resource area, or under more formal arrangements for large quantities. Salable minerals can be obtained for free by some entities, including government entities and non-profit organizations. Unless found in unusually valuable deposits, salable minerals are no longer covered by the General Mining Law of 1872. <2.2. Land Laws Applicable to Mining> <2.2.1. Federal Lands Overview> The present land area of the United States, excluding territories and possessions, is approximately 2.4 billion acres, and is the culmination of land purchases, cessions, and acquisitions. As the country's land area grew, public policies were enacted to encourage settlement and private land ownership of previously federal lands. These and other policies resulted in changes to the acreage of federal lands; these changes continue, although more slowly in recent years. Four federal land management agencies include the BLM, the Fish and Wildlife Service (FWS), and the National Park Service (NPS) in the DOI, and the Forest Service (FS) in the Department of Agriculture. The BLM managed 244.4 million acres of surface lands (about 10% of the total surface area) and 708.5 million acres of the federal mineral estate (about 29% of the total surface area) of the United States in 2018. The laws and regulations applicable to mining on federal lands vary for different arrangements of surface and subsurface ownership, and if the lands are part of the public domain . The following examples illustrate some of the potential complexities related to mining on federal lands for different situations. Mining may be allowed in a national forest, whose surface is managed by the U.S. Forest Service and whose subsurface is managed by the BLM. New mining claims are not allowed in national parks. Regulations for mining on acquired lands may be different from regulations for mining on other federal lands, depending on the mineral. The Department of Energy manages and leases about 25,000 acres of federal land that was withdrawn from the public domain for mining uranium, which would otherwise be a locatable mineral. Mineral production data for a given mineral may or may not be publicly available, depending on the type of federal land on which it is found. The following three subsections highlight statutes related to federal lands that directly impact mining on federal lands. <2.2.2. Federal Land Policy Management Act of 1976> The Federal Land Policy Management Act (FLPMA) establishes statutory guidance for DOI and BLM management of federal lands, including the federal mineral estate. FLPMA directs the BLM to manage federal lands according to the principles of multiple use and sustained yield . FLPMA codifies the policy that public lands remain in federal ownership, unless the DOI determines disposal of public lands is in the national interest, and that fair market value is to be obtained for use of federal lands. Under FLPMA, the BLM prepares resource management plans (or land use plans ) through a defined process that incorporates public input, including environmental, historical, and societal values, from a variety of stakeholders. Where the BLM is not the surface management agency of a proposed mining operation, FLPMA directs the BLM to coordinate with the surface management agency. FLPMA provides authority to DOI to withdraw lands from mineral entry (i.e., no new mining is allowed). <2.2.3. Mineral Leasing Act for Acquired Lands> Acquired lands are lands that federal agencies purchased, received by donation or exchange, or acquired through eminent domain; millions of acres have been acquired by the federal government. Generally, minerals that would otherwise be considered locatable are leasable if they are on acquired lands, per the Mineral Leasing Act for Acquired Lands, as amended, which became law in 1947. Specific legislation could allow for different treatment of such minerals on acquired lands. <2.2.4. Stock Raising Homestead Act of 1916> The Stock Raising Homestead Act of 1916 allowed settlers to claim the surface rights of 640 acres of federal land, while the subsurface rights remained with the federal government. When the surface owner does not own the subsurface rights, the joint ownership is designated split estate . No new split estate lands have been created under the Stock Raising Homestead Act since 1976. The process to explore and claim mineral deposits on split estate lands requires additional steps, as the surface owner must be notified, and compensated in the case of damage to the surface resulting from the mining operation. <2.3. Laws That Apply to Mining on Federal and Non-Federal Lands> Two laws are discussed in this subsection. The first is applicable to all mining, including all mining on federal lands. The second is applicable to all coal mining, about 43% of which was produced on federal lands in 2018. <2.3.1. Federal Mine Safety and Health Act of 1977> The Federal Mine Safety and Health Act (FMSHA), as amended, created the Mine Safety and Health Administration (MSHA) within the Department of Labor. MSHA develops and enforces safety and health rules for all U.S. mines regardless of size, number of employees, commodity mined, method of extraction, or land ownership. <2.3.2. Surface Mining Control and Reclamation Act of 1977> The Surface Mining Control and Reclamation Act (SMCRA), as amended, established the Office of Surface Mining Reclamation and Enforcement (OSMRE) within the Department of the Interior. SMCRA applies to all coal mining operations, including those on federal and Native American lands. OSMRE's objectives "are to ensure that coal mines are operated in a manner that protects citizens and the environment during mining and assures that the land is restored to beneficial use following mining, and to mitigate the effects of past mining by aggressively pursuing reclamation of abandoned coal mines." Among other requirements, SMCRA establishes that, as a prerequisite for obtaining a coal mining permit, the applicant is required to post a reclamation bond. <2.4. Selected Federal Laws That May Impact Mining on Federal Lands> Other laws and statutes may apply to mining on federal lands in certain situations. Below is a selected list of such statutes with a reference for more information; a range of other federal and state laws may also apply on a case-by-case basis. Application of these laws and statutes vary widely for different mining operations; further discussion is beyond the scope of this report. National Environmental Policy Act of 1969 (NEPA) Clean Water Act of 1972 (CWA) Clean Air Act (CAA) Endangered Species Act of 1973 (ESA) National Historic Preservation Act of 1966 (NHPA) <3. Processes Related to Mining on Federal Lands> The process to mine on federal lands generally begins with the interested person identifying the surface management agency (or owner, if the land is split estate) and the subsurface management agency, if different. The surface management agency can assist with the process to determine whether the area targeted for mining has been previously claimed, leased, or withdrawn from the federal mineral estate. This can occur when lands are designated as national parks, monuments, or military bases, among others. The agency can also ensure that the targeted area and mineral estate are still under federal control, as changes can occur that would give control to private entities, state governments, or Indian governments. The managing agency can also indicate whether the targeted area is acquired land, for which, in most cases, mineral leasing applies. Further, the managing agency can indicate the required information and processes to explore and potentially mine in a given area; such requirements can vary among agencies and within agency offices. Aside from special cases, the BLM is the subsurface management agency for mining on federal lands. Additional considerations and regulations may apply to Indian territories, which number more than 300 territories and cover more than 56 million acres. Indian tribes and persons retain the right to develop or allow others to develop mineral resources on their lands. The BLM may be invited to provide assistance, in which case "the BLM's authorities and responsibilities include, but are not limited to, resource evaluation, approval of drilling permits, mining and reclamation, production plans, mineral appraisals, inspection and enforcement, and production verification." The subsequent steps in the process to open a new mine on federal lands depend on the type of mineral to be mined (i.e., locatable, leasable, or salable), as the processes vary by mineral category. <3.1. Locatable Minerals> If the mineral of interest is locatable and on federal lands open to mineral entry not previously claimed, exploration that does not result in surface disturbances (e.g., rock-hounding or use of hand-operated tools) can begin without a permit; a permit may be required if surface disturbance is expected. Establishing or staking a claim is the statutorily defined process of physically indicating and publicly recording the specific boundaries of the area containing the mineral(s). The local field office of the applicable surface management agency can assist with this process, but the person exploring is responsible for knowing if a specific area is subject to being claimed (i.e., there is not an existing prior claim on that area, and that the area is open to mineral entry). If a reasonable quantity of a locatable mineral is found on public land that is open to mineral entry and has not yet been claimed, the area can be claimed. The two types of mineral claims defined by statute are lode claims and placer claims. Lode claims pertain to valuable minerals in an undisturbed state or location (i.e., rock in place); placer claims refer to valuable minerals that have been moved and deposited in a location different from the mineral's formation, typically due to erosion (e.g., sediment bars along streams). A lode claim cannot be longer than 1,500 feet along the main axis and wider than 300 feet on each side of the axis; an individual placer claim cannot exceed 20 acres. If the BLM is both the surface and subsurface manager, it then works with the operator to approve a required notice or a plan of operation . The mine operator is required to submit an estimate of the reclamation costs to the BLM for approval, after which the mine operator provides a financial guarantee equal to that amount to the BLM. The financial guarantee is held until operations have ceased and the site has been acceptably reclaimed, as determined by the BLM. A claimant must pay a location fee when first recording the claim. An annual maintenance fee is also required. Claim holders may be required to file annual documentation required by FLPMA. More detailed processes need to be followed if exploring on split-estate lands. Under the General Mining Law, mining claims meeting certain conditions are allowed to be patented , which typically transfers all rights to the claim holder. However, starting in 1994, Congress, through appropriations laws, has continually placed one-year moratoria on the patent process. <3.2. Leasable Minerals: Other Than Coal> If the mineral of interest is leasable, which generally includes otherwise locatable minerals on acquired lands, exploration requires a permit or license a pr ospecting permit is required to identify valuable deposits of leasable minerals in areas where valuable deposits have not yet been identified; an exploration license is required if additional information is desired by the prospective miner regarding a known deposit. If a valuable deposit is identified by a prospecting permit holder (and other conditions are met), the BLM may issue the holder a preference right lease . The BLM may issue a notice for a competitive lease sale on unleased, leasable parcels known to contain valuable mineral deposits. Some leasable minerals are subject to minimum royalties, including 5% of the value of gross output for sulfur and phosphate; 2% of the value of gross output for potassium and sodium; and 25 cents per ton of marketable production for asphalt. Unless otherwise indicated by the BLM, leases require the payment of rent, royalties, and the posting of a reclamation bond; reclamation includes removal of machinery and structures, in addition to required grading and re-vegetation. Many of the steps needed to obtain mining permits, leases, or licenses require the payment of cost-recovery fees to agencies and local governments. <3.3. Leasable Minerals: Coal> Coal is a leasable mineral and follows the general process for leasable minerals. However, coal exploration and coal leasing on federal lands are subject to specific regulations and statutes. Coal exploration begins with a designation that the land in question is suitable for coal leasing. Coal exploration requires an exploration license, an exploration bond, and conformance with various federal statutory obligations, and also includes conformance of the regulations promulgated by SMCRA. After any party expresses interest in exploring for coal, the BLM is to publish a notice of in vitation calling for other interested parties to jointly explore the indicated tract of federal land. Existing coal regions on federal lands may have tracts available for lease that do not require additional exploration. While some exceptions exist, coal leases are to be issued through the competitive process lease by application . This process begins when an interested party files an application of interest with the BLM for a tract of land previously identified as suitable for coal mining by the BLM. The BLM publishes notices of the lease sale and invites others to submit sealed bids for the lease. The lease is awarded to the highest bid that is at least equal to the fair market value of the lease (conditional on other requirements being met). Only U.S. citizens, associations, corporations, and public bodies are able to obtain coal leases. No entity is permitted to own or control coal leases on federal lands exceeding 75,000 acres in any one state or 150,000 acres in the United States. Coal leases require an annual rental payment of a minimum of $3 per acre, to be specified in the lease. Coal mining on federal lands requires the payment of royalties. The royalty for surface mined coal is a minimum of 12.5% of the gross value of coal produced, and the royalty for coal mined by underground mining methods is 8%. A coal lease also requires that the successful bidder post a lease bond to the BLM. <3.4. Salable Minerals> An individual planning to mine or remove salable minerals must contact the local BLM office and secure a sales contract before conducting any operations. Generally, the BLM authorizes the removal (i.e., disposition) of salable minerals on federal lands by a sales contract ; a free use permit may be available to certain government entities or non-profit organizations. If a mine operator desires to open a new deposit of a salable mineral, exploration and mining follow the general processes for leasable minerals. However, c ommon use areas or community pits may be available for immediate mineral removal, eliminating the need for exploration and other processes. The BLM is to identify the fair market value of the mineral at the specific location, required payment, and limitation on surface disturbances, among other specifications. <4. Policy Topics and Legislative Activity> Four policy areas related to mining on federal lands that have been raised in legislation in the 116 th Congress are presented and discussed below. After a brief presentation of the topic, each section presents policy concerns, options, and examples of related current legislation. Unless noted, bills discussed in this section have been introduced in the House or Senate and referred to committee, but have not seen further legislative activity. <4.1. Data Availability for Locatable Minerals> The BLM currently collects mineral production data for leasable and salable minerals on federal lands, but not for locatable minerals. Locatable mineral production information could be useful for some policy considerations; conversely, the lack of such information could limit policy discussion for those considerations. Concern regarding the collection of these data is not new. In 2008 the U.S. Government Accountability Office (GAO) reported, "according to officials with BLM and the Forest Service, they do not have the authority to collect information from mine operators on the amount of hardrock minerals produced on federal land, or the amount remaining." The GAO also highlighted the limitations of the data collected and reported by the U.S. Geological Survey (USGS) by noting, "it is not possible to determine hardrock mineral production on federal lands from the USGS data." The DOI reports production of some hardrock minerals from federal lands, but notes those values are estimates based on state data. This lack of locatable mineral production data for federal lands can impact multiple policy areas, including issues discussed in the following sections. Some related policy topics include Royalties: Potential changes to existing mining laws to extend royalties to all locatable minerals face the challenge that current production and value of these minerals is not collected. Without this information, analysis of such policy changes may be limited. For example, it may be difficult to estimate increased royalty collection or increased costs to producers. Reclamation Bonds: Knowledge of production data could assist the BLM in determining if the posted reclamation bond continues to be adequate, is excessive, or is inadequate for an ongoing locatable mineral operation on federal lands. Critical Minerals: Executive Order (E.O.) 13817 tasked the DOI with coordinating with other executive branch agencies to publish a list of critical minerals. One criterion used to define a critical mineral is net import reliance , the calculation of which includes domestic production of the critical mineral commodity. It is unclear how locatable mineral production, which is not required to be reported, is incorporated into the calculation of net import reliance. Congress could address this question of data availability by requiring the collection of mineral production data from federal lands. For example, Congress could authorize and require a government agency to collect mineral production and production value data, among other operations data. While the BLM could be the agency tasked with this data collection due to its role in managing the federal mineral estate, other agencies could also receive consideration. For example, MSHA currently collects and publicly provides data on all mining operations; the USGS tracks and distributes mineral production from sources around the country; and the Environmental Protection Agency (EPA) administers or oversees certain permits for most domestic mining operations. H.R. 2579 , the Hardrock Leasing and Reclamation Act of 2019 (ordered reported by the House Committee on Natural Resources on October 23, 2019), among other provisions, would establish the requirement that mining operations on federal lands report production volumes and values, and it includes the requirement that these and other data are to be made public. <4.2. Royalties> Locatable minerals remain regulated by the General Mining Law and are not subject to federal royalties, unlike leasable minerals. Although the federal government does not assess royalties on locatable minerals, some states assess royalties (i.e., severance taxes) on some minerals mined on federal lands. Congress might consider establishing a royalty policy for locatable minerals. As viewed by some, locatable minerals represent public assets, and the public should be compensated if any of these assets are removed for private gain. Royalties on locatable minerals could capture this change in ownership, and the revenue streams could be used to fund national priorities. Others view royalty-free access to locatable minerals as a public benefit, given associated mining employment and mining-related economic activity. If set too high, mineral royalties could restrict mining activity and force marginal operations to cease. Congress could also recognize additional complexities stemming from the different types of royalties and their associated characteristics. Three common royalties are unit-based royalties, ad valorem royalties, and profit-based royalties. Unit-based royalties are assessed on units of volume or weight and ensure that some revenue is collected in exchange for the removal of the mineral. Ad valorem royalties are assessed on the sale of the mineral and are subject to fluctuations in mineral prices. Profit-based royalties are assessed on operator profits, allowing deductions for certain costs. Further complexities can include whether to assign different royalty rates to different minerals and how to treat minerals that are byproducts of other minerals. As noted above, Congress is currently considering H.R. 2579 , the Hardrock Leasing and Reclamation Act of 2019 (ordered reported by the House Committee on Natural Resources on October 23, 2019), which, among other provisions, would close federal lands to new mining claims under the General Mining Law of 1872 and create a hardrock mine reclamation fund. This bill would establish a federal royalty of 12.5% and a displaced materials reclamation fee of 7 cents per ton of displaced materials for all new hardrock mineral mining operations on federal lands. These fees and other revenue generated by provisions in the bill would be deposited into a newly created fund, the Hardrock Minerals Reclamation Fund. The reclamation fund would target reclamation of abandoned hardrock mines and other environmental conservation activities on lands and waters affected by past hardrock mining activity, independent of land owner. The bill would require the collection and public dissemination of data regarding mine production and royalties paid, and regular inspection of all hardrock mines on federal lands. <4.3. Federal Land Withdrawals> New mining operations on federal lands require that the federal lands are open for mineral entry. Some federal lands have undergone withdrawal , which generally means those lands are closed to or withdrawn from mining and other activities. FLPMA defines withdrawal as withholding an area of Federal land from settlement, sale, location, or entry, under some or all of the general land laws, for the purpose of limiting activities under those laws in order to maintain other public values in the area or reserving the area for a particular public purpose or program; or transferring jurisdiction over an area of Federal land, other than "property" ... from one department, bureau or agency to another department, bureau or agency. As indicated in this definition, a withdrawal does not necessarily close land to mining, and a withdrawal that closes land to mining may not restrict other land uses. A land withdrawal can occur through legislation, executive order, or agency action, and a withdrawal is usually for a specified period of time. In the event a withdrawal impacts existing mining claims or leases, the DOI and the involved agencies may allow the claims or leases to continue, or they may offer other federal land in exchange for the existing claims or leases. Many federal land withdrawals close the land to mining, including NPS lands, which are closed to new mining claims. The mining industry generally advocates for limited withdrawals from the mineral estate, as access to public lands for mining represents opportunities for ongoing and future operations. Advocates for a specific land withdrawal (with closure to mineral entry) generally see the proposed use (e.g., military base, national park, national monument, wilderness area) as superseding the potential use of the public land by other interests (e.g., for mining). One example of a withdrawal affecting mining on federal lands occurred in 2012 when the Secretary of the Interior withdrew about one million acres of federal land surrounding the Grand Canyon National Park from new mineral development for 20 years. The withdrawn area contained active uranium mining operations and about 3,200 mining claims. H.R. 1373 , among other provisions, would permanently withdraw this area from new mineral entry. H.R. 1373 passed the House; a companion bill has been introduced in the Senate as S. 3127 . Another example of a withdrawal with closure to mineral entry is for the Nevada Test and Training Range (NTTR), which is currently comprised of over 2.9 million acres of federal land withdrawn until 2021. The Department of the Air Force is requesting that this land withdrawal be renewed and an additional 300,000 acres be withdrawn to expand the area. The State of Nevada Commission on Mineral Resources has produced a map of the existing and proposed expansion areas, including affected active mining claims. H.R. 5606 and S. 3145 , among other provisions, would expand and renew the withdrawn federal land. A third example involves a planned mine by Twin Metals Minnesota (TMM) in the Superior Nation Forest, near the Boundary Waters Canoe Area Wilderness. The Superior National Forest was withdrawn from mineral entry in 1930, but it was reopened to mineral entry in 1950. TMM holds two leases issued in 1966 (renewed twice); no mineral production has occurred under these leases. TMM applied to renew these leases for a third time in 2012, ahead of their 2016 expiration. In 2016, DOI found that TMM does not have a non-discretionary right to renewal, and the FS did not consent to renewing the leases; DOI canceled the leases. In 2017, the DOI found that TMM has a non-discretionary right to renewal, and it renewed the leases. H.R. 5598 , among other provisions, would withdraw 234,328 acres of federal lands in the Superior National Forest, which include the lands covered by the TMM leases. <4.4. Critical Minerals> Affordable and reliable access to critical minerals, and materials or products containing critical minerals, has been an issue since before the Great Depression, with the first official list of critical minerals dating to 1921. One recent definition of a critical mineral is (i) a non-fuel mineral or mineral material essential to the economic and national security of the United States, (ii) the supply chain of which is vulnerable to disruption, and (iii) that serves an essential function in the manufacturing of a product, the absence of which would have significant consequences for our economy or our national security. Numerous lists of critical minerals and materials exist, and the creation of such lists is inherently subjective, as the definition of "critical" includes notions of access to markets and costs of possible supply interruptions. Potentially adding further confusion, some agencies and studies conflate or do not clarify distinctions between the related terms critical minerals, critical materials, strategic minerals, and strategic materials. Discussions of critical minerals often note that the United States has few known locations of critical minerals that could be economically produced, and the United States does not presently have refining capabilities to process those critical minerals into commodities. The United States imports critical minerals (the USGS calculates net import reliance as part of the process to define a critical mineral) or products containing them, resulting in what is sometimes considered vulnerable dependencies. The limitations of using net import reliance to define a critical mineral or critical material are not fully defined, as manufactured products can contain critical minerals of domestic or foreign origin that have been previously imported or exported. Some known critical mineral deposits lie on federal lands. One example is the Idaho Cobalt Operation, which is a cobalt reserve on federal lands. Another example is the Twin Metals Minnesota mining project, which would mine copper, nickel, platinum group metals, and cobalt in the Superior National Forest. To provide more information on the likely locations of critical mineral resources, the USGS has begun the Earth Mapping Resources Initiative (Earth MRI). This program has produced a map and dataset covering numerous focus areas for one group of critical minerals: the rare-earth elements. Many of these focus areas occur in the western region and presumably lie on federal lands. As the Earth MRI program continues, it plans to focus on other critical minerals. Policy options to address concerns related to critical minerals typically intend to create or increase access to secure quantities of critical minerals. Expanding mineral production on federal and non-federal lands is one option to create increased access to secure quantities of critical minerals. Other policy options can include non-mining options; two such options are mentioned below. One option that could increase access to critical minerals on federal lands includes creating mapping and mineral exploration programs, such as Earth MRI. Such programs can facilitate and lower the private costs of locating critical mineral reserves. While general knowledge of the likelihood of a deposit can assist new mineral developments, policies supporting such programs may have limited impacts on production from known critical mineral deposits. A policy option not focused on increasing domestic mineral production would focus on reducing potential negative effects of supply shocks by stockpiling additional critical minerals at the National Defense Stockpile. Given the number of critical minerals and the higher number of manufacturing input materials made from critical minerals, the costs and complexity of maintaining substantial supplies could limit the effectiveness of this option. An additional complication is that "the National Defense Stockpile is not to be used for economic or budgetary purposes," and much demand for critical minerals stems from private consumption, such as motors and batteries for electric vehicles. A third option, also not focused on increasing domestic mineral production, would be to secure more access to critical minerals by supporting a domestic supply chain based on critical minerals captured through recycling consumer products. Such support could include funding research to develop technology that would reduce the costs of recycling critical minerals to a competitive level. Other support could include tariffs or quotas on imported critical minerals, thus allowing recycled domestic sources to be more cost competitive. Congress is presently considering bills related to critical minerals and materials, with some containing provisions related to the federal mineral estate. These include An amendment in the nature of a substitute to S. 2657 was introduced on February 27, 2020 (including the new title "American Energy Innovation Act of 2020"), and incorporated language from several energy and mineral bills reported by the Senate Committee on Energy and Natural Resources. Cloture was invoked on March 2. This bill includes text from S. 1317 and S. 1052 (discussed below). S. 1317 , among other provisions, would instruct the USGS to publish information regarding known and unknown domestic critical mineral resources. The USGS may conduct geological surveys to increase this information. This bill would also establish a research and development program in the Department of Energy (DOE) to increase efficiencies in the critical mineral supply chain, to identify substitutes for critical minerals, and to promote the use of recycling as a source of critical minerals. This research also includes producing forecasts related to critical minerals for a 10-year period, including expected demand, market conditions, and possible substitutes for critical minerals. This bill would repeal the National Critical Materials Act of 1984 and authorize $50 million per year for 10 years to fund its activities. This bill also includes identical language to S. 1052 (discussed below). H.R. 4410 , among other provisions, would establish a federal cooperative and a federal corporation related to rare-earth minerals and thorium; both federal charters would be privately funded and operated. The cooperative would process domestic and international sources of rare-earth minerals and materials into products for sale. The corporation would accept all radioactive material (e.g., thorium) produced by the cooperative, sell any valuable materials, and could conduct research on new uses of such materials. S. 1052 , among other provisions, would direct the DOE to authorize an ongoing program to develop technologies for the extraction of rare-earth elements (REE) from coal and coal byproducts. The bill would authorize $23 million per year for eight years to fund this program. According the committee report accompanying this bill, "Congress appropriated funding in 2014 for [the National Energy Technology Lab] to develop extraction technologies for REEs from coal byproducts. S. 1052 formally authorizes the program." H.R. 2531 , among other provisions, would treat mineral exploration and mining projects related to critical minerals as high-priority infrastructure projects, as defined by E.O. 13807, and would attempt to reduce the time to issue permits to 30 months by allowing the lead agency to determine that NEPA requirements have been met or do not apply to the project. H.R. 3405 , among other provisions, would instruct the Secretary of the Interior to remove uranium from the list of critical minerals, as prepared by the USGS pursuant to E.O. 13817. A previous version of this bill, introduced on June 21, 2019, finds that the United States has reserves of uranium, and that 52% of uranium is imported from stable trading partners. H.R. 3567 , among other provisions, would direct the Under Secretary of Defense for Acquisition and Sustainment, in consultation with others, to establish guidance for the acquisition of items containing rare-earth materials and the supply chain of rare-earth materials from countries that are not U.S. adversaries. The bill would also direct the National Defense Stockpile Manager to dispose of an additional three million pounds of tungsten and to use available funds to acquire approximately $37 million of critical materials over five years; tantalum would be added to the list of critical materials. S. 3356 , among other provisions, would require the DOE to award grants to encourage battery recycling research, development, and demonstration projects. Separately, grants would be awarded to state and local governments and battery retailers to enhance battery recycling collection programs. The bill would authorize $10 million for one year for the existing Lithium-Ion Battery Recycling Prize competition at the DOE, and would authorize to be appropriated $30 million per year for five years.

The 116 th Congress is considering multiple proposed changes to U.S. mineral policy. Currently certain types of mineral production on federal lands provide the federal government and some states and industries with sources of revenue, while other production does not generate similar revenue. Proposed changes to federal mineral policy could impact these revenue streams, industries, and states in a variety of ways. The processes and requirements to mine on federal lands vary by mineral category, surface/subsurface management agencies, and estate ownership. Three main statutes create the three categories of minerals applicable to mining on federal lands. The General Mining Law of 1872 covers locatable (or hardrock) minerals, which are now defined as those minerals not defined by other statutes; typical examples include gold, silver, copper, and gemstones, when not found on acquired lands. Leasable minerals are defined by the Mineral Leasing Act of 1920, and include coal, phosphate, potassium, and sodium, among others (leasable minerals also include otherwise locatable minerals on acquired land, per the Mineral Leasing Act for Acquired Lands of 1947). Salable minerals are defined by the Materials Act of 1947, and include common minerals such as sand and gravel. Additional processes and requirements apply when the surface rights above the federal mineral estate are privately owned (i.e., split estate), commonly resulting from the Stock Raising Homestead Act of 1916. Similarly, coordination is required between the surface management agency and the agency managing the mineral estate. Two statutes generally apply to mining on federal lands, including the Surface Mining Control and Reclamation Act of 1977 (only applicable to coal) and the Federal Mine Safety and Health Act of 1977, while others may apply, including the Federal Land Policy Management Act of 1976; the National Environmental Policy Act of 1969; the Clean Water Act of 1972; the Clean Air Act; the Endangered Species Act of 1973; and the National Historic Preservation Act of 1966, among others. Data regarding mineral production for locatable minerals on federal lands are not collected by the federal government. This lack of data can hinder the development and analysis of policies intending to affect mineral production on federal lands. The 116 th Congress is considering H.R. 2579 , the Hardrock Leasing and Reclamation Act of 2019, which would, among other provisions, require mining operations on federal lands to report production volumes and values, with these data made public. Locatable mineral production on federal lands is not subject to royalties. Some interested parties see not charging royalties as a means of encouraging mineral exploration and production, while others may argue the public is not recovering fair market value for the transfer of a public asset to a private entity. H.R. 2579 would also establish a federal royalty policy for all new hardrock mineral mining operations on federal lands, and use these and other fees for the reclamation of abandoned hardrock mines and other environmental conservation activities on lands and waters affected by past hardrock mining. Federal land withdrawals may close a given area to mining. Advocates for a specific land withdrawal generally see the proposed use (e.g., military base, national park, national monument, wilderness area) as superseding the potential use of the public land by other interests (e.g., for mining). Proponents of mining generally advocate for limited withdrawals from the mineral estate, as access to public lands for mining represents opportunities for ongoing and future operations. H.R. 1373 would permanently withdraw about one million acres surrounding the Grand Canyon National Park from new mineral entry; it passed the House, and a companion bill, S. 3127 , has been introduced in the Senate. H.R. 5598 would withdraw 234,328 acres of federal lands in the Superior National Forest, including lands covered by previously disputed mineral leases. Several bills in the 116 th Congress would address U.S. critical mineral supply (i.e., those minerals defined by the U.S. Geological Survey that meet certain net import dependence criteria and perceived necessity to the U.S. economy). For example, S. 1317 would instruct the U.S. Geological Survey (USGS) to publish information regarding domestic critical mineral resources and would authorize an ongoing research and development program for critical minerals in the Department of Energy. The text of S. 1317 was incorporated into a substitute amendment to S. 2657 . Another example is H.R. 4410 , which would establish a federal cooperative and a federal corporation to process and sell certain critical minerals commonly found with thorium, which is radioactive.

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<1. Introduction> The K-12 teacher workforce is relatively large each year, nearly 4 million teachers are employed in U.S. elementary and secondary schools. Turnover in these schools is high relative to earlier periods about 1 in 10 teachers left his or her job in 2018. This figure follows federal statistical trends that show a steady growth in teacher attrition since the 1980s. The problem of teacher turnover raises a number of recruitment and retention issues of interest to policymakers. The Higher Education Act (HEA) is the main federal law containing policies designed to address these issues. Title II of the HEA authorizes grant support for schools that prepare new teachers. Title IV of the HEA authorizes financial support to encourage people to stay in the teaching profession in the form of loan forgiveness and other benefits. The HEA was last comprehensively amended in 2008 by the Higher Education Opportunity Act (HEOA, P.L. 110-315 ). Although the authorities have expired, the associated programs continue to receive appropriations. Congressional consideration of potentially reauthorizing the HEA is ongoing, with the introduction of numerous bills to amend current law and address teacher recruitment and retention. This report describes (1) the history of federal teacher recruitment and retention policy, (2) current policies in this area, and (3) related issues that may arise as Congress considers reauthorizing the HEA. <2. Legislative History6> Teacher recruitment and retention have been the focus of federal policy since the HEA was first enacted in 1965. This section briefly describes the history of federal policy in this area. <2.1. Teacher Corps and Teacher Centers> The HEA was originally enacted by the 89 th Congress and signed into law on November 8, 1965 (P.L. 89-329). Title V authorized the Teacher Corps program, which recruited interns for teaching in high-poverty areas of the country. These interns, directed by experienced teachers, taught in participating K-12 schools while also taking higher education courses to secure teaching certificates. The program was initially funded in FY1966 and phased out in FY1981 under the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ). In 1967, Title V became the Education Professions Development Act (EPDA, P.L. 90-35), which reauthorized the Teacher Corps program and authorized a number of new teacher development programs. Among these programs were efforts to attract low-income persons to teaching and a fellowship program for enhancing the skills of higher education faculty training elementary and secondary school teachers. In general, EPDA programs were funded beginning for FY1969 or FY1970. The Education Amendments of 1976 ( P.L. 94-482 ) repealed all of the EPDA with the exception of the Teacher Corps program. The Education Amendments of 1976 ( P.L. 94-482 ) renamed Title V as Teacher Corps and Teacher Training Programs, extended the Teacher Corps program authorization, and authorized a new Teacher Centers program. Teacher Centers, first funded for FY1978, were operated by local educational agencies (LEAs) or institutions of higher education (IHEs), and provided in-service training to the elementary and secondary school teaching force. The Omnibus Budget Reconciliation Act phased out the program in FY1981. <2.2. Paul Douglas Teacher Scholarships and Christa McAuliffe Fellowships> Initially enacted in 1984 under the Human Services Reauthorization Act ( P.L. 98-558 ), the Paul Douglas Teacher Scholarships provided annual $5,000 postsecondary education scholarships, for up to four years, to outstanding high school graduates (candidates in the top 10% of their high school graduating class, among other criteria). Recipients were required to teach for two years at the K-12 level for each year of scholarship assistance they received, an obligation that could be reduced by half for those teaching in geographic or subject areas that were experiencing shortages. Federal funds were allocated by formula to states. The Paul Douglas Teacher Scholarships were first funded for FY1986 and last funded for FY1995 (when the program authority was terminated). Also initially authorized under the Human Services Reauthorization Act, the National Talented Teacher Fellowships, later-renamed the Christa McAuliffe Fellowships, provided one-year awards to outstanding, experienced public and private elementary and secondary school teachers for sabbaticals. Following sabbaticals to develop innovative teaching projects, recipients had to return to their prior place of employment for two years. The federal appropriation was allocated by formula among the states. The Christa McAuliffe Fellowships were first funded for FY1987 and last funded for FY1995. <2.3. Mid-Career Teacher Training and Minority Teacher Recruitment> The Higher Education Amendments of 1986 ( P.L. 99-498 ) rewrote Title V as Educator Recruitment, Retention, and Development. These amendments not only extended and renamed the scholarship and fellowship programs enacted in 1984, but also added two new programs intended to recruit new teachers to the profession: Mid-Career Teacher Training and Minority Teacher Recruitment. Mid-Career Teacher Training provided grants to IHEs for the establishment of programs to prepare individuals leaving their current careers in order to teach. Eligibility was limited to individuals with a baccalaureate or advanced degree who had job experience in education-related fields. Two fields are specifically cited in the authorizing statute: preschool and early childhood education. IHEs were initially to receive a planning grant of not more than $100,000 to be used in the two fiscal years following selection; however, the program was funded for two years (FY1990 and FY1991). Minority Teacher Recruitment awarded grants to partnerships between an IHE and either a State Education Agency (SEA) or an LEA to recruit and train minority students, beginning with students in 7 th grade, to become teachers. The program also awarded grants to IHEs to improve teacher preparation programs and to support teacher placement in schools with high minority student enrollment. It was initially funded for FY1993 and received its last appropriation for FY1997. <2.4. Teacher Quality Enhancement Program> The Higher Education Amendments of 1998 established a new federal teacher program in Title II, the Teacher Quality Enhancement Grant program. Part A of Title II authorized three types of competitively awarded grants: State Grants, Partnership Grants, and Recruitment Grants. State Grants and Partnership Grants were each authorized to receive 45% of the appropriation for Title II-A and Recruitment Grants were allocated the remaining 10%. Funds for these grants were first appropriated for FY1999 and have been continued to the present day under new authority described below. State Grants and Partnership Grants funds were to be used for activities including the improvement of teacher pre-service preparation, accountability for teacher preparation programs, the reform of teacher certification requirements (including alternative routes to certification), and in-service professional development. Recruitment Grants funds were to be used for the recruitment of highly qualified teachers (Partnership Grants could also be used for this purpose). Specific recruitment activities described in Title II include teacher education scholarships, support services to help recipients complete postsecondary education, follow-up services during the first three years of teaching, and activities enabling high-need LEAs and schools to recruit highly qualified teachers. In 2008, HEA Title II-A was renamed the Teacher Quality Partnership program under amendments made by the HEOA, which remains current law. <3. Current Programs> The HEA, as amended by the HEOA, addresses current K-12 teacher issues through programs supporting the improvement of teacher preparation and recruitment. Title II of the HEA authorizes grants for improving teacher education programs, strengthening teacher recruitment efforts, and providing training for prospective teachers. This title also includes reporting requirements for states and IHEs regarding the quality of teacher education programs. Title IV of the HEA authorizes Teacher Education Assistance for College and Higher Education (TEACH) Grants to encourage more students to prepare for a career in teaching and student loan forgiveness for individuals teaching in certain high-need subjects. Teachers may also be eligible for loan relief through the Title IV Public Service Loan Forgiveness program. <3.1. Teacher Quality Partnership Grants> Title II, Part A of the HEA authorizes Teacher Quality Partnership (TQP) grants to improve the quality of teachers working in high-need schools and early childhood education programs by improving the preparation of teachers and enhancing professional development activities for them, holding teacher preparation programs accountable for preparing effective teachers, and recruiting highly qualified individuals into the teaching force. <3.1.1. Eligible Partnerships> To be eligible, partnerships must include a high-need LEA; a high-need school or high-need early childhood education program (or a consortium of high-need schools or early childhood education programs served by the partner high-need LEA); a partner IHE; a school, department, or program of education within the partner IHE; and a school or department of arts and sciences within the partner IHE. The TQP statute requires that a high-need LEA must have either a high rate of out-of-field teachers or a high rate of teacher turnover and meet one of the following three criteria: 1. have at least 20% of its children served be from low-income families; 2. serve at least 10,000 children from low-income families; or 3. be eligible for one of the two Rural Education Achievement Programs. <3.1.2. Partnership Activities> Partnership grant funds are authorized to be used for a Pre-Baccalaureate Preparation program, a Teacher Residency program, or both. Funds may also be used for a Leadership Development program, but only in addition to one of the other two programs. Activities authorized by the HEOA amendments are described below. <3.1.2.1. Pre-Baccalaureate Preparation Program> Grants are provided to implement a wide range of reforms in teacher preparation programs and, as applicable, preparation programs for early childhood educators. These reforms may include, among other things, implementing curriculum changes that improve, evaluate, and assess how well prospective teachers develop teaching skills; using teaching and learning research so that teachers implement research-based instructional practices and use data to improve classroom instruction; developing a high-quality and sustained pre-service clinical education program that includes high-quality mentoring or coaching; creating a high-quality induction program for new teachers; implementing initiatives that increase compensation for qualified early childhood educators who attain two-year and four-year degrees; developing and implementing high-quality professional development for teachers in the partner high-need LEAs; developing effective mechanisms, which may include alternative routes to state certification, to recruit qualified individuals into the teaching profession; and strengthening literacy teaching skills of prospective and new elementary and secondary school teachers. <3.1.2.2. Teacher Residency Program> Grants are provided to develop and implement teacher residency programs that are based on models of successful teaching residencies and that serve as a mechanism to prepare teachers for success in high-need schools and academic subjects. Grant funds must be used to support programs that provide, among other things, rigorous graduate-level course work to earn a master's degree while undertaking a guided teaching apprenticeship, learning opportunities alongside a trained and experienced mentor teacher, and clear criteria for selecting mentor teachers based on measures of teacher effectiveness. Programs must place graduates in targeted schools as a cohort in order to facilitate professional collaboration and provide to members of the cohort a one-year living stipend or salary, which must be repaid by any recipient who does not teach full-time for at least three years in a high-need school or subject area. <3.1.2.3. Leadership Development Program> Grants are provided to develop and implement effective school leadership programs to prepare individuals for careers as superintendents, principals, early childhood education program directors, or other school leaders. Such programs must promote strong leadership skills and techniques so that school leaders are able to create a school climate conducive to professional development for teachers, understand the teaching and assessment skills needed to support successful classroom instruction, use data to evaluate teacher instruction and drive teacher and student learning, manage resources and time to improve academic achievement, engage and involve parents and other community stakeholders, and understand how students learn and develop in order to increase academic achievement. Grant funds must also be used to develop a yearlong clinical education program, a mentoring and induction program, and programs to recruit qualified individuals to become school leaders. <3.2. Enhancing Teacher Education Programs> The HEOA amendments established five new programs in HEA, Title II, Part B, Enhancing Teacher Education: Subpart 1, Preparing Teachers for Digital Age Learners; Subpart 2, Hawkins Centers of Excellence; Subpart 3, Teach to Reach Grants; Subpart 4, Adjunct Teacher Corps; and Subpart 5, Graduate Fellowships to Prepare Faculty in High-Need Areas. None of these programs has received funding. <3.3. TEACH Grants> The College Cost Reduction and Access Act ( P.L. 110-84 ) established the TEACH Grants under Subpart 9 of HEA, Title VI-A to provide aid directly to postsecondary students who are training to become teachers. The program provides grants to cover the cost of attendance of up to $4,000 per year ($16,000 total) for bachelor's studies or $8,000 total for master's studies to students who commit to teaching high-need subjects in low-income schools after completing their postsecondary education. Both undergraduate and graduate students are eligible for the grants and must agree to serve as full-time mathematics, science, foreign language, bilingual education, special education, or reading teachers in low-income schools for at least four years within eight years of graduating. Current teachers, retirees from other occupations, and those who became teachers through alternative certification routes are also eligible for TEACH Grants to help pay for the costs of obtaining graduate degrees. An individual who fails to complete the agreed-upon service in low-income schools and high-need subjects is required to pay back his or her TEACH Grant as an Unsubsidized Direct Loan, including interest from the day the grant was made. <3.4. Debt Relief from Student Loans> Relief from repayment obligations under federal student loan programs has been available to teachers since before enactment of the HEA. The National Defense Education Act of 1958 (NDEA, P.L. 85-864) included a loan forgiveness component of the National Defense Student Loan (NDSL) program that was intended to increase the number and quality of teachers in U.S. schools. The NDSL program was incorporated into the HEA through the Education Amendments of 1972 (P.L. 92-318) and was later renamed the Federal Perkins Loan Program by amendments made through the Higher Education Amendments of 1986 ( P.L. 99-498 ). Under current HEA provisions, qualified teachers may receive relief from up to 100% of their Perkins Loan balance, depending on years of service; although new Perkins Loans are no longer being made. Loan forgiveness for teachers was expanded to include loans made under the Federal Family Education Loan and Direct Loan programs by the Higher Education Amendments of 1998 ( P.L. 105-244 ). For individuals who teach for five years on a full-time basis in eligible low-income schools, up to $5,000 may be canceled. Forbearance is available to borrowers during their five years of qualified teaching. Only individuals who are new borrowers on or after October 1, 1998, are eligible for this loan forgiveness benefit. The Taxpayer-Teacher Protection Act of 2004 ( P.L. 108-409 ) increased the maximum amount of loan forgiveness to $17,500 for special education teachers and those teaching mathematics or science in secondary schools. Teachers may also qualify for student debt relief under the Public Service Loan Forgiveness (PSLF) program, enacted by the College Cost Reduction and Access Act of 2007 ( P.L. 110-84 ). Under the PSLF program, individuals may qualify to have the balance (principal and interest) of their Direct Loans forgiven if they have made 120 full, scheduled, monthly payments on those loans, according to certain repayment plans, while concurrently employed full-time in public service (which can include teaching). <4. HEA Reauthorization Issues> The 116 th Congress is expected to consider reauthorizing the HEA. Thus far, numerous bills have been introduced to amend current law and address teacher recruitment and retention. This section discusses issues that may arise as the potential reauthorization process unfolds. The policy issues discussed here are based on existing and prior legislative proposals and are intended to provide some context for their consideration. These issues include modifying the Title II grant partnership structure, targeting support to specific teacher shortage areas or non-instructional staff, expanding teacher preparation program accountability requirements, reforming administration of the TEACH Grant program, and expanding or consolidating teacher loan forgiveness programs. <4.1. Title II Grant Partnership Structure> Currently, IHEs are a required partner in the TQP program and often serve as the sponsor of a partnership. With the rise of alternatives to traditional routes into the teaching profession, some proposals would eliminate the requirement that IHEs be a partner by allowing non-IHE-based teacher preparation providers to serve as TQP grantee sponsors as well. Current law defines a "partner institution" as a four-year IHE. Policymakers may consider amending this definition to allow two-year IHEs or other nonprofit teacher preparation programs to serve as a TQP partner institution or partnership sponsor. To be a partner in a TQP grant, LEAs and schools must be designated as "high-need" according to definitions in Title II of the HEA. Those definitions attempt to direct support, in part, toward low-income LEAs and schools. Some feel the thresholds set by the HEA are too low and that funds should be reserved for very low-income LEAs and schools. <4.2. Targeting School Staff> Current federal teacher recruitment and retention programs often direct support to certain instructional areas that are considered hard-to-staff, such as mathematics, science, and special education. Some feel these provisions should be broadened to include additional subject areas (e.g., English language learner instruction) or certain hard-to-staff schools (e.g., rural and/or Native American schools). Others have proposed that the targeted position types should be broadened to include non-instructional staff such as school counselors, librarians, literacy specialists, and coaches. There are also proposals focused on staff who serve in leadership roles (e.g., establishing principal residency programs similar to the current teacher residencies). Some have pushed for Title II amendments that would support teacher advancement into leadership through the creation of career ladders and incentives for master teachers. Still others would like to allow the Secretary to set aside Title II funds for a state grant for leadership training activities. <4.3. Preparation Program Accountability> Under current HEA provisions, IHEs that operate teacher preparation programs are required to report information on their performance including pass rates and scaled scores on teacher certification exams. States are required to report these data in aggregate as well as the results of program evaluations and any programs designated as "low-performing." Thirty states have never identified a program as low-performing and fewer than 3% of all programs nationwide have ever been identified as low-performing or at-risk of such designation. Some policymakers have argued that current accountability provisions are inadequate. Some have asserted that non-IHE-based programs in particular are not sufficiently scrutinized. Others think that all teacher preparation programs should be subject to outcome measures beyond passage of certification exams and that programs should be judged by their graduates' professional readiness, ability to find employment, and retention in teaching, as well as the performance of their students. <4.4. TEACH Grant Program Administration> The TEACH Grant program has reportedly encountered significant administrative challenges and has been the subject of increasing congressional scrutiny. Changes that have been suggested to alleviate these issues include providing grant recipients additional time to complete the service requirement, the option to pay back part of their grant if they are unable to complete the service requirement in full, and a better process by which to appeal the conversion of their grant to a loan. Some observers are concerned that students in the first year or two of college are not fully aware of what profession they want to go into, and they have advocated that TEACH Grants be made available to student in their junior and senior years of college and/or to master's degree candidates. Others have sought to limit TEACH Grants to programs with a proven ability to prepare individuals effectively for the teaching profession. <4.5. Loan Forgiveness> Teachers may access several separate loan relief options under current federal law. In many cases, these options serve similar purposes, but benefit requirements may conflict with or not complement one another (i.e., exercising eligibility for one program may nullify or forestall eligibility for another). The existence of multiple programs may lead to borrower confusion as well as administrative complexity. Policymakers might consider consolidating programs or targeting them to a narrower set of borrowers. Some argue that the requirements teachers must meet to qualify for loan relief are too difficult to understand and/or fulfill. These requirements caused the loan forgiveness programs to encounter administrative problems similar to those in the TEACH Grant program. Policymakers may consider whether to simplify these requirements to improve the effectiveness of loan forgiveness as a teacher retention tool.

The K-12 teacher workforce is relatively large—each year, about 4 million teachers are employed in U.S. elementary and secondary schools. Turnover in these schools is high relative to earlier periods—about 1 in 10 teachers left his or her job in 2018. This figure follows federal statistical trends that show a sizable growth in teacher attrition since the 1980s. Teacher shortages and high turnover raise a number of recruitment and retention issues that may be of interest to policymakers. One of the more difficult issues involves a debate between observers who are concerned about an overall teacher shortage, and others who see it largely as a distributional problem where some schools have a relative surplus of teachers while other schools struggle with a persistent, unmet demand for qualified teachers. Those in the former camp focus on policies that aim to improve the recruitment and retention in the teaching profession in general, while those in the latter camp focus on policies that target education funding to fill positions for certain hard-to- staff schools and/or subject areas. Current federal policy addresses recruitment and retention. The Higher Education Act (HEA) authorizes grant support to institutions that prepare K-12 teachers as well as financial aid to students interested in the teaching profession. Title II of the HEA authorizes grants for improving teacher education programs, strengthening teacher recruitment efforts, and providing training for prospective teachers. Title IV of the HEA authorizes Teacher Education Assistance for College and Higher Education (TEACH) Grants to encourage students to prepare for a career in teaching and student loan forgiveness for teachers that remain in the classroom over a number of years. The HEA was last comprehensively amended in 2008 by the Higher Education Opportunity Act (HEOA, P.L. 110-315 ). Congressional consideration of potentially reauthorizing the HEA is ongoing, including the introduction of numerous bills to amend the portions of current law that address teacher recruitment and retention. Issues that may arise as the reauthorization process unfolds include modifying the Title II grant partnership structure, targeting support to specific teacher shortage areas or non-instructional staff, expanding teacher preparation program accountability, reforming administration of the TEACH Grant program, and expanding or consolidating teacher loan forgiveness programs.

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<1. Introduction> Economic factors, new technologies, environmental concerns and associated regulatory policies, and other developments are changing the energy sources used to generate electricity in the United States. One notable change is increased generation from variable renewable energy (VRE) sources such as wind and solar. According to the U.S. Energy Information Administration (EIA), combined generation from wind and solar sources increased from 1% of total electricity generation in 2008 to 9% of total electricity generation in 2018. These sources have weather-dependent availability, meaning that changing weather patterns can change available electricity supply from those sources. In contrast, conventional sources for electricity generation, such as coal, natural gas, or nuclear energy, are usually available under normal weather conditions. Power system operators have adjusted existing reliability standards and planning practices to accommodate weather-dependent wind and solar sources. Further adjustments are being discussed as generation from wind and solar sources continue to grow. Congress required the setting and enforcement of electric reliability standards in the Energy Policy Act of 2005 (EPACT05; P.L. 109-58 ). These standards are developed by the North American Electric Reliability Corporation (NERC) and approved by the Federal Energy Regulatory Commission (FERC) in the United States. These mandatory standards apply to the bulk power system, which is comprised mostly of large-scale generators and electricity transmission systems. Small-scale generators (e.g., rooftop solar electricity generation), publicly owned utilities, and local electricity distribution systems are generally under the jurisdiction of state public utility regulatory commissions (PUCs). To date, generation from wind and solar sources does not appear to be causing electric reliability issues at the national level. NERC's 2018 annual report on reliability showed that, of the 13 metrics it uses to assess reliability, 9 were stable or improving over the 2013-2017 period and 4 showed trends that were, at least partly, inconclusive. Of the four metrics with inconclusive trends, three improved over this period for a subset of bulk power system components. Data from NERC also indicate that reliability performance is currently stable in regions such as the Midwest and California where the shares of generation from wind and solar sources are above the national average. Questions remain about how higher levels of generation from wind and solar sources might impact electric reliability moving forward. This report provides background on reliability planning in the United States with an emphasis on the effects of daily and seasonal variability in wind and solar sources on the bulk power system. Members of Congress might consider how reliability could be impacted if generation from wind and solar sources increases, as many analysts expect. Other reliability concerns, such as cyber and physical security, small-scale generators, and local distribution networks, may be of interest to Congress but are not discussed at length in this report. <2. Electric Power Sector Overview> As shown in Figure 1 the electric power sector consists primarily of three systems. The generation system consists of power plants that generate electricity. The transmission system consists of high voltage transmission lines that move power across long distances. The distribution systems make final delivery of electricity to homes and businesses. This report will refer to the combined generation and transmission systems as the bulk power system, following the definition Congress established in EPACT05: The term "bulk-power system" means (a) facilities and control systems necessary for operating an interconnected electric energy transmission network (or any portion thereof); and (b) electric energy from generation facilities needed to maintain transmission system reliability. The term does not include facilities used in the local distribution of electric energy. Notably, the discussion in this report generally excludes distributed energy resources such as rooftop solar electricity generation. These resources might pose separate reliability challenges that Congress might choose to consider. Ownership structures for bulk power system components vary across the country. In some regions, shown in Figure 2 , competitive markets exist for wholesale electric power, and regional transmission organizations (RTOs) and independent system operators (ISOs) manage the generation and transmission components of the power system. In RTO regions, electricity generators compete to sell power to distribution utilities. The RTO manages an auction process to select the sources for generation that distribution utilities resell to end-use customers. The RTO is also responsible for managing the transmission system and overseeing reliability within its boundaries. In RTO regions, market signals primarily determine investment decisions. Some RTOs operate separate auction processes specifically for essential reliability services. According to FERC, two-thirds of U.S. electricity demand comes from RTO regions. In non-RTO regions, vertically integrated electric utilities are largely responsible for power generation, transmission, and distribution of electricity to end-use customers. These utilities are regulated as natural monopolies and, unlike utilities in RTO regions, do not face competition for generation and transmission services. These utilities may also take responsibility for some aspects of reliability as discussed in the Appendix . State regulators generally oversee these utility operations and are responsible for authorizing new investments, including those related to reliability. Even in RTO regions, municipal utilities and rural electric cooperatives may own generation and transmission system components and oversee their operation. These systems and operation are generally outside of federal and state regulatory jurisdiction. <3. What Is Electric Reliability?> A colloquial definition of electric reliability is "having power when it is needed." Operators of bulk power system components, though, require specific and highly technical definitions for reliability. For purposes of regulation, these definitions are provided in the form of NERC reliability standards. NERC develops individual standards for each set of power system components, which may include separate standards covering different reliability timescales for each set of components. As NERC defines "reliability standard," it includes requirements for the operation of existing Bulk-Power System facilities, including cybersecurity protection, and the design of planned additions or modifications to such facilities to the extent necessary to provide for Reliable Operation of the Bulk-Power System, but the term does not include any requirement to enlarge such facilities or to construct new transmission capacity or generation capacity. When all bulk power system components meet reliability standards, NERC expects the vast majority of individuals to have the full amount of electricity they desire. NERC reliability standards do not apply to local electricity distribution system components and operations (see discussion in text box, "Distribution System Reliability"), so localized outages could still occur when reliability standards are met. An analysis found that from 2008 to 2014, upwards of 90% of power outages originated in local distribution systems. This measure includes major events (e.g., hurricanes), but may not capture the full scope or severity of large-scale outages. NERC's reliability standards are meant to ensure an Adequate Level of Reliability (ALR) for the bulk power system during normal operating conditions and following localized disturbances such as lightning strikes. For economic reasons, some risk of occasional power loss is accepted in reliability planning. A common goal is to limit outages to no more than 1 day every 10 years under normal operating conditions. Achieving ALR is not the same goal as preventing all brownouts and blackouts. Bulk power system outages could still occur when reliability standards are fully met. These outages might follow a major event such as a hurricane affecting large areas of the bulk power system. Generally, factors that increase uncertainty reduce reliability, and factors that reduce uncertainty increase reliability. Wind and solar are types of variable renewable energy sources of electricity, and weather is a key source of uncertainty for forecasts of generation from these sources. In contrast, conventional sources such as coal and nuclear have long-lasting, on-site fuel supplies that reduce the uncertainty about their availability. This difference has raised questions about how to integrate large amounts of VRE sources into the existing bulk power system, since it was not originally designed to accommodate large amounts of weather-dependent sources of electricity. Figure 3 shows typical patterns for electricity generation for wind and solar sources in the United States. Wind generation tends to peak overnight and during winter months. Solar generation, on the other hand, tends to be highest during the middle of the day and during the summer. Though these typical patterns are well established for most of the United States, actual generation from wind and solar sources at any particular moment will depend upon specific weather conditions. <4. Changing Electricity Generation Profile> The electric power sector is increasing its use of sources associated with more uncertainty in availability. According to the U.S. Energy Information Administration, combined generation from wind and utility-scale solar sources increased from 1% of total electricity generation in 2008 to 8% of total electricity generation in 2018. Of the generation in 2018 from wind and utility-scale solar sources, 80% came from wind. Conventional sources such as coal, natural gas, and nuclear comprised a large majority of generation over this time period. The annual share of generation from different sources from 2008 to 2018 in shown in Figure 4 . National-level data are not indicative of how generation from wind and solar sources varies across the country. Similarly, annual data do not show how electricity generation varies throughout the day or during different seasons. For example, during brief periods in some regions, wind and solar sources have provided a majority of the energy for electricity generation. Some examples are Generation from wind sources supplied 56% of electricity demand in ERCOT, the RTO covering most of Texas, at 3:10 am on January 19, 2019. Generation from solar sources supplied 59% of electricity demand in CAISO, the RTO covering most of California, at 2:45 pm on March 16, 2019. Generation from wind supplied 67.3% of electricity demand in SPP, the RTO covering many central states, at 1:25 am on April 27, 2019. These events all set records for maximum share of generation from renewable sources, and the bulk power system maintained reliability during them. Some advocates for increased use of wind and solar sources have pointed to events like these as evidence that VRE sources can be used to an even greater degree without impacting reliability. Extrapolating these events to scenarios of correspondingly high national levels of generation from wind and solar sources, however, is complicated by several factors. First, these events were all short lived, typically five minutes or less. Further, these events all occurred when electricity demand was relatively low, namely weekend days during cool months. During times of the year when electricity demand is high, such as the summer cooling season, the share of electricity generation from renewable sources is lower. For example, SPP has reported that during its peak demand hours in 2016, wind supplied 11% of generation while conventional sources such as coal (47%) and natural gas (33%) supplied the majority of electricity. The seasonality of VRE availability also likely contributed to these record-setting events, especially for wind, which tends to have maximum generation during winter and spring months. <5. Balancing Variable Renewable Energy> Electricity is essentially generated as a just-in-time commodity, due to limited energy storage capacities. If electricity supply and demand differ by too much, system components could be damaged, leading to system instability or potential failure. The operations that keep electricity supply and demand within acceptable levels are known as balancing. Balancing involves increasing or decreasing output from generators according to system conditions over timescales of minutes to hours, and it is a critical aspect of maintaining reliability. Balancing authorities, discussed in the Appendix , issue orders to generators to change their output as needed to maintain reliability. Balancing authorities can be utilities, or RTOs can act as balancing authorities in the regions where they exist. The rules for selecting which generators must increase or decrease output typically reflect an approach known as security-constrained economic dispatch (SCED). Under SCED, system operators ensure that electricity is produced at the lowest overall cost while respecting any transmission or operational constraints. When generation from a low-cost source would jeopardize reliability, a higher-cost source is used. In other words, SCED has two goals: affordability and reliability. SCED favors sources with low operating costs, and wind and solar sources do not have to pay for fuel. As a result, wind and solar sources typically generate the maximum amount of electricity they can at any moment. Balancing typically involves quickly increasing or decreasing output from other sources in response to variable output from wind and solar sources. The capability to quickly change output is known as ramping, and electricity sources differ in their ramping capability. System operators use a variety of electricity sources to balance generation from wind and solar sources. Some may be more commonly used in certain regions of the country, depending on local factors. Each has different benefits and limitations, some of which are summarized below. Reciprocating internal combustion engines (RICE) have seen an increase in installed capacity since 2000, partly in response to higher levels of generation from wind and solar sources. These sources have high ramping capabilities and use mature technologies. They usually use natural gas or fuel oil as fuel, so they have associated fuel costs and environmental impacts. Steam turbines, usually fueled by coal or nuclear energy , have historically been operated at steady, high output levels, barring maintenance needs, because that is the most efficient and lowest cost operational mode for them. These sources are capable of ramping to some extent. This operational mode may provide revenue for certain sources located in regions of the country with low wholesale electricity prices. It might also result in higher costs for electricity from these sources, compared to when they are not ramped. Wind and solar sources located in one area can balance wind and solar sources in other areas, since it is rare to have cloudy skies or calm winds over broad regions of the country simultaneously. This could have the benefit of using sources with zero fuel costs and zero emissions for balancing; however, existing electricity transmission system constraints limit the extent to which this is possible. Energy storage can be used for balancing because it stores electricity during periods of high supply and then provides electricity when supply is low. Many experts also see storage as a way to address the daily variability shown in Figure 3 and thereby expand the utilization of installed wind and solar sources. Many energy storage types are expensive and not currently deployed in large amounts. Energy storage can be co-located with wind or solar generators, or it can be located at other sites in the power system or the distribution system. Demand response, sometimes called demand-side management, involves adjusting electricity demand in response to available supply. This is counter to how the power system has historically been operated, but has become more commonly used. Demand response includes programs in which electricity consumers voluntarily reduce their usage in exchange for financial compensation. Demand response can be a low-cost balancing option because it does not require electricity generation; however, it comes at a social cost because consumers do not use electricity at their preferred time.The electric power sector is working to improve the use of weather and power forecasting in system balancing. For example, MISO changed its wholesale electricity market rules in 2011 to create a Dispatchable Intermittent Resources program. This program allows wind sources to make use of their own generation forecasts and offer generation at five-minute intervals. Previously, offers had to be made on an hourly basis. This was creating inefficiencies in using wind sources since their output can vary over the course of an hour. Improved forecasting could result in increased use of low-cost wind and solar sources, but forecasting methodologies are still being optimized for this purpose. The above considerations apply to bulk power system balancing today. Technological or policy developments could alter how system balancing is conducted in the future. Additionally, if wind and solar sources provided even larger shares of overall generation, new benefits or limitations for each balancing source type could emerge. <6. Federal Government Activities Affecting Reliability and Balancing> Work at the federal level to address reliability needs associated with increased use of wind and solar sources has been underway for some time. For example, NERC created a task force in December 2007 to study the integration of VRE and identify gaps in reliability standards. The federal government undertakes actions in addition to the development and enforcement of reliability standards that affect electric reliability. FERC regulates interstate electricity transmission, which can be a key determinant of what sources are available to balance wind and solar. FERC also regulates wholesale electricity markets in most regions of the country. Market rules, including how SCED is implemented, can influence which individual generators are used for system balancing. Market prices can directly affect project revenues and influence investment decisions. Additionally, Congress funds projects and programs that support technology development and deployment, including for sources and operations that improve reliability. Some examples demonstrate the breadth of federal activities related to reliability. In EPACT05, Congress created Section 219 of the Federal Power Act that directs FERC to establish financial incentives for certain electricity transmission investments. FERC's resulting rule became effective in 2006 and includes provisions allowing higher rates of return, accelerated depreciation, and full cost recovery, all for investments and activities that FERC approves on a case-by-case basis. Transmission investment has increased since the passage of EPACT05, although there may be many factors driving this investment. On March 21, 2019, FERC opened an inquiry on potential changes to its transmission incentive policy. In 2011, FERC issued a rule, Order No. 1000, revising requirements related to new transmission projects. Among other revisions, Order No. 1000 increased the weight given to achieving public policy requirements when FERC considers approval of transmission projects. An example of a public policy requirement might be a state requirement that a specified share of electricity sales come from renewable sources, a policy commonly known as a renewable portfolio standard. New transmission capacity is often needed to access and balance wind and solar sources. Several FERC orders demonstrate how market rules are changing in response to increased need for balancing and ramping. Order No. 745 allows demand response to earn compensation from wholesale electricity markets for providing energy services to balance the power system in day-ahead and real-time markets. Order No. 841 allows energy storage systems to earn compensation from wholesale electricity markets for providing any energy, capacity, and essential reliability services they are capable of providing. Implementation of Order No. 841 might lead to greater deployment of energy storage which could improve balancing. Various grant programs administered by the Department of Energy (DOE) have supported the development of new technologies that can balance wind and solar sources or support reliability in other ways. These include research and development into electricity generators; wind forecast models and methodology; power electronics for solar sources; and standards for interconnection into the bulk power system. DOE's Office of Energy Efficiency and Renewable Energy (EERE) has funded research meant to improve short-term weather forecasting specifically related to wind power forecasts in two Wind Forecast Improvement Projects. DOE reports that advances made during this research include improved observations of meteorological data and improved methodologies for using those data in wind forecasts. <7. Potential Issues for Congress> Congress has held hearings related to the changes in the electricity generation profile of the country, and some Members raised concerns about reliability during these hearings. Members may continue to examine reliability issues moving forward, in light of projections that wind and solar will become an increasingly larger share of electricity generation. For example, EIA's projection of existing law and regulations shows wind and solar sources contributing 23% of electricity generation in 2050. Members may also choose to include reliability as part of any debate about policies to increase the generation from wind and solar sources. Preparing for higher levels of generation from wind and solar might require new approaches to maintaining electric reliability. The existing regulatory framework can accommodate some changes since FERC and NERC have authority to initiate development of new reliability standards. For example, NERC has raised the issue of whether it should develop new reliability metrics in light of the increasing use of VRE for electricity generation. In addition to its capacity supply assessment, NERC's Reliability Assessment Subcommittee should lead the electric industry in developing a common approach and identify metrics to assess energy adequacy. As identified in this assessment, the changing resource mix can alter the energy and availability characteristics of the generation fleet. Additional analysis is needed to determine energy sufficiency, particularly during off-peak periods and where energy-limited resources are most prominent. Congress could choose to provide guidance for FERC and NERC activities in this area. Congress could also assess whether the existing regulatory framework is sufficient to maintain reliability if generation from wind and solar sources increase above current projections. One area of discussion is the siting and approval of transmission projects, particularly those that might result in enhanced availability of wind and solar sources for system balancing. Currently, the siting of electricity transmission facilities is largely left to the states. Section 1221 of EPACT05 directs FERC to issue permits for the construction or modification of transmission facilities in certain circumstances in areas designated by the Secretary of Energy as "National Interest Electric Transmission Corridors." This authority was to be exercised only if the relevant state agency lacks the authority to permit the transmission facilities or has "withheld approval for more than one year." Shortly after passage of EPACT05, DOE set out to designate the National Interest Electric Transmission Corridors and FERC set up a framework for permitting transmission facilities on those corridors. However, federal courts vacated both agencies' actions, and neither agency has taken any significant action pursuant to their Section 1221 authority since that time. As noted above, most power outages occur on local electricity distribution systems, and these are regulated by state or local governments. Congress could consider expanding federal activities affecting distribution system reliability. This might involve studies of the factors (e.g., weather, aging infrastructure, VRE) that result in power outages. Such activities might also include federal financial support for projects or practices that improve reliability of distribution systems or encouraging new operational regimes such as independent distribution system operators (see earlier discussion of this issue in text box, "Distribution System Reliability"). Congress might also consider acting on the emerging and related issue of electric resilience. Some support for an enhanced federal role in electricity system resilience exists. For example, the National Academy recommends Congress and the Department of Energy leadership should sustain and expand the substantive areas of research, development, and demonstration that are now being undertaken by the Department of Energy's Office of Electricity Delivery and Energy Reliability and Office of Energy Efficiency and Renewable Energy, with respect to grid modernization and systems integration, with the explicit intention of improving the resilience of the U.S. power grid. Many sources currently used to balance wind and solar have received federal financial support in the past, such as tax credits, grants to states or other entities, and DOE research programs. Congress might consider continuing or expanding this type of support if current activities affecting reliability were deemed insufficient. <7.1. Appendix. Key Reliability Concepts for Policymakers> Electric reliability encompasses short-term and long-term aspects as shown in Figure A-1 . System operators and reliability planners, governed by reliability standards from the North American Electric Reliability Corporation (NERC), have different practices in place to address reliability over these various timescales. Reliability over Different Timescales At the smallest timescales, typically seconds or less, are factors such as frequency control, voltage support, and ramping capability. These are often automatic responses of power system components. NERC refers to these factors as Essential Reliability Services (ERS), and they are sometimes called ancillary services. Historically, many ERS were provided as a natural consequence of the physical operational characteristics of steam turbines. Wind and solar generators do not inherently provide ERS in the same way. They require additional electrical components to do so, and these are being more commonly deployed. In some cases, FERC has mandated the use of technologies that allow wind and solar to provide ERS. Balancing, described in the main body of this report, typically occurs over minutes to hours. Unlike ERS, balancing typically requires action by a system operator. Long-term aspects of reliability relate to planning for energy and transmission needs over months to years. This is sometimes referred to as resource adequacy. Policy goals, such as preferences for certain electricity sources over others, tend to influence long-term reliability planning more than shorter-term reliability aspects. Planning for resource adequacy involves forecasts of electricity supply and demand. For variable renewable energy (VRE) like wind and solar sources, these forecasts require assumptions about wind and solar availability. Reliability planners commonly use planning reserve margins to assess whether planned generation and transmission capacity will be sufficient to supply electricity demand. A planning reserve margin is the difference between expected peak demand and available generating capacity at the peak period in each forecast year. It is often expressed as a percentage where the difference is normalized by the peak demand value. According to NERC, reserve margins "in the range of 10-18 percent" are typically sufficient for ensuring reliability, although "by itself the expected Planning Reserve Margin cannot communicate how reliable a system is." Reserve margins are calculated months or years ahead as part of assessments of whether and where reliability concerns might exist. High planning reserve margins may indicate a likelihood that reliability will be maintained, but, especially when variable sources are present, they might not be predictive. That is, a high planning reserve margin does not guarantee reliability and a low planning reserve margin does not guarantee power disruptions. At the national level, NERC annually assesses resource adequacy over a 10-year forecasting window. NERC uses historic VRE generation data in its assessment and has noted "methods for determining the on-peak availability of wind and solar are improving with growing performance data." In its 2018 Long-Term Reliability Assessment, NERC recommended enhancing its reliability assessment process to account for events, like those noted in the " Changing Electricity Generation Profile " section above, during which VRE sources provided large shares of generation during off-peak periods. Solar eclipses, though rare events, provide opportunities to test the ability of grid operators to reliably operate the grid when solar sources are unavailable. The August 21, 2017, solar eclipse that affected many parts of the United States was one such opportunity. According to NERC, no reliability issues developed during the event, in part because of the measures implemented in advance by the electric industry. Electric Reliability Regulatory Framework Current electric reliability planning is a coordinated process involving multiple entities and spanning multiple jurisdictions. These reliability planning organizations share responsibility for, among other responsibilities, ensuring electricity from wind and solar sources are reliably integrated into the power system. Table A-1 summarizes these entities and their responsibilities. In the Energy Policy Act of 2005 (EPACT05; P.L. 109-58 ), Congress gave FERC responsibility for reliability of the grid through the setting and enforcement of electric reliability standards. These standards are developed by NERC and approved by FERC in the United States. NERC has set over 100 reliability standards that cover all timescales of reliability planning. Congress gave NERC authority to enforce reliability standards in EPACT05. Per statute, NERC has delegated this authority to the Regional Entities shown in Figure A-2 . The jurisdiction for enforcing compliance with reliability standards includes "all users, owners and operators of the bulk-power system" within the contiguous United States. Separate from the tasks of setting and enforcing reliability standards is the task of reliably operating the power system in real time. Per NERC's reliability standards, balancing authorities carry most of the responsibility for matching generation levels with electricity demand. Balancing authorities can have different geographic footprints. RTOs act as balancing authorities and they may have a footprint spanning multiple states. Other balancing authorities might have a footprint spanning an area within a single state. Another class of entities with operational responsibilities are reliability coordinators. A reliability coordinator may operate over larger geographic areas than balancing authorities and can overrule real-time decisions by balancing authorities to preserve the larger scale power system reliability. RTOs typically also act as reliability coordinators. NERC has certified 66 balancing authorities and 11 reliability coordinators in the United States.

The share of wind and solar power in the U.S. electricity mix grew from 1% in 2008 to 8% in 2018. Wind and solar are variable renewable energy (VRE) sources. Unlike conventional sources, weather variability creates uncertainty about the availability of VRE sources. This uncertainty could potentially result in a lack of reliability. Some Members of Congress have expressed concerns about the reliability of the electric power system given recent growth in generation from wind and solar sources and projections that growth will continue. According to official metrics, electric reliability was generally stable or improving over the 2013-2017 period. In other words, generation from wind and solar sources does not appear to be causing electric reliability issues at the national level over this period. Questions remain, however, about maintaining reliability if generation from wind and solar should increase above current projections, as some Members of Congress have supported. Entities in the electric power sector and their regulators are evaluating changes to their approaches to reliability to prepare for this possibility. Congress might seek clarification on whether new or modified approaches are required. Under the current regulatory framework, the federal government oversees reliability for the generation and transmission systems of the electric power sector. These components comprise the bulk power system and include large-scale wind and solar sources. The Energy Policy Act of 2005 (EPACT05; P.L. 109-58 ) authorized the Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC) to develop and enforce mandatory reliability standards for the bulk power system. Small-scale wind and solar sources, such as rooftop solar photovoltaic (PV) panels, are connected to the distribution system which is localized and under state jurisdiction. Federal mandatory reliability standards do not apply to the distribution system. The colloquial definition of reliability is "having power when it is needed," but regulators and operators of power system components require a more precise statement of objectives and metrics. FERC and NERC have developed numerous technical standards to address reliability. These standards apply over the range of timescales over which reliability is measured, from milliseconds to years. FERC has approved approximately 100 reliability standards to date, and new standards are developed as needed to respond to changing conditions, including increasing generation from wind and solar sources. Multiple entities spanning multiple jurisdictions work together to maintain electric reliability. For economic reasons, wind and solar sources tend to be utilized to the maximum extent possible. When their availability changes, which can happen quickly, other sources must quickly respond to maintain reliability. Typically, other sources respond by increasing or decreasing their output, an operation known as balancing. Multiple types of electricity sources are used to balance wind and solar, including some fossil fuel-fired generators, some nuclear generators, other wind and solar sources (provided sufficient transmission availability), energy storage, and demand response. Each of these has benefits and limitations. Some sources and system operations that currently support balancing have received federal financial support in the past, such as tax credits, grants to states or other entities, and Department of Energy research programs. Congress might consider continuing or expanding such support, if lawmakers believed current activities affecting reliability were insufficient. Beyond developing and enforcing reliability standards, other federal government activities affect electric reliability. For example, FERC's regulation of interstate electricity transmission can be a key determinant of how effectively different electricity sources can meet demand. FERC's regulation of the wholesale electricity markets that operate in some regions of the country may also affect reliability, because market rules can influence which individual generators are used for system balancing. Market prices directly affect project revenues, influencing the kinds of sources that are developed. Additionally, some projects and programs Congress funds support reliability by enabling technology development and providing financial support for projects that support reliability.

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<1. Introduction> Congress has long been interested in the status of indigenous peoples abroad. In 1992, the 102 nd Congress enacted H.R. 5368 ( P.L. 102-391 ) requiring the State Department's annual human rights report to "describe the extent to which indigenous people are able to participate in decisions affecting their lands, cultures, traditions and the a llocation of natural resources, and assess the extent of protection of their civil and political rights." Issues relating to indigenous peoples periodically have been considered in hearings focused on such issues as environmental protection, energy opportunities, and security cooperation. This report provides statistical information on indigenous peoples in Latin America, including populations and languages, socioeconomic data, land and natural resources, human rights, and international legal conventions. Resource lists for each section (languages; socioeconomics; land and resources; international organizations; and human rights) are available in the tables of Appendix A . Table B-1 lists national agencies that oversee indigenous affairs in each country. <1.1. Terms> Definitions of indigenous peoples vary. The United Nations (U.N.) has not adopted an official definition, but instead relies on self-identification to categorize indigenous populations around the world; many countries do the same. However, the U.N. web page dedicated to indigenous peoples does state "indigenous peoples are inheritors and practitioners of unique cultures and ways of relating to people and the environment. They have retained social, cultural, economic and political characteristics that are distinct from those of the dominant societies in which they live." The annex of the U.N. Declaration on the Rights of Indigenous Peoples states "indigenous peoples have suffered from historic injustices as a result of, inter alia , their colonization and dispossession of their lands, territories and resources." The Organization of American States' (OAS) American Declaration on the Rights of Indigenous Peoples repeats the U.N. Declaration language and adds "indigenous peoples are original, diverse societies with their own identities that constitute an integral part of the Americas." According to OAS estimates, there are more than 50 million people of indigenous descent in the Western hemisphere. This report examines those living in Latin American and the Caribbean. According to the Manual for National Human Rights Institutions that accompanied the U.N. Declaration on the Rights of Indigenous Peoples, "indigenous peoples have argued against the adoption of a formal definition at the international level, stressing the need for flexibility and for respecting the desire and the right of each indigenous people to define themselves. As a consequence, no formal definition has been adopted in international law. A strict definition is seen as unnecessary and undesirable." In counting distinct groups, this report uses the term "indigenous groups" rather than "tribe," "nation," "ethnic minority," or "sociolinguistic group." A 2019 United Nations report included sections titled "the need for disaggregated data" and "the persistent invisibility of indigenous peoples" to address data limitations regarding indigenous people around the globe. However, the report notes progress in Latin America: "only two censuses included self-identification criteria in the 1990 round, but by the 2010 round such criteria were present in 21 of them." Despite some advances, the sources cited in this report contain data limitations, which are discussed in Appendix A . The countries listed in each table or graph may differ from others in this report based on the information available in the sources. <2. Population Data> Latin America is home to 29-45 million indigenous people according to several studies that provided estimates for around 2010. The World Bank stated in a report that "official data on indigenous people are not conclusive, as many technical and sociological difficulties persist in census data collection. Other sources based on estimates and unofficial data refer to 50 million indigenous inhabitants in Latin America (about 10 percent of the total population). For this report, however, we will refer to the official albeit imperfect numbers provided by the national censuses [41.81 million]." Figure 1 illustrates the total number of indigenous people and their share of the total population according to three sources: a 2009 UNICEF report, a 2015 report from the Economic Commission for Latin America and the Caribbean (ECLAC), and a 2015 World Bank Report. Census projections forecast indigenous population increases in many countries in part due to populations that are younger on average than non-indigenous populations and in part due to an increase in self-identification. Table 1 shows a breakdown by country of indigenous populations and their share of the overall population. CRS created the following tables from several sources; publication dates and methodologies differed. The countries listed in each table may differ from others in this report based on the information available in the sources. Figure 2 illustrates the range of estimates regarding the indigenous population as a percentage of the general population in each country. Bolivia's steep decrease in the indigenous population reflects "reasons that probably have more to do with discrepancies in how the data were collected between the last two censuses than with a real trend to negative growth," according to the World Bank. More generally, differences in data collection between censuses and across countries make it difficult to estimate population increases. <2.1. Indigenous Groups and Languages> To raise awareness and mobilize action, the U.N. declared 2019 the International Year of Indigenous Languages, yet figures on indigenous groups and languages vary among sources. Figure 3 shows the total number of indigenous groups in Latin America as identified by three sources. A 2009 UNICEF report identified a total of 655 indigenous groups in Latin America. The 2014 ECLAC report cites 826 indigenous groups in Latin America although it does not provide a country breakdown. Of these 826, about 200 indigenous groups live in voluntary isolation, which is defined by an Inter-American Commission on Human Rights report as groups that "do not maintain sustained contacts with the majority non-indigenous population." The World Bank's 2015 report identifies 772 indigenous groups in Latin America. According to several sources, indigenous languages number fewer than the number of indigenous groups across the region (see Figure 4 ). The 2015 World Bank report found 558 indigenous languages across 20 countries of Latin America, while a 2009 UNICEF report found 551 languages across the same 20 countries. Of these 551, the latter report found that 111 languages are vulnerable to extinction although five (Quechua, Nahuatl, Aymara, Yucatan Maya, and Ki'che') had over a million speakers each. In 2019, the Summer Institute of Linguistics (SIL International) reported 880 indigenous languages are spoken across the same 20 Latin American countries. Table 2 shows a breakdown of Latin America's indigenous groups and languages by country according to two sources. CRS created the table from several sources; publication dates and methodologies differed. The countries listed in each table may differ from others in this report based on the information available in the sources. According to the U.S. Census Bureau, approximately 15,000-19,000 indigenous language speakers from Latin America reside in the United States. Additional resources about indigenous groups and languages can be found in Table A-1 . <3. Socioeconomic Data> In a 2015 publication, the World Bank found that 43% of indigenous people in Latin America are poor (living on less than $5.50 a day in 2011 purchasing power parity prices or PPP), and 24% are extremely poor (living on less than $1.90 a day in 2011 PPP prices), more than twice the rates for non-indigenous people. The report also documented education gaps were across the region. Drawing from another World Bank resource, Figure 5 compares rates of indigenous peoples living on less than $5.50 a day compared to the general population in select countries of Central and South America. The World Bank provides statistics on access to various services and opportunities for indigenous peoples in select countries of Central and South America, last updated in October 2018. The following graphs compare indigenous rates of access to these amenities compared with the general population rates by country ( Figure 6 , electricity; Figure 7 , internet; Figure 8 , home ownership; Figure 9 , sewage; and Figure 10 , water). The World Bank also provides labor and education statistics for indigenous peoples in select countries of Central and South America, last updated in October 2018. The following graphs compare indigenous rates compared with general population rates by country ( Figure 11 , literacy; Figure 12 , school attendance; Figure 13 , unemployment; and Figure 14 , low-skill and high-skill employment). In the appendix, Table A-2 lists resources relating to the socioeconomic standing of indigenous peoples in Latin America. <3.1. Land and Natural Resources> A 2017 World Resources Institute (WRI) report states "the precise amount of communal land is not known, but many experts argue that at least half of the world's land is held by Indigenous Peoples and other communities. Some estimates are as high as 65 percent or more of the global land area." The WRI goes on to specify that "globally, Indigenous Peoples and local communities have formal legal ownership of 10 percent of the land, and have some degree of government-recognized management rights over an additional 8 percent." The United Nations' Economic Commission for Latin America and the Caribbean's (ECLAC) 2014 report Guaranteeing indigenous people's rights in Latin America: Progress in the past decade and remaining challenges states that "over the past decade, booming international demand for primary goods (minerals, hydrocarbons, soybeans and other agricultural commodities) has boosted economic growth in the countries of Latin America but has had its cost in the form of a growing number of environmental, social and ethnic conflicts involving extractive industries located in or near indigenous territories." According a 2012 Forest Peoples Programme global report, "[A]n estimated 350 million people live inside or close to dense forests, largely dependent on these areas for subsistence and income, while an estimated range of 60 million to 200 million indigenous people are almost wholly dependent on forests." For the region of Mexico, Central and South America, the report estimates 42-48 million indigenous peoples and 21-26 million forest peoples. Some but not all indigenous peoples are also forest peoples. Some countries did not have population figures for forest people. A 2018 Science article classifies drivers of global tree cover loss using satellite imagery. In Latin America, deforestation accounts for over half of the tree cover loss, shifting agriculture about a third, and, to a smaller degree, forestry, wildfire, and urbanization. In the 2015 report Indigenous Peoples, Communities of African Descent, Extractive Industries , the IACHR wrote that "through the implementation of its monitoring mechanisms, the Commission has consistently received information evidencing the human, social, health, cultural and environmental impacts of [extraction, exploitation, and development activities concerning natural resources] on indigenous peoples and Afrodescendent communities. Many extractive and development activities in the hemisphere are implemented in lands and territories historically occupied by indigenous and Afro-descendent communities, which often coincide with areas hosting a great wealth of natural resources." Table A-3 lists resources about indigenous peoples' lands and natural resources in Latin America. While the titles may not exclusively focus on indigenous peoples, the industries' impact on indigenous people is a part of the analysis of each resource. <4. Human Rights and Multilateral Instruments> Various international human rights mechanisms protect the rights of indigenous peoples of Latin America and the Caribbean. Table 3 identifies those countries that have ratified or voted in favor of the following three multilateral instruments on indigenous peoples' rights: International Labor Organization's Indigenous and Tribal Peoples Convention, 1989 (No. 169). 26 The convention includes sections on land; recruitment and conditions of employment; vocational training, handicrafts and rural industries; and social security and health; education and means of communication. United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). 27 The 2007 declaration covers such topics as self-determination or autonomy; land and environment; employment; religion; language and media; education; discrimination and violence; and health. American Declaration on the Rights of Indigenous Peoples (ADRIP). 28 The 2016 declaration approved by the Organization of American States includes sections on human and collective rights; cultural identity; organizational and political rights; and social, economic and property rights. The United Nations has a Permanent Forum on Indigenous Issues and in 2001 created the Special Rapporteurship on the Rights of Indigenous Peoples, which promote the rights of indigenous peoples across the globe. In 1990, the Organization of American States created the Rapporteurship on the Rights of Indigenous Peoples to promote the rights of indigenous peoples throughout the Western Hemisphere. Table A-4 provides additional resources about the work of international organizations with indigenous peoples. In a 2000 report, the Inter-American Commission on Human Rights (IACHR) wrote "concern for the human rights of indigenous peoples and their members has been a constant feature in the work of the Commission." The IACHR has tracked its work involving indigenous peoples. It hosts multiple sessions per year to hold hearings regarding human rights issues affecting a particular country or subregion of the Western Hemisphere. One of the categories for hearings is the rights of indigenous peoples. Table 4 shows the number of IACHR hearings by country involving indigenous peoples' rights. It also shows the number of Inter-American Court of Human Rights cases brought by indigenous peoples against countries. In the appendix, Table A-5 lists publications that document various human rights issues confronting indigenous peoples. CRS also publishes a number of reports with country-specific information on indigenous peoples' human rights issues. Appendix A. Data Sources and Resources Lists The United Nations Children's Fund (UNICEF) and Fundaci n para la Educaci n en Contextos de Multiling ismo y Pluriculturalidad (the Foundation for Education in Multilingual and Multicultural Contexts or FUNPROEIB) gathered data in 21 Latin American and Caribbean countries in 2009 for its report in two volumes titled Atlas Socioling stico de Pueblos Ind genas en Am rica Latina . The report notes the limitations of using national censuses. In 2014, the United Nations' Economic Commission for Latin America and the Caribbean (ECLAC) gathered population data from 17 Latin American countries using national censuses for Guaranteeing Indigenous People's Rights in Latin America: Progress in the past Decade and Remaining Challenges . The report notes that most countries ask people to self-identify as indigenous with the exception of Peru, which asks people if they speak an indigenous language. In 2015, the World Bank gathered data in 16 countries using national censuses and household survey data in order to publish Indigenous Latin America in the Twenty-First Century: the First Decade . The report notes that the definition of who is indigenous has become increasingly controversial and "underscores the complexity of identifying indigenous people across the region and argues that the conditions of indigeneity vary over time and are, in some cases, context- and country-specific." The current edition of Ethnologue documents language counts for each country and divides them into indigenous and non-indigenous categories. Indigenous languages figures were used in Table 2 as non-indigenous is defined as "a language that did not originate in the country, but which is now established there either as a result of its longstanding presence or because of institutionally supported use and recognition." Only living languages were included in the count, not languages classified as extinct. Ethnologue's "about" section provides details on the methodology, language names, and status of usage. The World Bank's Latin America and Caribbean Equity Lab provides data on poverty, access to services, education and labor (last updated in October 2018). The World Bank notes that ethnic identity is based on self-reported data. Statistics may vary from official statistics reported by governments as the World Bank uses SEDLAC, "a regional data harmonization effort that increases cross-country comparability." The web page of the Inter-American Commission's Human Rights Rapporteurship on the Rights of Indigenous Peoples provides detailed information on hearings and court cases related to indigenous peoples' rights. The data on drivers of forest loss in Latin America are from: Philip G. Curtis, Christy M. Slay, Nancy L. Harris, Alexandra Tyukavina, Matthew C. Hansen, "Classifying drivers of global forest loss," Science , Vol. 361, Issue 6407, pp. 1108-1111, September 14, 2018, at https://science.sciencemag.org/content/361/6407/1108 . There are multiple methodologies for each driver of forest loss using map-based estimates and sample-based estimates. For each table below, sources are listed in reverse chronological order with the year in parentheses following the title. Multiple sources from the same year are listed alphabetically as are sources without a publication date, such as websites. Some sources are global, with a section dedicated to Latin America. Appendix B. National Agencies of Indigenous Affairs

This report provides statistical information on indigenous peoples in Latin America, including populations and languages, socioeconomic data, land and natural resources, human rights and international legal conventions. Resource lists for each section (languages; socioeconomics; land and resources; international organizations; and human rights) are available in the appendix as well as a lists of national agencies that oversee indigenous affairs in each Central American or South American country.

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<1. Introduction> The Bureau of Reclamation (Reclamation), part of the Department of the Interior (DOI), operates the multipurpose federal Central Valley Project (CVP) in California, one of the world's largest water storage and conveyance systems. The CVP runs approximately 400 miles in California, from Redding to Bakersfield ( Figure 1 ). It supplies water to hundreds of thousands of acres of irrigated agriculture throughout the state, including some of the most valuable cropland in the country. It also provides water to selected state and federal wildlife refuges, as well as to some municipal and industrial (M&I) water users. This report provides information on hydrologic conditions in California and their impact on state and federal water management, with a focus on deliveries related to the federal CVP. It also summarizes selected issues for Congress related to the CVP. <2. Recent Developments> The drought of 2012-2016, widely considered to be among California's most severe droughts in recent history, resulted in major reductions to CVP contractor allocations and economic and environmental impacts throughout the state. These impacts were of interest to Congress, which oversees federal operation of the CVP. Although the drought ended with the wet winter of 2017, many of the water supply controversies associated with the CVP predated those water shortages and remain unresolved. Absent major changes to existing hydrologic, legislative, and regulatory baselines, most agree that at least some water users are likely to face ongoing constraints to their water supplies. Due to the limited water supplies available, proposed changes to the current operations and allocation system are controversial. As a result of the scarcity of water in the West and the importance of federal water infrastructure to the region, western water issues are regularly of interest to many lawmakers. Legislation enacted in the 114 th Congress (Title II of the Water Infrastructure Improvements for the Nation [WIIN] Act; P.L. 114-322 ) included several CVP-related sections. These provisions directed pumping to "maximize" water supplies for the CVP (including pumping or "exports" to CVP water users south of the Sacramento and San Joaquin Rivers' confluence with the San Francisco Bay, known as the Bay-Delta or Delta ) in accordance with applicable biological opinions (BiOps) for project operations. They also allowed for increased pumping during certain storm events generating high flows, authorized actions to facilitate water transfers, and established a new standard for measuring the effects of water operations on species. In addition to operational provisions, the WIIN Act authorized funding for construction of new federal and nonfederal water storage projects. CVP projects are among the most likely recipients of this funding. Due to increased precipitation and disagreements with the state, among other factors, the WIIN Act's CVP operational authorities did not yield significant new water exports south of the Delta in 2017 and 2018. However, the authorities may be more significant in years of limited precipitation and thus may yield increased supplies in the future. Although use of the new operational authorities was limited, Reclamation received funding for WIIN Act-authorized water storage project design and construction in FY2017-FY2019; a significant amount of this funding has gone to CVP-related projects. Several state and federal proposals are also currently under consideration and have generated controversy for their potential to significantly alter CVP operations. In mid-2018, the State of California proposed revisions to its Bay-Delta Water Quality Control Plan. These changes would require that more flows from the San Joaquin and Sacramento Rivers reach the California Bay-Delta for water quality and fish and wildlife enhancement (and would thus further restrict water supplies for other users). At the same time, the Trump Administration is exploring options to increase CVP water supplies for users. <3. Background> California's Central Valley encompasses almost 20,000 square miles in the center of the state ( Figure 1 ). It is bound by the Cascade Range to the north, the Sierra Nevada to the east, the Tehachapi Mountains to the south, and the Coast Ranges and San Francisco Bay to the west. The northern third of the valley is drained by the Sacramento River, and the southern two-thirds of the valley are drained by the San Joaquin River. Historically, this area was home to significant fish and wildlife populations. The CVP originally was conceived as a state project; the state studied the project as early as 1921, and the California state legislature formally authorized it for construction in 1933. After it became clear that the state was unable to finance the project, the federal government (through the U.S. Army Corps of Engineers, or USACE) assumed control of the CVP as a public works construction project authority provided under the Rivers and Harbors Act of 1935. The Franklin D. Roosevelt Administration subsequently transferred the project to Reclamation. Construction on the first unit of the CVP (Contra Costa Canal) began in October 1937, with water first delivered in 1940. Additional CVP units were completed and came online over time, and some USACE-constructed units also have been incorporated into the project. The New Melones Unit was the last unit of the CVP to come online; it was completed in 1978 and began operations in 1979. The CVP made significant changes to California's natural hydrology to develop water supplies for irrigated agriculture, municipalities, and hydropower, among other things. Most of the CVP's major units, however, predated major federal natural resources and environmental protection laws such as the Endangered Species Act (ESA; 87 Stat. 884. 16 U.S.C. 1531-1544) and the National Environmental Policy Act (NEPA; 42 U.S.C. 4321 et seq), among others. Thus, much of the current debate surrounding the project revolves around how to address the project's changes to California's hydrologic system that were not major considerations when it was constructed. Today, CVP water serves a variety of different purposes for both human uses and fish and wildlife needs. The CVP provides a major source of support for California agriculture, which is first in the nation in terms of farm receipts. CVP water supplies irrigate more than 3 million acres of land in central California and support 7 of California's top 10 agricultural counties. In addition, CVP M&I water provides supplies for approximately 2.5 million people per year. CVP operations also are critical for hydropower, recreation, and fish and wildlife protection. In addition to fisheries habitat, CVP flows support wetlands, which provide habitat for migrating birds. <3.1. Overview of the CVP and California Water Infrastructure> The CVP ( Figure 1 ) is made up of 20 dams and reservoirs, 11 power plants, and 500 miles of canals, as well as numerous other conduits, tunnels, and storage and distribution facilities. In an average year, it delivers approximately 5 million acre-feet (AF) of water to farms (including some of the nation's most valuable farmland); 600,000 AF to M&I users; 410,000 AF to wildlife refuges; and 800,000 AF for other fish and wildlife needs, among other purposes. A separate major project owned and operated by the State of California, the State Water Project (SWP), draws water from many of the same sources as the CVP and coordinates its operations with the CVP under several agreements. In contrast to the CVP, the SWP delivers about 70% of its water to urban users (including water for approximately 25 million users in the San Francisco Bay, Central Valley, and Southern California); the remaining 30% is used for irrigation. At their confluence, the Sacramento and San Joaquin Rivers flow into the San Francisco Bay (the Bay-Delta, or Delta). Operation of the CVP and SWP occurs through the storage, pumping, and conveyance of significant volumes of water from both river basins (as well as trans-basin diversions from the Trinity River Basin in Northern California) for delivery to users. Federal and state pumping facilities in the Delta near Tracy, CA, export water from Northern California to Central and Southern California and are a hub for CVP operations and related debates. In the context of these controversies, north of Delta (NOD) and south of Delta (SOD) are important categorical distinctions for water users. CVP storage is spread throughout Northern and Central California. The largest CVP storage facility is Shasta Dam and Reservoir in Northern California ( Figure 2 ), which has a capacity of 4.5 million AF. Other major storage facilities, from north to south, include Trinity Dam and Reservoir (2.4 million AF), Folsom Dam and Reservoir (977,000 AF), New Melones Dam and Reservoir (2.4 million AF), Friant Dam and Reservoir (520,000 AF), and San Luis Dam and Reservoir (1.8 million AF of storage, of which half is federal and half is nonfederal). The CVP also includes numerous water conveyance facilities, the longest of which are the Delta-Mendota Canal (which runs for 117 miles from the federally operated Bill Jones pumping plant in the Bay-Delta to the San Joaquin River near Madera) and the Friant-Kern Canal (which runs 152 miles from Friant Dam to the Kern River near Bakersfield). Non-CVP water storage and infrastructure also is spread throughout the Central Valley and in some cases is integrated with CVP operations. Major non-CVP storage infrastructure in the Central Valley includes multiple storage projects that are part of the SWP (the largest of which is Oroville Dam and Reservoir in Northern California), as well as private storage facilities (e.g., Don Pedro and Exchequer Dams and Reservoirs) and local government-owned dams and infrastructure (e.g., O'Shaughnessy Dam and Hetch-Hetchy Reservoir and Aqueduct, which are owned by the San Francisco Public Utilities Commission). In addition to its importance for agricultural water supplies, California's Central Valley also provides valuable wetland habitat for migratory birds and other species. As such, it is home to multiple state, federal, and private wildlife refuges north and south of the Delta. Nineteen of these refuges (including 12 refuges within the National Wildlife Refuge system, 6 State Wildlife Areas/Units, and 1 privately managed complex) provide managed wetland habitat that receives water from the CVP and other sources. Five of these units are located in the Sacramento River Basin (i.e., North of the Delta), 12 are in the San Joaquin River Basin, and the remaining 2 are in the Tulare Lake Basin. <3.2. Central Valley Project Water Contractors and Allocations> In normal years, snowpack accounts for approximately 30% of California's water supplies and is an important factor in determining CVP and SWP allocations. Water from snowpack typically melts in the spring and early summer, and it is stored and made available to meet water needs throughout the state in the summer and fall. By late winter, the state's water supply outlook typically is sufficient for Reclamation to issue the amount of water it expects to deliver to its contractors. At that time, Reclamation announces estimated deliveries for its 250 CVP water contractors in the upcoming water year. More than 9.5 million AF of water per year is potentially available from the CVP for delivery based on contracts between Reclamation and CVP contractors. However, most CVP water contracts provide exceptions for Reclamation to reduce water deliveries due to hydrologic conditions and other conditions outside Reclamation's control. As a result of these stipulations, Reclamation regularly makes cutbacks to actual CVP water deliveries to contractors due to drought and other factors. Even under normal hydrological circumstances, the CVP often delivers much less than the maximum contracted amount of water; since the early 1980s, an average of about 7 million AF of water has been made available to CVP contractors annually (including 5 million AF to agricultural contractors). However, during drought years deliveries may be significantly less. In the extremely dry water years of 2012-2015, CVP annual deliveries averaged approximately 3.45 million AF. CVP contractors receive varying levels of priority for water deliveries based on their water rights and other related factors, and some of the largest and most prominent water contractors have a relatively low allocation priority. Major groups of CVP contractors include water rights contractors (i.e., senior water rights holders such as the Sacramento River Settlement and San Joaquin River Exchange Contractors, see box below), North and South of Delta water service contractors, and Central Valley refuge water contractors. The relative locations for these groups are shown in Figure 1 . The largest contract holders of CVP water by percentage of total contracted amounts are Sacramento River Settlement Contractors, located on the Sacramento River. The second-largest group are SOD water service contractors (including Westlands Water District, the CVP's largest contractor), located in the area south of the Delta. Other major contractors include San Joaquin River Exchange Contractors, located west of the San Joaquin River and Friant Division contractors, located on the east side of the San Joaquin Valley. Central Valley refuges and several smaller contractor groups (e.g., Eastside Contracts, In-Delta-Contra Costa Contracts, and SOD Settlement Contracts) also factor into CVP water allocation discussions. Figure 3 depicts an approximate division of maximum available CVP water deliveries pursuant to contracts with Reclamation. The largest contractor groups and their relative delivery priority are discussed in more detail in the Appendix to this report. <3.2.1. CVP Allocations> Reclamation provided its allocations for the 2019 water year in a series of announcements in early 2019. As was the case in 2018, over the course of the spring Reclamation increased its allocations for some contractors from initially announced levels. Most CVP contractor groups were allocated 100% of their maximum contracted amounts in 2019. One major exception is SOD agricultural water service contractors, who were allocated 70% of their contracted supplies. Prior to receiving a full allocation in 2017, the last time these contractors received a 100% allocation was 2006. They have received their full contract allocations only four times since 1990. <3.3. State Water Project Allocations> The other major water project serving California, the SWP, is operated by California's Department of Water Resources (DWR). The SWP primarily provides water to M&I users and some agricultural users, and it integrates its operations with the CVP. Similar to the CVP, the SWP has considerably more contracted supplies than it typically makes available in its deliveries. SWP contracted entitlements are 4.17 million AF, but average annual deliveries are typically considerably less than that amount. SWP water deliveries were at their lowest point in 2014 and 2015, and they were significantly higher in the wet year of 2017. SWP water supply allocations for water years 2012-2019 are shown in Table 2 . <3.4. Combined CVP/SWP Operations> The CVP and SWP are operated in conjunction under the 1986 Coordinated Operations Agreement (COA), which was executed pursuant to P.L. 99-546 . COA defines the rights and responsibilities of the CVP and SWP with respect to in-basin water needs and provides a mechanism to account for those rights and responsibilities. Despite several prior efforts to review and update the agreement to reflect major changes over time (e.g., water delivery reductions pursuant to the Central Valley Project Improvement Act, the Endangered Species Act requirements, and new Delta Water Quality Standards, among other things), the 1986 agreement remains in place. Combined CVP and SWP exports (i.e., water transferred from north to south of the Delta) is of interest to many observers because it reflects trends over time in the transfer of water from north to south (i.e., exports ) by the two projects, in particular through pumping. Exports of the CVP and SWP, as well as total combined exports since 1978, have varied over time ( Figure 4 ). Most recently, combined exports dropped significantly during the 2012-2016 drought but have rebounded since 2016. Prior to the drought, overall export levels had increased over time, having averaged more from 2001 to 2011 than over any previous 10-year period. The 6.42 million AF of combined exports in 2017 was the second most on record, behind 6.59 million AF in 2011. Over time, CVP exports have decreased on average, whereas SWP exports have increased. Additionally, exports for agricultural purposes have declined as a subset of total exports, in part due to those exports being made available for other purposes (e.g., fish and wildlife). Previously, some observers argued that CVP obligations under COA were no longer proportional to water supplies that the CVP receives from the Delta, thus the agreement should be renegotiated. Dating to 2015, Reclamation and DWR conducted a mutual review of COA but reportedly were unable to agree on revisions. On August 17, 2018, Reclamation provided a Notice of Negotiations to DWR. Following negotiations in the fall of 2018, Reclamation and DWR agreed to an addendum to COA in December 2018. Whereas the original 1986 agreement included a fixed ratio of 75% CVP/25% SWP for the sharing of regulatory requirements associated with storage withdrawals for Sacramento Valley in-basin uses (e.g., curtailments for water quality and species uses), the revised addendum adjusted the ratio of sharing percentages based on water year types ( Table 3 ). The 2018 addendum also adjusted the sharing of export capacity under constrained conditions. Whereas under the 1986 COA, export capacity was shared 50/50 between the CVP and the SWP, under the revised COA the split is to be 60% CVP/40% SWP during excess conditions, and 65% CVP/35% SWP during balanced conditions. Finally, the state also agreed in the 2018 revisions to transport up to 195,000 AF of CVP water through the California Aqueduct, during certain conditions. <4. Constraints on CVP Deliveries> Concerns over CVP water supply deliveries persist in part because even in years with high levels of precipitation and runoff, some contractors (in particular SOD water service contractors) have regularly received allocations of less than 100% of their contract supplies. Allocations for some users have declined over time; additional environmental requirements in recent decades have reduced water deliveries for human uses. Coupled with reduced water supplies available in drought years, some have increasingly focused on what can be done to increase water supplies for users. At the same time, others that depend on or advocate for the health of the San Francisco Bay and its tributaries, including fishing and environmental groups and water users throughout Northern California, have argued for maintaining or increasing existing environmental protections (the latter of which likely would further constrain CVP exports). Hydrology and state water rights are the two primary drivers of CVP allocations. However, at least three other regulatory factors affect the timing and amount of water available for delivery to CVP contractors and are regularly the subject of controversy: State water quality requirements pursuant to state and the federal water quality laws (including the Clean Water Act [CWA, 33 U.S.C. 1251-138]); Regulations and court orders pertaining to implementation of the federal Endangered Species Act (ESA, 87 Stat. 884. 16 U.S.C. 1531-1544); and Implementation of the Central Valley Project Improvement Act (CVPIA; P.L. 102-575 ). Each of these factors is discussed in more detail below. <4.1. Water Quality Requirements: Bay-Delta Water Quality Control Plan> California sets water quality standards and issues permits for the discharge of pollutants in compliance with the federal CWA, enacted in 1972. Through the Porter-Cologne Act (a state law), California implements federal CWA requirements and authorizes the State Water Resources Control Board (State Water Board) to adopt water quality control plans, or basin plans. The CVP and the SWP affect water quality in the Bay-Delta depending on how much freshwater the projects release into the area as "unimpaired flows" (thereby affecting area salinity levels). The first Water Quality Control Plan for the Bay-Delta (Bay-Delta Plan) was issued by the State Water Board in 1978. Since then, there have been three substantive updates to the plan in 1991, 1995, and 2006. The plans generally have required the SWP and CVP to meet certain water quality and flow objectives in the Delta to maintain desired salinity levels for in-Delta diversions (e.g., water quality levels for in-Delta water supplies) and fish and wildlife, among other things. These objectives often affect the amount and timing of water available to be pumped, or exported, from the Delta and thus at times result in reduced Delta exports to CVP and SWP water users south of the Delta. The Bay-Delta Plan is currently implemented through the State Water Board's Decision 1641 (or D-1641), which was issued in 1999 and placed responsibility for plan implementation on the state's largest two water rights holders, Reclamation and the California DWR. Pumping restrictions to meet state-set water quality levels particularly increases in salinity levels can sometimes be significant. However, the relative magnitude of these effects varies depending on hydrology. For instance, Reclamation estimated that in 2014, water quality restrictions accounted for 176,300 AF of the reduction in pumping from the long-term average for CVP exports. In 2016, Reclamation estimated that D-1641 requirements accounted for 114,500 AF in reductions from the long-term export average. <4.1.1. Bay-Delta Plan Update> In mid-2018, the State Water Board released the final draft of the update to the 2006 Bay Delta Plan (i.e., the Bay-Delta Plan Update) for the Lower San Joaquin River and Southern Delta. It also announced further progress on related efforts under the update for flow requirements on the Sacramento River and its tributaries. The Bay-Delta Plan Update requires additional flows to the ocean (generally referred to in these documents as "unimpaired flows") from the San Joaquin River and its tributaries (i.e., the Stanislaus, Tuolumne, and Merced Rivers). Under the proposal, the unimpaired flow requirement for the San Joaquin River would be 40% (within a range of 30%-50%); average unimpaired flows currently range from 21% to 40%. The state estimates that the updated version of the plan would reduce water available for human use from the San Joaquin River and its tributaries by between 7% and 23%, on average (depending on the water year type), but it could reduce these water supplies by as much as 38% during critically dry years. A more detailed plan for the Sacramento River and its tributaries also is expected in the future. A preliminary framework released by the state in July 2018 proposed a potential requirement of 55% unimpaired flows from the Sacramento River (within a range of 45% to 65%). According to the State Water Board, if the plan updates for the San Joaquin and Sacramento Rivers are finalized and water users do not enter into voluntary agreements to implement them, the board could take actions to require their implementation, such as promulgation of regulations and conditioning of water rights. Reclamation and its contractors likely would play key roles in implementing any update to the Bay-Delta Plan, as they do in implementing the current plan under D-1641. Pursuant to Section 8 of the Reclamation Act of 1902, Reclamation generally defers to state water law in carrying out its authorities, but the proposed Bay Delta Plan Update has generated controversy. In a July 2018 letter to the State Water Board, the Commissioner of Reclamation opposed the proposed standards for the San Joaquin River, arguing that meeting them would necessitate decreased water in storage at New Melones Reservoir of approximately 315,000 AF per year (a higher amount than estimated by the State Water Board). Reclamation argued that such a change would be contrary to the CVP prioritization scheme as established by Congress. On December 12, 2018, the State Water Board approved the Bay Delta Plan Update in Resolution 1018-0059. According to the state, the plan establishes a "starting point" for increased river flows but also makes allowances for reduced river flows on tributaries where stakeholders have reached voluntary agreements to pursue both flow and "non-flow" measures. The conditions in the Bay-Delta Plan Update would be implemented through water rights conditions imposed by the State Water Board; these conditions are to be implemented no later than 2022. On March 28, 2019, the Department of Justice and DOI filed civil actions in federal and state court against the State Water Board for failing to comply with the California Environmental Quality Act. <4.2. Endangered Species Act> Several species that have been listed under the federal ESA are affected by the operations of the CVP and the SWP. One species, the Delta smelt, is a small pelagic fish that is susceptible to entrainment in CVP and SWP pumps in the Delta; it was listed as threatened under ESA in 1993. Surveys of Delta smelt in 2017 found two adult smelt, the lowest catch in the history of the survey. These results were despite the relatively wet winter of 2017, which is a concern for many stakeholders because low population sizes of Delta smelt could result in greater restrictions on water flowing to users. It also raises larger concerns about the overall health and resilience of the Bay-Delta ecosystem. In addition to Delta smelt, multiple anadromous salmonid species are listed under ESA, including the endangered Sacramento River winter-run Chinook salmon, the threatened Central Valley spring-run Chinook salmon, the threatened Central Valley steelhead, threatened Southern Oregon/Northern California Coast coho salmon, and the threatened Central California Coast steelhead. Federal agencies consult with the U.S. Fish and Wildlife Service (FWS) in DOI or the Department of Commerce's (DOC's) National Marine Fisheries Service (NMFS) to determine if a federal project or action might jeopardize the continued existence of a species listed under ESA or adversely modify its habitat. If an effect is possible, formal consultation is started and usually concludes with the appropriate service issuing a BiOp on the potential harm the project poses and, if necessary, issuing reasonable and prudent measures to reduce the harm. FWS and NMFS each have issued federal BiOps on the coordinated operation of the CVP and the SWP. In addition, both agencies have undertaken formal consultation on proposed changes in the operations and have concluded that the changes, including increased pumping from the Delta, would jeopardize the continued existence of several species protected under ESA. To avoid such jeopardy, the FWS and NMFS BiOps have included Reasonable and Prudent Alternatives (RPAs) for project operations. CVP and SWP BiOps have been challenged and revised over time. Until 2004, a 1993 winter-run Chinook salmon BiOp and a 1995 Delta smelt BiOp (as amended) governed Delta exports for federal ESA purposes. In 2004, a proposed change in coordinated operation of the SWP and CVP (including increased Delta exports), known as OCAP (Operations Criteria and Plan) resulted in the development of new BiOps. Environmental groups challenged the agencies' 2004 BiOps; this challenge resulted in the development of new BiOps by the FWS and NMFS in 2008 and 2009, respectively. These BiOps placed additional restrictions on the amount of water exported via SWP and CVP Delta pumps and other limitations on pumping and release of stored water. The CVP and SWP currently are operated in accordance with these BiOps, both of which concluded that the coordinated long-term operation of the CVP and SWP, as proposed in Reclamation's 2008 Biological Assessment, was likely to jeopardize the continued existence of listed species and destroy or adversely modify designated critical habitat. Both BiOps included RPAs designed to allow the CVP and SWP to continue operating without causing jeopardy to listed species or destruction or adverse modification to designated critical habitat. Reclamation accepted and then began project operations consistent with the FWS and NMFS RPAs, which continue to govern operations. The exact magnitude of reductions in pumping due to ESA restrictions compared to the aforementioned water quality restrictions has varied considerably over time. In absolute terms, ESA-driven reductions typically are greater in wet years than in dry years, but the proportion of ESA reductions relative to deliveries is not necessarily constant and depends on numerous factors. For instance, Reclamation estimated that ESA restrictions accounted for a reduction in deliveries of 62,000 AF from the long-term average for CVP deliveries in 2014 and 144,800 AF of CVP delivery reductions in 2015 (both years were extremely dry). In 2016, ESA reductions accounted for a much larger amount (528,000 AF) in a wet year, when more water is delivered. Some scientists estimate that flows used to protect all species listed under ESA accounted for approximately 6.5% of the total Delta outflow from 2011 to 2016. During the 2012-2016 drought, implementation of the RPAs (which generally limit pumping under specific circumstances and call for water releases from key reservoirs to support listed species) was modified due to temporary urgency change orders (TUCs). These TUCs, issued by the State Water Resources Control Board in 2014 and again in 2015, were deemed consistent with the existing BiOps by NMFS and FWS. Such changes allowed more water to be pumped during certain periods based on real-time monitoring of species and water conditions. DWR estimates that approximately 400,000 AF of water was made available in 2014 for export due to these orders. In August 2016, Reclamation and DWR requested reinitiation of consultation on long-term, system-wide operations of the CVP and the SWP based on new information related to multiple years of drought, species decline, and related data. In December 2017, the Trump Administration gave formal notice of its intent to prepare an environmental impact statement analyzing potential long-term modifications to the coordinated operations of the CVP and the SWP. According to the notice, the actions under consideration will include those with the potential to "maximize" water and power supplies for users and that modify existing regulatory requirements, among other things. The effort is widely viewed as an initial step toward potential long-term changes to CVP operations and existing BiOp requirements. The Biological Assessment (BA) proposing changes for the operation of the CVP and SWP was sent to FWS and NMFS by Reclamation on January 31, 2019. The BA discusses the operational changes proposed by Reclamation and mitigation factors to address listed species. The changes reflect provisions in the WIIN Act and efforts to maximize water supplies for users. The BA also states that nonoperational activities will be implemented to augment and bolster listed fish populations. These activities include habitat restoration and introducing hatchery-bred Delta smelt. Operational changes include increasing flows to take into account additional water from winter storms and increasing base flows when storage levels are higher. The Trump Administration also has indicated its intent to expedite other regulatory changes under ESA. On October 19, 2018, President Trump issued a memorandum that directed DOI and DOC to identify water infrastructure projects in California for which they have responsibilities under ESA. Per the memorandum, the agencies are to identify regulations and procedures that burden the projects and develop a plan to "suspend, revise, or rescind" those regulations. The White House memorandum also directed that the aforementioned joint BiOps be completed by June 15, 2019. <4.3. Central Valley Project Improvement Act> In an effort to mitigate many of the environmental effects of the CVP, Congress in 1992 passed the CVPIA as Title 34 of P.L. 102-575 . The act made major changes to the management of the CVP. Among other things, it formally established fish and wildlife purposes as an official project purpose of the CVP and called for a number of actions to protect, restore, and enhance these resources. Overall, the CVPIA's provisions resulted in a combination of decreased water availability and increased costs for agricultural and M&I contractors, along with new water and funding sources to restore fish and wildlife. Thus, the law remains a source of tension, and some would prefer to see it repealed in part or in full. Some of the CVPIA's most prominent changes to the CVP included directives to double certain anadromous fish populations by 2002 (which did occur); allocate 800,000 AF of "(b)(2)" CVP yield (600,000 AF in drought years) to fish and wildlife purposes; provide water supplies (in the form of "Level 2" and "Level 4" supplies) for 19 designated Central Valley wildlife refuges; establish a fund, the Central Valley Project Restoration Fund (CVPRF), to be financed by water and power users for habitat restoration and land and water acquisitions. Pursuant to prior court rulings since enactment of the legislation, CVPIA (b)(2) allocations may be used to meet other state and federal requirements that reduce exports or require an increase from baseline reservoir releases. Thus, in a given year, the aforementioned export reductions due to state water quality and federal ESA restrictions are counted and reported on annually as (b)(2) water, and in some cases overlap with other stated purposes of CVPIA (e.g., anadromous fish restoration). The exact makeup of (b)(2) water in a given year typically varies. For example, in 2014 (a critically dry year), out of a total of 402,000 AF of (b)(2) water, 176,300 AF (44%) was attributed to export reductions for Bay-Delta Plan water quality requirements. Remaining (b)(2) water was comprised of a combination of reservoir releases classified as CVPIA anadromous fish restoration and NMFS BiOp compliance purposes (163,500 AF) and export reductions under the 2009 salmonid BiOp (62,200 AF). In 2016 (a wet year), 793,000 AF of (b)(2) water included 528,000 AF (66%) of export pumping reductions under FWS and NMFS BiOps and 114,500 AF (14%) for Bay-Delta Plan requirements. The remaining water was accounted for as reservoir releases for the anadromous fish restoration programs, the NMFS BiOp, and the Bay-Delta Plan. <5. Ecosystem Restoration Efforts> Development of the CVP made significant changes to California's natural hydrology. In addition to the aforementioned CVPIA efforts to address some of these impacts, three ongoing, congressionally authorized restoration initiatives also factor into federal activities associated with the CVP: The Trinity River Restoration Program (TRRP), administered by Reclamation, attempts to mitigate impacts and restore fisheries impacted by construction of the Trinity River Division of the CVP. The San Joaquin River Restoration Program (SJRRP) is an ongoing effort to implement a congressionally enacted settlement to restore fisheries in the San Joaquin River. The California Bay-Delta Restoration Program aims to restore and protect areas within the Bay-Delta that are affected by the CVP and other activities. In addition to their habitat restoration activities, both the TRRP and the SJRRP involve the maintenance of instream flow levels that use water that was at one time diverted for other uses. Each effort is discussed briefly below. <5.1. Trinity River Restoration Program> TRRP administered by DOI aims to mitigate impacts of the Trinity Division of the CVP and restore fisheries to their levels prior to the Bureau of Reclamation's construction of this division in 1955. The Trinity Division primarily consists of two dams (Trinity and Lewiston Dams), related power facilities, and a series of tunnels (including the 10.7-mile tunnel Clear Creek Tunnel) that divert water from the Trinity River Basin to the Sacramento River Basin and Whiskeytown Reservoir. Diversion of Trinity River water (which originally required that a minimum of 120,000 AF be reserved for Trinity River flows) resulted in the near drying of the Trinity River in some years, thereby damaging spawning habitat and severely depleting salmon stocks. Efforts to mitigate the effects of the Trinity Division date back to the early 1980s, when DOI initiated efforts to study the issue and increase Trinity River flows for fisheries. Congress authorized legislation in 1984 ( P.L. 98-541 ) and in 1992 ( P.L. 102-575 ) providing for restoration activities and construction of a fish hatchery, and directed that 340,000 AF per year be reserved for Trinity River flows (a significant increase from the original amount). Congress also mandated completion of a flow evaluation study, which was formalized in a 2000 record of decision (ROD) that called for additional water for instream flows, river channel restoration, and watershed rehabilitation. The 2000 ROD forms the basis for TRRP. The flow releases outlined in that document have in some years been supplemented to protect fish health in the river, and these increases have been controversial among some water users. From FY2013 to FY2018, TRRP was funded at approximately $12 million per year in discretionary appropriations from Reclamation's Fish and Wildlife Management and Development activity. <5.2. San Joaquin River Restoration Program> Historically, the San Joaquin River supported large Chinook salmon populations. After the Bureau of Reclamation completed Friant Dam on the San Joaquin River in the late 1940s, much of the river's water was diverted for agricultural uses and approximately 60 miles of the river became dry in most years. These conditions made it impossible to support Chinook salmon populations upstream of the Merced River confluence. In 1988, a coalition of environmental, conservation, and fishing groups advocating for river restoration to support Chinook salmon recovery sued the Bureau of Reclamation. A U.S. District Court judge eventually ruled that operation of Friant Dam was violating state law because of its destruction of downstream fisheries. Faced with mounting legal fees, considerable uncertainty, and the possibility of dramatic cuts to water diversions, the parties agreed to negotiate a settlement instead of proceeding to trial on a remedy regarding the court's ruling. This settlement was agreed to in 2006 and enacted by Congress in 2010 (Title X of P.L. 111-11 ). The settlement agreement and its implementing legislation form the basis for the SJRRP, which requires new releases of CVP water from Friant Dam to restore fisheries (including salmon fisheries) in the San Joaquin River below Friant Dam (which forms Millerton Lake) to the confluence with the Merced River (i.e., 60 miles). The SJRRP also requires efforts to mitigate water supply delivery losses due to these releases, among other things. In combination with the new releases, the settlement's goals are to be achieved through a combination of channel and structural modifications along the San Joaquin River and the reintroduction of Chinook salmon ( Figure 5 ). These activities are funded in part by federal discretionary appropriations and in part by repayment and surcharges paid by CVP Friant water users that are redirected toward the SJRRP in P.L. 111-11 . Because increased water flows for restoring fisheries (known as restoration flows ) would reduce CVP diversions of water for off-stream purposes, such as irrigation, hydropower, and M&I uses, the settlement and its implementation have been controversial. The quantity of water used for restoration flows and the quantity by which water deliveries would be reduced are related, but the relationship is not necessarily one-for-one, due to flood flows in some years and other mitigating factors. Under the settlement agreement, no water would be released for restoration purposes in the driest of years; thus, the agreement would not reduce deliveries to Friant contractors in those years. Additionally, in some years, the restoration flows released in late winter and early spring may free up space for additional runoff storage in Millerton Lake, potentially minimizing reductions in deliveries later in the year assuming Millerton Lake storage is replenished. Consequently, how deliveries to Friant water contractors may be reduced in any given year is likely to depend on many factors. Regardless of the specifics of how much water may be released for fisheries restoration vis- -vis diverted for off-stream purposes, the SJRRP will impact existing surface and groundwater supplies in and around the Friant Division service area and affect local economies. SJRRP construction activities are in the early stages, but planning efforts have targeted a completion date of 2024 for the first stage of construction efforts. <5.3. CALFED Bay-Delta Restoration Program> The Bay-Delta Restoration Program is a cooperative effort among the federal government, the State of California, local governments, and water users to proactively address the water management and aquatic ecosystem needs of California's Central Valley. The CALFED Bay-Delta Restoration Act ( P.L. 108-361 ), enacted in 2004, provided new and expanded federal authorities for six agencies related to the 2000 ROD for the CALFED Bay-Delta Program's Programmatic Environmental Impact Statement. These authorities were extended through FY2019 under the WIIN Act. The interim action plan for CALFED has four objectives: a renewed federal-state partnership, smarter water supply and use, habitat restoration, and drought and floodplain management. From FY2013 to FY2018, Reclamation funded its Bay-Delta restoration activities at approximately $37 million per year; the majority of this funding has gone for projects to address the degraded Bay-Delta ecosystem and includes federal activities under California WaterFix (see below section, " California WaterFix "). Other agencies receiving funding to carry out authorities under CALFED include DOI's U.S. Fish and Wildlife Service and U.S. Geological Survey; the Department of Agriculture's Natural Resources Conservation Service; the Department of Defense's Army Corps of Engineers; the Department of Commerce's National Oceanic and Atmospheric Administration; and the Environmental Protection Agency. Similar to Reclamation, these agencies report on CALFED expenditures that involve a combination of activities under "base" authorities and new authorities that were provided under the CALFED authorizing legislation. The annual CALFED crosscut budget records the funding for CALFED across all federal agencies. The budget generally is included in the Administration's budget request and contains CALFED programs, their authority, and requested funding. For FY2019, the Administration requested $474 million for CALFED activities. This figure is an increase from the FY2018 enacted level of $415 million. <6. New Storage and Conveyance> Reductions in available water deliveries due to hydrological and regulatory factors have caused some stakeholders, legislators, and state and federal government officials to look at other methods of augmenting water supplies. In particular, proposals to build new or augmented CVP and/or SWP water storage projects have been of interest to some policymakers. Additionally, the State of California is pursuing a major water conveyance project, the California WaterFix, with a nexus to CVP operations. <6.1. New and Augmented Water Storage Projects> The aforementioned CALFED legislation ( P.L. 108-361 ) also authorized the study of several new or augmented CVP storage projects throughout the Central Valley that have been ongoing for a number of years. These studies include Shasta Lake Water Resources Investigation, North of the Delta Offstream Storage Investigation (also known as Sites Reservoir), In-Delta Storage, Los Vaqueros Reservoir Expansion, and Upper San Joaquin River/Temperance Flat Storage Investigation ( Figure 6 ). Although the recommendations of these studies normally would be subject to congressional approval, Section 4007 of the WIIN Act authorized $335 million in Reclamation financial support for new or expanded federal and nonfederal water storage projects and provided that these projects could be deemed authorized, subject to a finding by the Administration that individual projects met certain criteria. In 2018 reporting to Congress, Reclamation recommended an initial list of seven projects that it concluded met the WIIN Act criteria. The projects were allocated $33.3 million in FY2017 funding that was previously appropriated for WIIN Act Section 4007 projects. Congress approved the funding allocations for these projects in enacted appropriations for FY2018 ( P.L. 115-141 ). Four of the projects receiving FY2017 funds ($28.05 million) were CALFED studies that would address water availability in the CVP: Shasta Dam and Reservoir Enlargement Project ($20 million for design and preconstruction); North-of-Delta Off-Stream Storage Investigation/Sites Reservoir Storage Project ($4.35 million for feasibility study); Upper San Joaquin River Basin Storage Investigation ($1.5 million for feasibility study); and Friant-Kern Canal Subsidence Challenges Project ($2.2 million for feasibility study). The enacted FY2018 Energy and Water appropriations bill further stipulated that $134 million of the amount set aside for additional water conservation and delivery projects be provided for Section 4007 WIIN Act storage projects (i.e., similar direction as FY2017). The enacted FY2019 bill set aside another $134 million for these purposes. Future reporting and appropriations legislation is expected to propose allocation of this and any other applicable funding. Congress also may consider additional directives for these and other efforts to address water supplies in the CVP, including approval of physical construction for one or more of these projects. Funding by the State of California also may influence the viability and timing of construction for some of the proposed projects. For example, in June 2018, the state announced significant bond funding for Sites Reservoir ($1.008 billion), as well as other projects. <6.2. California WaterFix> In addition to water storage, some have advocated for a more flexible water conveyance system for CVP and SWP water. An alternative was the California WaterFix, a project initiated by the State of California in 2015 to address some of the water conveyance and ecosystem issues in the Bay-Delta. The objective of this project was to divert water from the Sacramento River, north of the Bay-Delta, into twin tunnels running south along the eastern portion of the Bay-Delta and emptying into existing pumps that feed water into the CVP and SWP. In the spring of 2019, Governor Newsom of California canceled the plans for this project and introduced an alternative plan for conveying water through the Delta. DWR is creating plans to construct a single tunnel to convey water from the Sacramento River to the existing pumps in the Bay-Delta. DWR's stated reasons for supporting this approach are to protect water supplies from sea-level rise, saltwater intrusion, and earthquakes. The new plan is expected to take a "portfolio" approach that focuses on a number of interrelated efforts to make water supplies climate resilient. This approach includ es actions such as strengthening levees, protecting Delta water quality, and recharging groundwater, according to DWR. This project will require a new environmental review process for federal and state permits. It is being led by the Delta Conveyance Design and Construction Authority, a joint powers authority created by public water agencies to oversee the design and construction of the new conveyance system. DWR is expected to oversee the planning effort. The cost of the project is anticipated to be largely paid by public water agencies. The federal government's role in this project beyond evaluating permit applications and maintaining related CVP operations has not been defined. <7. Congressional Interest> Congress plays a role in CVP water management and previously has attempted to make available additional water supplies in the region by facilitating efforts such as water banking, water transfers, and construction of new and augmented storage. In 2016, Congress enacted provisions aiming to benefit the CVP and the SWP, including major operational changes in the WIIN Act and additional appropriations for western drought response and new water storage that have benefited (or are expected to benefit) the CVP. Congress also continues to consider legislation that would further alter CVP operational authorities and responsibilities related to individual units of the project. The below section discusses some of the main issues related to the CVP that may receive attention by Congress. <7.1. CVP Operational Authorities Under the WIIN Act72> Title II, Subtitle J of the WIIN Act (enacted in December 2016) included multiple provisions related to the Bureau of Reclamation's operations of the CVP. Most of the WIIN Act's operational provisions are set to expire in 2021 (five years after the bill's enactment). In addition to overseeing the implementation of these operational provisions, Congress may also consider their amendment, extension, or repeal. The WIIN Act directed Reclamation to "maximize" CVP pumping (in accordance with applicable BiOps), allowed for increased pumping during certain temporary storm events, and authorized expedited reviews of water transfers, among other things. The WIIN Act also established a new standard for measuring the effects of water operations on species listed as endangered or threatened under the ESA, allowing most of the bill's actions to go forward unless they are determined to cause additional adverse effects on listed species beyond the range of the effects anticipated to occur for the duration of the species BiOp. Although the WIIN Act included some provisions from legislation that had been proposed dating back to the 112 th Congress, many of the controversial provisions from prior bills were not included in the act. Supporters of WIIN Act operational changes contended that these changes had the potential to make additional water available to users facing curtailed deliveries, while also improving the flexibility and responsiveness of the management and operations of the CVP and SWP. Opponents worried that the changes may have detrimental effects on species' survival in both the short and long terms and may limit agency efforts to manage water supplies for the benefit of species. Some of the notable CVP operational provisions in the WIIN Act aimed to provide the Administration with authority to make available more water supplies during periods in which pumping otherwise would have been limited. According to Reclamation, some changes authorized under the WIIN Act were implemented during the winter of 2017-2018. In particular, communication and transparency were reportedly increased for some operational decisions, allowing for reduced or rescheduled pumping restrictions. Additionally, as of spring 2018, WIIN Act allowances relaxed restrictions on inflow-to-export ratios related to the voluntary sale, transfer, or exchange of water that were used to affect a transfer resulting in additional exports of 50,000-60,000 AF. Reclamation has noted that hydrology has affected its ability to implement some of the act's provisions. Many of the WIIN Act changes have the potential to make their greatest impact during drought years. At the same time, some federal operational changes pursuant to the WIIN Act reportedly were proposed but were deemed incompatible with state requirements. Despite these limitations, WIIN Act authorities are likely to continue as a topic of congressional interest. <7.1.1. Other Proposed Changes to CVP Operations> Previous Congresses have considered legislation that proposed additional changes to CVP operations. For instance, in the 115 th Congress, H.R. 23 , the Gaining Responsibility on Water Act (GROW Act), incorporated a number of provisions that were included in previous California drought legislation in the 112 th , 113 th , and 114 th Congresses but were not enacted in the WIIN Act. Generally speaking, the GROW Act included provisions that would have loosened some environmental protections and restrictions that are imposed under the CVPIA, ESA, CWA, and SJRRP, and had the potential to increase exports under some scenarios. This legislation was not enacted. In addition to legislation proposing operational changes, the Administration has indicated its intent to propose administrative changes to CVP operations, including through reinitiation of consultation on long-term, system-wide operations of the CVP and SWP (see earlier section, " Endangered Species Act "). A 2018 White House memorandum directed DOC and DOI to finalize their new BiOps for the coordinated operation of the CVP and SWP by June 15, 2019, and to "suspend, revise, or rescind" regulations that unduly burden the project. It is unclear how the latter process might unfold or what particular regulations will be addressed. <7.2. New Water Storage Projects> As previously noted, Reclamation and the State of California have funded the study of new water storage projects in recent years, and future appropriations legislation and reporting may provide additional direction for these and other efforts to develop new water supplies for the CVP. As such, Congress may consider oversight, authorization, and/or funding for these projects. Some projects, such as the Shasta Dam and Reservoir Enlargement Project, have the potential to augment CVP water supplies but also have generated controversy for their potential to conflict with the intent of certain state laws. Although Reclamation has indicated its interest in pursuing the Shasta Dam raise project, the state has opposed the project under Governor Jerry Brown's Administration, and it is unclear how such a project might proceed absent state regulatory approvals and financial support. As previously noted, in early 2018, Reclamation proposed and Congress agreed to $20 million in design and preconstruction funding for the project. An additional $75 million was recommended by the Trump Administration in February 2019. In addition to the Shasta Dam and Reservoir Enlargement Project, Congress approved Reclamation-recommended study funding for Sites Reservoir/North of Delta Offstream Storage (NODOS), Upper San Joaquin River Basin Storage Investigation, and the Friant-Kern Canal Subsidence Challenges Project. Overall, from FY2017 to FY2019 Congress provided Reclamation with $335 million for new water storage projects authorized under Section 4007 of the WIIN Act. A significant share of this total is expected to be used on CVP and related water storage projects in California. Once the appropriations ceiling for these projects has been reached, funding for storage projects under Section 4007 would need to be extended by Congress before projects could proceed further. Legislation in the 116 th Congress has proposed to expedite certain water storage studies in the Central Valley, and could also provide mandatory funding for their eventual construction. For instance, Section 5 of H.R. 2473 would direct the Secretary to complete, as soon as practicable, the ongoing feasibility studies associated with Sites Reservoir, Del Puerto Canyon Reservoir, Los Vaqueros Reservoir, and San Luis Reservoir. Section 2 of the same legislation would authorize $100 million per year for fiscal years 2030 to 2060, without further appropriation (i.e., mandatory funding) for new Reclamation surface or groundwater storage projects. <8. Conclusion> The CVP is one of the largest and most complex water storage and conveyance projects in the world. Congress has regularly expressed interest in CVP operations and allocations, in particular pumping in the Bay-Delta. In addition to ongoing oversight of project operations and previously enacted authorities, a number of developing issues and proposals related to the CVP have been of interest to congressional decisionmakers. These include study and approval of new water storage and conveyance projects, updates to the state's Bay-Delta Water Quality Plan, and a multipronged effort by the Trump Administration to make available more water for CVP water contractors, in particular those south of the Delta. Future drought or other stressors on California water supplies are likely to further magnify these issues. <8.1. Appendix. CVP Water Contractors> The below sections provide a brief discussion some of the major contractor groups and individual contractors served by the CVP. Sacramento River Settlement Contractors and San Joaquin River Exchange Contractors (Water Rights Contractors) CVP water generally is made available for delivery first to those contractors north and south of the Delta with water rights that predate construction of the CVP: the Sacramento River Settlement Contractors and the San Joaquin River Exchange Contractors. (These contractors are sometimes referred to collectively as water rights contractors .) Water rights contractors typically receive 100% of their contracted amounts in most water year types. During water shortages, their annual maximum entitlement may be reduced, but not by more than 25%. Sacramento River Settlement Contractors include the 145 contractors (both individuals and districts) that diverted natural flows from the Sacramento River prior to the CVP's construction and executed a settlement agreement with Reclamation that provided for negotiated allocation of water rights. Reclamation entered into this agreement in exchange for these contractors withdrawing their protests related to Reclamation's application for water rights for the CVP. The San Joaquin River Exchange Contractors are four irrigation districts that agreed to "exchange" exercising their water rights to divert water on the San Joaquin and Kings Rivers for guaranteed water deliveries from the CVP (typically in the form of deliveries from the Delta-Mendota Canal and waters north of the Delta). During all years except for when critical conditions are declared, Reclamation is responsible for delivering 840,000 AF of "substitute" water to these users (i.e., water from north of the Delta as a substitute for San Joaquin River water). In the event that Reclamation is unable to make its contracted deliveries, these Exchange Contractors have the right to divert water directly from the San Joaquin River, which may reduce water available for other San Joaquin River water service contactors. Friant Division Contractors CVP's Friant Division contractors receive water stored behind Friant Dam (completed in 1944) in Millerton Lake. This water is delivered through the Friant-Kern and Madera Canals. The 32 Friant Division contractors, who irrigate roughly 1 million acres on the San Joaquin River, are contracted to receive two "classes" of water: Class 1 water is the first 800,000 AF available for delivery; Class 2 water is the next 1.4 million AF available for delivery. Some districts receive water from both classes. Generally, Class 2 waters are released as "uncontrolled flows" (i.e., for flood control concerns), and may not necessarily be scheduled at a contractor's convenience. Deliveries to the Friant Division are affected by a 2009 congressionally enacted settlement stemming from Friant Dam's effects on the San Joaquin River. The settlement requires reductions in deliveries to Friant users for protection of fish and wildlife purposes. In some years, some of these "restorations flows" have been made available to contractors for delivery as Class 2 water. Unlike most other CVP contractors, Friant Division contractors have converted their water service contracts to repayment contracts and have repaid their capital obligation to the federal government for the development of their facilities. In years in which Reclamation is unable to make contracted deliveries to Exchange Contractors, these contractors can make a "call" on water in the San Joaquin River, thereby requiring releases from Friant Dam that otherwise would go to Friant contractors. South-of-Delta (SOD) Water Service Contractors: Westlands Water District As shown in Figure 3 , SOD water service contractors account for a large amount (2.09 million AF, or 22.1%) of the CVP's contracted water. The largest of these contractors is Westlands Water District, which consists of 700 farms covering more than 600,000 acres in Fresno and Kings Counties. In geographic terms, Westlands is the largest agricultural water district in the United States; its lands are valuable and productive, producing more than $1 billion of food and fiber annually. Westlands' maximum contracted CVP water is in excess of 1.2 million AF, an amount that makes up more than half of the total amount of SOD CVP water service contracts and significantly exceeds any other individual CVP contactor. However, due to a number of factors, Westlands often receives considerably less water on average than it did historically. Westlands has been prominently involved in a number of policy debates, including proposals to alter environmental requirements to increase pumping south of the Delta. Westlands also is involved in a major proposed settlement with Reclamation, the San Luis Drainage Settlement. The settlement would, among other things, forgive Westlands' share of federal CVP repayment responsibilities in exchange for relieving the federal government of its responsibility to construct drainage facilities to deal with toxic runoff associated with naturally occurring metals in area soils. Central Valley Wildlife Refuges The 20,000 square mile California Central Valley provides valuable wetland habitat for migratory birds and other species. As such, it is the home to multiple state and federally-designated wildlife refuges north and south of the Delta. These refuges provide managed wetland habitat that receives water from the CVP and other sources. The Central Valley Project Improvement Act (CVPIA; P.L. 102-575 ), enacted in 1992, sought to improve conditions for fish and wildlife in these areas by providing them coequal priority with other project purposes. CVPIA also authorized a Refuge Water Supply Program to acquire approximately 555,000 AF annually in water supplies for 19 Central Valley refuges administered by three managing agencies: California Department of Fish and Wildlife, U.S. Fish and Wildlife Service, and Grassland Water District (a private landowner). Pursuant to CVPIA, Reclamation entered into long-term water supply contracts with the managing agencies to provide these supplies. Authorized refuge water supply under CVPIA is divided into two categories: Level 2 and Level 4 supplies. Level 2 supplies (approximately 422,251 AF, except in critically dry years, when the allocation is reduced to 75%) are the historical average of water deliveries to the refuges prior to enactment of CVPIA. Reclamation is obligated to acquire and deliver this water under CVPIA, and costs are 100% reimbursable by CVP contractors through a fund established by the act, the Central Valley Project Restoration Fund (CVPRF; see previous section, " Central Valley Project Improvement Act "). Level 4 supplies (approximately 133,264 AF) are the additional increment of water beyond Level 2 supplies for optimal wetland habitat development. This water must be acquired by Reclamation through voluntary measures and is funded as a 75% federal cost (through the CVPRF) and 25% state cost. In most cases, the Level 2 requirement is met; however, Level 4 supplies have not always been provided in full for a number of reasons, including a dearth of supplies due to costs in excess of available CVPRF funding and a lack of willing sellers. In recent years, costs for the Refuge Water Supply Program (i.e., the costs for both Level 2 and Level 4 water) have ranged from $11 million to $20 million.

The Central Valley Project (CVP), a federal water project owned and operated by the U.S. Bureau of Reclamation (Reclamation), is one of the world's largest water supply projects. The CVP covers approximately 400 miles in California, from Redding to Bakersfield, and draws from two large river basins: the Sacramento and the San Joaquin. It is composed of 20 dams and reservoirs and numerous pieces of water storage and conveyance infrastructure. In an average year, the CVP delivers more than 7 million acre-feet of water to support irrigated agriculture, municipalities, and fish and wildlife needs, among other purposes. About 75% of CVP water is used for agricultural irrigation, including 7 of California's top 10 agricultural counties. The CVP is operated jointly with the State Water Project (SWP), which provides much of its water to municipal users in Southern California. CVP water is delivered to users that have contracts with Reclamation. These contractors receive varying levels of priority for water deliveries based on several factors, including hydrology, water rights, prior agreements with Reclamation, and regulatory requirements. The Sacramento and San Joaquin Rivers' confluence with the San Francisco Bay (Bay-Delta or Delta) is a hub for CVP water deliveries; many CVP contractors south of the Delta receive water that is "exported" from north of the Delta. Development of the CVP resulted in significant changes to the area's natural hydrology. However, construction of most CVP facilities predated major federal natural resources and environmental protection laws. Much of the current debate related to the CVP revolves around how to deal with changes to the hydrologic system that were not significantly mitigated for when the project was constructed. Thus, multiple ongoing efforts to protect species and restore habitat have been authorized and are incorporated into project operations. Congress has engaged in CVP issues through oversight and at times legislation, including provisions in the 2016 Water Infrastructure Improvements for the Nation (WIIN Act; P.L. 114-322) that, among other things, authorized changes to operations in an attempt to provide for delivery of more water under certain circumstances. Although some stakeholders are interested in further operational changes to enhance CVP water deliveries, others are focused on the environmental impacts of operations. Various state and federal proposals are currently under consideration and have generated controversy for their potential to affect CVP operations and allocations. In late 2018, the State of California finalized revisions to its Bay-Delta Water Quality Control Plan. These changes would require that more flows from the San Joaquin and Sacramento Rivers reach the Bay-Delta for water quality and fish and wildlife enhancement (and thus would further restrict water supplies for other users). The changes have generally been opposed by the Trump Administration. At the same time, the Trump Administration is pursuing efforts to increase CVP water supplies for users, including changes to CVP operations under an October 2018 White House memorandum on western water supplies. Efforts to add or supplement CVP storage and conveyance also are being considered: The state is proposing a new water conveyance project (known as the California WaterFix) that would bypass the Bay-Delta and, under certain conditions, increase exports from north to south for some users. Additionally, new storage projects are under study by federal and state entities; these projects would aim to increase CVP and/or SWP water supplies. In the 116th Congress, legislators may consider bills and conduct oversight on efforts to increase CVP water exports compared to current baselines. Congress is considering whether to approve funding for new water storage projects, and also may consider legislation to extend or amend previously enacted CVP authorities (e.g., WIIN Act authorities that are expiring or have exceeded their appropriations ceiling).

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<1. Introduction> Relations between the United States and Russia have shifted over time sometimes reassuring and sometimes concerning yet most experts agree that Russia is the only nation that poses, through its arsenal of nuclear weapons, an existential threat to the United States. While its nuclear arms have declined sharply in quantity since the end of the Cold War, Russia retains a stockpile of thousands of nuclear weapons, with more than 1,500 warheads deployed on missiles and bombers capable of reaching U.S. territory. The United States has always viewed these weapons as a potential threat to U.S. security and survival. It has not only maintained a nuclear deterrent to counter this threat, it has also signed numerous arms control treaties with the Soviet Union and later Russia in an effort to restrain and reduce the number and capabilities of nuclear weapons. The collapse of the 1987 Intermediate-range Nuclear Forces (INF) Treaty and the possible expiration of the 2010 New Strategic Arms Reduction Treaty (New START) in 2021 may signal the end to mutual restraint and limits on such weapons. The 2018 National Defense Strategy identifies the reemergence of long-term, strategic competition with Russia and China as the "the central challenge to U.S. prosperity and security." It notes that Russia seeks "to shatter the North Atlantic Treaty Organization and change European and Middle East security and economic structures to its favor." It argues that the challenge from Russia is clear when its malign behavior is "coupled with its expanding and modernizing nuclear arsenal." The 2018 Nuclear Posture Review (NPR) amplifies this theme. It notes that "Russia has demonstrated its willingness to use force to alter the map of Europe and impose its will on its neighbors, backed by implicit and explicit nuclear first-use threats." The NPR describes changes to Russia's nuclear doctrine and catalogues Russia's efforts to modernize its nuclear forces, arguing that these efforts have "increased, and will continue to increase, [Russia's] warhead delivery capacity, and provides Russia with the ability to rapidly expand its deployed warhead numbers." Congress has shown growing concern about the challenges Russia poses to the United States and its allies. It has expressed concerns about Russia's nuclear doctrine and nuclear modernization programs and has held hearings focused on Russia's compliance with arms control agreements and the future of the arms control process. Moreover, Members have raised questions about whether U.S. and Russian nuclear modernization programs, combined with the demise of restraints on U.S. and Russian nuclear forces, may be fueling an arms race and undermining strategic stability. This report seeks to advise this debate by providing information about Russia's nuclear doctrine, its current nuclear force structure, and its ongoing nuclear modernization programs. It is divided into five sections. The first section describes Russia's nuclear strategy and focuses on ways in which that strategy differs from that of the Soviet Union. The second section provides a historical overview of the Soviet Union's nuclear force structure. The third section details Russia's current force structure, including its long-range intercontinental ballistic missiles (ICBM), submarine-launched ballistic missiles (SLBM), and heavy bombers and shorter-range nonstrategic nuclear weapons. This section also highlights key elements of relevant infrastructure, including early warning, command and control, production, testing, and warhead storage. It also describes the key modernization programs that Russia is pursuing to maintain and, in some cases, expand its nuclear arsenal. The fourth section focuses on how arms control has affected the size and structure of Russia's nuclear forces. The fifth section discusses several potential issues for Congress. <2. Strategy and Doctrine> <2.1. Soviet Doctrine> The Soviet Union valued nuclear weapons for both their political and military attributes. From a political perspective, nuclear weapons served as a measure of Soviet status, while nuclear parity with the United States offered the Soviet Union prestige and influence in international affairs. From a military perspective, the Soviet Union considered nuclear weapons to be instrumental to its plans for fighting and prevailing in a conventional war that escalated to a nuclear one. As a leading Russian analyst has written, "for the first quarter-century of the nuclear age, the fundamental assumption of Soviet military doctrine was that, if a global war was unleashed by the 'imperialist West,' the Soviet Union would defeat the enemy and achieve victory, despite the enormous ensuing damage." Soviet views on nuclear weapons gradually evolved as the United States and the Soviet Union engaged in arms control talks in the wake of the 1962 Cuban Missile Crisis, and as the Soviet Union achieved parity with the United States. During the 1960s, both countries recognized the reality of the concept of "Mutually Assured Destruction" (MAD) a situation in which both sides had nuclear retaliatory capabilities that prevented either side from prevailing in an all-out nuclear war. Analysts argue that the reality that neither side could initiate a nuclear war without facing the certainty of a devastating retaliatory attack from the other was codified in the agreements negotiated during the Strategic Arms Limitation Talks (SALT). With the signing of the 1972 Anti-Ballistic Missile (ABM) Treaty, both sides accepted limits on their ability to protect themselves from a retaliatory nuclear attack, thus presumably reducing incentives for either side to engage in a nuclear first strike. The Soviet Union offered rhetorical support to the nonuse of nuclear weapons throughout the 1960s and 1970s. At the time, this approach placed the Soviet Union on the moral high ground with nonaligned nations during the negotiations on the Nuclear Nonproliferation Treaty. The United States and its NATO allies refused to adopt a similar pledge, maintaining a "flexible response" policy that allowed for the possible use of nuclear weapons in response to a massive conventional attack by the Soviet Union and its Warsaw Pact allies. At the same time, however, most U.S. analysts doubted that Soviet support for the nonuse of nuclear weapons actually influenced Soviet warfighting plans, even though Soviet-Warsaw Pact advantages in conventional forces along the Central European front meant that the Soviet Union would not necessarily need to use nuclear weapons first. U.S. and NATO skepticism about a Soviet nonuse policy reflected concerns about the Soviet military buildup of a vast arsenal of battlefield and shorter-range nuclear delivery systems. These systems could have been employed on a European battlefield in the event of a conflict with the United States and NATO. On the other hand, interviews with Soviet military officials have suggested that this theater nuclear buildup was intended to "reduce the probability of NATO's first use [of nuclear weapons] and thereby to keep the war conventional." In addition, many U.S. commentators feared that the Soviet Union might launch a "bolt from the blue" attack against U.S. territory even in the absence of escalation from a conflict in Europe. Other military analysts suspect that the Soviet Union would not have initiated such an attack and likely did not have the capability to conduct an disarming attack against U.S. nuclear forces a capability that would have been needed to restrain the effectiveness of a U.S. retaliatory strike. Instead, the Soviet Union might have launched its weapons on warning of an imminent attack, which has sometimes been translated as a retaliatory reciprocal counter strike , or in a retaliatory strike after initial nuclear detonations on Soviet soil. Many believe that, in practice, the Soviet Union planned only for these latter retaliatory strikes. Regardless, some scholars argue that the Soviet leadership likely retained the option of launching a first strike against the United States. Improvements to the accuracy of U.S. ballistic missiles raised concerns in the Soviet Union about the ability of retaliatory forces to survive a U.S. attack. For Soviet leaders, the increasing vulnerability of Soviet missile silos called into question the stability of mutual deterrence and possibly raised questions about the Soviet Union's international standing and bargaining position in arms control negotiations with the United States. In 1982, General Secretary Leonid Brezhnev officially announced that the Soviet Union would not be the first nation to use nuclear weapons in a conflict. When General Secretary Brezhnev formally enunciated the Soviet no-first-use policy in the 1980s, actual Soviet military doctrine may have become more consistent with this declaratory doctrine, as the Soviet military hoped to keep a conflict in the European theater conventional. In addition, by the end of the decade, and especially in the aftermath of the accident at the Chernobyl Nuclear Power Plant, Soviet leader Mikhail Gorbachev believed that the use of nuclear weapons would lead to catastrophic consequences. <2.2. Russian Nuclear Doctrine> Russia has altered and adjusted Soviet nuclear doctrine to meet the circumstances of the post-Cold War world. In 1993, Russia explicitly rejected the Soviet Union's no-first-use pledge, in part because of the weakness of its conventional forces at the time. Russia has subsequently revised its military doctrine and national security concept several times over the past few decades, with successive versions in the 1990s appearing to place a greater reliance on nuclear weapons. For example, the national security concept issued in 1997 allowed for the use of nuclear weapons "in case of a threat to the existence of the Russian Federation as an independent sovereign state." The military doctrine published in 2000 expanded the circumstances in which Russia might use nuclear weapons, including in response to attacks using weapons of mass destruction against Russia or its allies, as well as in response to "large-scale aggression utilizing conventional weapons in situations critical to the national security of the Russian Federation." These revisions have led to questions about whether Russia would employ nuclear weapons preemptively in a regional war or only in response to the use of nuclear weapons in a broader conflict. In mid-2009, Nikolai Patrushev, the head of Russia's Security Council, hinted that Russia would have the option to launch a "preemptive nuclear strike" against an aggressor "using conventional weapons in an all-out, regional, or even local war." However, when Russia updated its military doctrine in 2010, it did not specifically provide for the preemptive use of nuclear weapons. Instead, the doctrine stated that Russia "reserves the right to utilize nuclear weapons in response to the utilization of nuclear and other types of weapons of mass destruction against it and (or) its allies, and also in the event of aggression against the Russian Federation involving the use of conventional weapons when the very existence of the state is under threat." Compared with the 2000 version, which allowed for nuclear use "in situations critical to the national security of the Russian Federation," this change seemed to narrow the conditions for nuclear weapons use. The language on nuclear weapons in Russia's most current 2014 military doctrine is similar to that in the 2010 doctrine. Analysts have identified several factors that contributed to Russia's increasing reliance on nuclear weapons during the 1990s. First, with the demise of the Soviet Union and Russia's subsequent economic collapse, Russia no longer had the means to support large and effective conventional forces. Conflicts in the Russian region of Chechnya and, in 2008, neighboring Georgia also highlighted seeming weaknesses in Russia's conventional military forces. In addition, Russian analysts saw emerging threats in other neighboring post-Soviet states; many analysts believed that by even implicitly threatening that it might resort to nuclear weapons, Russia hoped it could enhance its ability to deter the start of, or NATO interference in, such regional conflicts. Russia's sense of vulnerability, and its view that its security was being increasingly threatened, also stemmed from NATO enlargement. Russia has long feared that an expanding alliance would create a new challenge to Russia's security, particularly if NATO were to move nuclear weapons closer to Russia's borders. These concerns contributed to the statement in the 1997 doctrine that Russia might use nuclear weapons if its national survival was threatened. For many in Russia, NATO's air campaign in Kosovo in 1999 underlined Russia's growing weakness and NATO's increasing willingness to threaten Russian interests. Russia's 2000 National Security Concept noted that the level and scope of the military threat to Russia was growing. It cited, specifically, "the desire of some states and international associations to diminish the role of existing mechanisms for ensuring international security." It also noted that "a vital task of the Russian Federation is to exercise deterrence to prevent aggression on any scale, nuclear or otherwise, against Russia and its allies." Consequently, it concluded, Russia "must have nuclear forces capable of delivering specified damage to any aggressor state or a coalition of states in any situation." The potential threat from NATO remained a concern for Russia in its 2010 and 2014 military doctrines. The 2010 doctrine stated that the main external military dangers to Russia were "the desire to endow the force potential of the North Atlantic Treaty Organization (NATO) with global functions carried out in violation of the norms of international law and to move the military infrastructure of NATO member countries closer to the borders of the Russian Federation, including by expanding the bloc." It also noted that Russia was threatened by "the deployment of troop contingents of foreign states (groups of states) on the territories of states contiguous with the Russian Federation and its allies and also in adjacent waters" (a reference to the fact that NATO now included states that had been part of the Warsaw Pact). Russian concerns also extend ed to U.S. missile defense deployed on land in Poland and Romania and at sea near Russian territory as a part of the European Phased Adaptive Approach (EPAA). Russia's possession of a large arsenal of nonstrategic nuclear weapons and dual-capable systems, combined with recent statements designed to remind others of the strength of Russia's nuclear deterrent, have led some to argue that Russia has increased the role of nuclear weapons in its military strategy and military planning. Before Russia's invasion of Ukraine in 2014, some analysts argued that Russia's nonstrategic nuclear weapons had "no defined mission and no deterrence framework [had] been elaborated for them." However, subsequent Russian statements, coupled with military exercises that appeared to simulate the use of nuclear weapons against NATO members, have led many to believe that Russia might threaten to use its shorter-range, nonstrategic nuclear weapons to coerce or intimidate its neighbors. Such a nuclear threat could occur before or during a conflict if Russia believed that a threat to use nuclear weapons could lead its adversaries, including the United States and its allies, to back down. Consequently, several analysts have argued that Russia has adopted an "escalate to de-escalate" nuclear doctrine. They contend that when faced with the likelihood of defeat in a military conflict with NATO, Russia might threaten to use nuclear weapons in an effort to coerce NATO members to withdraw from the battlefield. This view of Russian doctrine has been advanced by officials in the Trump Administration and has informed decisions made during the 2018 Nuclear Posture Review. However, Russia does not use the phrase "escalate to de-escalate" in any versions of its military doctrine, and debate exists about whether this is an accurate characterization of Russian thinking about nuclear weapons. Conflicting statements from Russia have contributed to disagreements among U.S. analysts over the circumstances under which Russia would use nuclear weapons. During a March 2018 speech to the Federal Assembly, President Putin seemed to affirm the broad role for nuclear weapons that Russia's military doctrine assigns: I should note that our military doctrine says Russia reserves the right to use nuclear weapons solely in response to a nuclear attack, or an attack with other weapons of mass destruction against the country or its allies, or an act of aggression against us with the use of conventional weapons that threaten the very existence of the state. This all is very clear and specific. As such, I see it is my duty to announce the following. Any use of nuclear weapons against Russia or its allies, weapons of short, medium or any range at all, will be considered as a nuclear attack on this country. Retaliation will be immediate, with all the attendant consequences. There should be no doubt about this whatsoever. Putin and other Russian officials have extensively used what some Western analysts have described as "nuclear messaging" in the wake of Russia's annexation of Crimea and instigation of conflict in eastern Ukraine. Their references to Russia's nuclear capabilities have seemed like an effort to signal that Russia's stakes are higher than those of the West and that Russia is willing to go to great lengths to protect its interests. At times, however, President Putin has offered a more restrained view of the role of nuclear weapons. In 2016, Putin stated that "brandishing nuclear weapons is the last thing to do. This is harmful rhetoric, and I do not welcome it." He also dismissed suggestions that Russia would consider using nuclear weapons offensively, stating that "nuclear weapons are a deterrent and a factor of ensuring peace and security worldwide. They should not be considered as a factor in any potential aggression, because it is impossible, and it would probably mean the end of our civilization." In October 2018, President Putin made a statement that some analysts interpreted as potentially moving toward a "sole purpose" doctrine, by which Russia would use nuclear weapons only in response to others' use of nuclear weapons. Putin declared: There is no provision for a preventive strike in our nuclear weapons doctrine. Our concept is based on a retaliatory reciprocal counter strike. This means that we are prepared and will use nuclear weapons only when we know for certain that some potential aggressor is attacking Russia, our territory [with nuclear weapons] . Only when we know for certain and this takes a few seconds to understand that Russia is being attacked will we deliver a counterstrike . Of course, this amounts to a global catastrophe, but I would like to repeat that we cannot be the initiators of such a catastrophe because we have no provision for a preventive strike. <3. Soviet Nuclear Forces> The Soviet Union conducted its first explosive test of a nuclear device on August 29, 1949, four years after the United States employed nuclear weapons against Japan at the end of World War II. After this test, the Soviet Union initiated the serial production of nuclear devices and work on thermonuclear weapons, and it began to explore delivery methods for its nascent nuclear arsenal. The Soviet Union tested its first version of a thermonuclear bomb in 1953, two years after the United States crossed that threshold. The Soviet stockpile of nuclear warheads grew rapidly through the 1960s and 1970s, peaking at more than 40,000 warheads in 1986, according to unclassified estimates (see Figure 1 ). Within this total, around 10,700 warheads were carried by long-range delivery systems, the strategic forces that could reach targets in the United States in the mid-1980s. By the 1960s, the Soviet Union, like the United States, had developed a triad of nuclear forces: land-based intercontinental ballistic missiles (ICBMs), submarine-launched ballistic missiles (SLBMs), and heavy bombers equipped with nuclear weapons. In 1951, the Soviet Union conducted its first air drop test of a nuclear bomb and began to deploy nuclear weapons with its Long-Range Aviation forces soon thereafter. Bomber aircraft included the M-4 Bison, which barely had the range needed to attack the United States and then return home. The Tu-95 Bear strategic bomber, which had a longer range, entered service in 1956. Later modifications of the Bear bomber have since been the mainstay of the Soviet/Russian nuclear triad's air leg. In 1956, the Soviet Union tested and deployed its first ballistic missile with a nuclear warhead, the SS-3, a shorter-range, or theater, missile. It tested and deployed the SS-4, a theater ballistic missile that would be at the heart of the 1962 Cuban Missile Crisis, by 1959. Soviet missile ranges were further extended with the deployment of an intermediate-range ballistic missile, the SS-5. The 1957 launch of the Sputnik satellite on a modified SS-6 long-range missile heralded the Soviet Union's development of ICBMs. By the end of the decade, the Soviet Union had launched an SS-N-1 SLBM from a Zulu-class attack submarine of the Soviet Navy. The undersea leg of the triad would steadily progress over the following decade with the deployment of SLBMs on the Golf class attack submarine and then the Hotel and Yankee class nuclear-powered submarines. Manned since 1959 by a separate military service called the Strategic Rocket Forces, the ICBM leg came to dominate the Soviet nuclear triad. During the 1960s, the Soviet Union rapidly augmented its force of fixed land-based ICBMs, expanding from around 10 launchers and two types of missiles in 1961 to just over 1,500 launchers with eight different types of missiles in 1971. Because these missiles were initially based on soft launch pads or in vertical silos that could not withstand an attack from U.S. nuclear warheads, many concluded that the Soviet Union likely planned to use them in a first strike attack against U.S. missile forces and U.S. territory. Moreover, the United States believed that the design of Soviet ICBMs provided the Soviet Union with the ability to contemplate, and possibly execute, a successful disarming first strike against U.S. land-based forces. Half of the ICBM missile types were different variants of the largest missile, the SS-9 ICBM. The United States referred to this as a "heavy" ICBM due to its significant throwweight, which allowed it to carry a higher-yield warhead, estimated at around 20 megatons. The United States believed, possibly inaccurately, that the missile's combination of improved accuracy and high yield posed a unique threat to U.S. land-based missiles. Concerns about Soviet heavy ICBMs persisted throughout the Cold War, affecting both U.S. force structure decisions and U.S. proposals for arms control negotiations. Although smaller and less capable than its land-based forces, the sea-based leg of the Soviet triad was built up during the 1960s, with the deployment of SLBMs on Golf-, Hotel-, and Yankee- class submarines. These submarines carried intermediate-range (rather than intercontinental-range) missiles, but their mobility allowed the Soviet Union to threaten targets throughout Europe and, to a lesser extent, in the United States. The Soviet Union began the decade with 30 missile launchers on 10 submarines and ended it with 228 launchers on 31 submarines. By the end of the 1960s, the United States and the Soviet Union had initiated negotiations to limit the numbers of launchers for long-range missiles. The emerging parity in numbers of deployed nuclear-armed missiles, coupled with several nuclear crises, had paved the way for a recognition of their mutual deterrence relationship and arms control talks. As noted below, the Interim Agreement on Offensive Arms negotiated as part of the Strategic Arms Limitation Talks (SALT I) and signed in 1972 capped the construction and size of ICBM silo launchers (in an effort to limit the number of heavy ICBMs in the Soviet force) and limited the number of launchers for SLBMs. It did not, however, limit the nuclear warheads that could be carried by ICBMs or SLBMs. As a result, the Soviet Union continued to modernize and expand its nuclear forces in the 1970s. During this time, the Soviet Union commissioned numerous Delta-class strategic missile submarines, armed with the single-warhead, intercontinental-range SS-N-8 SLBM; developed the Tu-22M Backfire intermediate-range bomber aircraft; began to develop a new supersonic strategic heavy bomber (eventually the Tu-160 Blackjack); and began to deploy the SS-20 intermediate-range ballistic missile in 1976, which, along with other missiles of its class, would be eliminated under the 1987 INF Treaty. The Soviet Union also pursued an extensive expansion of its land-based ICBM force. It not only developed a number of new types of ICBMs, but, in 1974, it began to deploy these missiles with multiple warheads (known as MIRVs, or multiple independent reentry vehicles). During this time frame the Soviet Union developed, tested, and deployed the 4-warhead SS-17 ICBM, 10-warhead SS-18 ICBM (a new heavy ICBM that replaced the SS-9), and 6-warhead SS-19 ICBM. Because each of these missiles could carry multiple warheads, the SALT I limit on ICBM launchers did not constrain the number of warheads on the Soviet missile force. Moreover, the ICBM force began to dominate the Soviet triad during this time (see Figure 2 ). U.S. analysts and officials expressed particular concern about the heavy SS-18 ICBM and its subsequent modifications. The Soviet Union deployed 308 of these missiles, each with the ability to carry up to 10 warheads and numerous decoys and penetration aides designed to confuse missile defense radars. These concerns contributed to a debate in the U.S. defense community about a "window of vulnerability" in the U.S.-Soviet nuclear balance due to a Soviet advantage in cumulative ballistic missile throwweight. Some asserted that the Soviets' throwweight advantage could translate into an edge in the number of warheads deployed on land-based missiles. They postulated that the Soviet Union could attack all U.S. land-based missiles with just a portion of the Soviet land-based force, leaving it with enough warheads after an initial nuclear attack to dominate and possibly coerce the United States into surrendering without any retaliation. Others disputed this theory, noting that the United States maintained a majority of its nuclear warheads on sea-based systems that could survive a Soviet first strike and that the synergy of U.S. land-based, sea-based, and air-delivered weapons would complicate, and therefore deter, a Soviet first strike. Recent research examining the records of Soviet planners and officials suggests that Soviet missile developments during the 1970s did not seek to achieve, and did not have the capabilities needed for, a first-strike advantage or a warfighting posture. Instead, the Soviet Union began to harden its missile silos so they could survive attack and to develop an early warning system, thus moving toward a second-strike capability. Moreover, the 1980s saw Soviet planners worrying about maintaining their second-strike capability in light of U.S. strategic offense and missile defense programs. The United States was modernizing its land-based ICBMs, ballistic missile submarines and SLBMs, and heavy bombers. Each of the new U.S. missiles would carry multiple warheads, and the Soviets believed all would have the accuracy to target and destroy Soviet land-based missiles. In March 1983, President Reagan announced the Strategic Defense Initiative, a missile defense program that he pledged would make ballistic missiles "impotent and obsolete." The SS-18 ICBM, with its capacity to carry 10 warheads and penetration aids, provided a counter to these U.S. capabilities. During the 1980s, development continued across all three legs of the Soviet nuclear triad. The Typhoon-class strategic submarine and the Tu-160 Blackjack bomber entered into service. Anti-ship cruise missiles were joined by modern AS-15 land-attack cruise missiles. The Soviet Union continued to improve the accuracy of its fixed, silo-based missiles and began to deploy mobile ICBMs, adding both the road-mobile, single warhead SS-25 missile and the rail-mobile, 10-warhead SS-24 missile. By the end of the 1980s, prior to the signing of the 1991 Strategic Arms Reduction Treaty (START), the Soviet Union had completed the backbone of what was to become the Russian nuclear triad of the 1990s. Its air leg consisted of Bear, Backfire, and Blackjack bombers. Its undersea leg consisted of Delta- and Typhoon-class submarines with MIRV SLBMs. Its ICBM leg consisted of the SS-18, SS-19, and SS-25 missiles. During the Cold War, the Soviet Union produced and deployed a wide range of delivery vehicles for nonstrategic nuclear weapons. At different times during the period, it deployed devices small enough to fit into a suitcase-sized container; nuclear mines; shells for artillery; short-, medium-, and intermediate-range ballistic missiles; short-range, air-delivered missiles; and gravity bombs. The Soviet Union deployed these weapons at nearly 600 bases, with some located in Warsaw Pact countries in Eastern Europe, some in the Soviet Union's non-Russian republics along its western and southern perimeter, and others throughout the Soviet Union. Estimates vary, but many analysts believe that by 1991 the Soviet Union had more than 20,000 of these weapons. Before the collapse of the Warsaw Pact in 1989, the numbers may have been higher, in the range of 25,000 weapons. <4. Russian Nuclear Forces> Like the Soviet Union, the Russia Federation maintains a triad of nuclear forces consisting of ICBMs, SLBMs, and heavy bombers. The total number of warheads in the Soviet and Russian arsenal and the number deployed on Soviet and Russian strategic forces began to decline in the late 1980s (see Figure 1 and Figure 2 above). These reductions were primarily driven by the limits in the 1991 START I Treaty, the 2002 Strategic Offensive Reductions Treaty, and the 2010 New START Treaty. The reductions also reflect the retirement of many older Soviet-era missiles and their replacement with new missiles that carry fewer warheads, as well as the effects of the fiscal crisis in the late 1990s, which slowed the deployment of the next generation of Russian missiles and submarines. Moreover, under the Nunn-Lugar Cooperative Threat Reduction program, the United States helped Russia, Ukraine, Belarus, and Kazakhstan move Soviet-era nuclear weapons back to Russian territory and to dismantle portions of the Soviet Union's nuclear arsenal. Russia deploys its strategic nuclear forces at more than a dozen bases across its territory. These bases are shown on Figure 4 , below. Russia is currently modernizing most of the components of its nuclear triad. The current phase of modernization essentially began in 1998. The Soviet Union replaced its land-based missiles frequently, with new systems entering the force every 10-15 years and modifications appearing every few years. Russia has not kept up this pace. When it began the most recent modernization cycle, it was in the midst of a financial crisis. The crisis not only reduced the number of new missiles entering the force each year, but slowed the process. As a result, some of the systems that have had been under development since the late 1990s and early 2000s began to enter the force in the late 2000s, but others will not do so until the 2020s. <4.1. Active Forces> <4.1.1. Intercontinental Ballistic Missiles> As was the case during the Soviet era, Russia's Strategic Rocket Forces (SRF) are a separate branch of the Russian armed forces. These forces are still the mainstay of Russia's nuclear triad. Today, the SRF includes three missile armies, which, in turn, comprise 11 missile divisions (see Figure 3 ). These divisions are spread across Russia's territory, from Vypolzovo in the west to the Irkutsk region in eastern Siberia. The Strategic Rocket Forces are estimated to have approximately 60,000 personnel. According to official and unofficial sources, Russia's ICBM force currently comprises 318 missiles that can carry up to 1,165 warheads, although only about 860 warheads are deployed and available for use. Over half of these missiles are MIRVed, carrying multiple warheads. Russia is modernizing its ICBM force, replacing the last of the missiles remaining from the Soviet era with new single warhead and multiple warhead missiles. According to U.S. estimates, Russia is likely to complete this modernization around 2022. It is anticipated that, after modernization, Russia's ICBM force will come to rely primarily on two missiles: the single-warhead SS-27 Mod 1 (Topol-M) and the SS-27 Mod 2 (Yars), which can carry up to 4 MIRV warheads. As discussed below, Russia is developing a new heavy ICBM, known as the Sarmat (SS-X-30), which is expected to deploy with 10 or more warheads on each missile. It may also carry the new Avangard hypersonic glide vehicle, also described below. According to unclassified reports, Russia has pursued other projects, including an intermediate-range version of the SS-27 Mod 2 (known as the RS-26) and a rail-mobile ICBM called Barguzin, but their future is unclear. <4.1.2. Submarine-Launched Ballistic Missiles> Russia's Strategic Naval Forces are a part of the Russian Navy. Ballistic missile submarines are deployed with the Northern Fleet, headquartered in Severomorsk in the Murmansk region, and the Pacific Fleet, headquartered in Vladivostok. The Strategic Naval Forces have 10 strategic submarines of three different types: Delta, Typhoon, and Borei class. Some of these are no longer operational. The last submarine of the Typhoon class is used as a testbed for launches of the Bulava missile, which is deployed on the Borei-class submarines. The Delta and Borei-class submarines can each carry 16 SLBMs, with multiple warheads on a missile, "for a combined maximum loading of more than 700 warheads." However, because Russia may have reduced the number of warheads on some of the missiles to comply with limitations set by the 2010 New START Treaty, the submarine fleet may carry only 600 warheads. Most of the submarines in Russia's fleet are the older Delta class, including one Delta III submarine and 6 Delta IV submarines. The last of these was built in 1992; they are based with Russia's Northern Fleet. Although older Delta submarines were deployed with three-warhead SS-N-18 missiles, the Delta IV submarines carry the four-warhead SS-N-23 missile. An upgraded version of this missile, known as the Sineva system, entered into service in 2007. Another modification, known as the Liner (or Layner), could reportedly carry up to 10 warheads. Russia began constructing the lead ship in its Borei class of ballistic missile submarines (SSBN) in 1996. After numerous delays, the lead ship joined the Northern Fleet in 2013. According to public reports, Russia will eventually deploy 10 Borei-class submarines, with 5 in the Pacific Fleet and 5 in the Northern Fleet. Three submarines are currently in service, all in the Northern Fleet, and five more are in "various stages of construction." The latter five submarines will be an improved version, known as the Borei-A/II. The first of these has recently completed its sea trials. Russia plans to complete the first eight ships by 2023 and to finish the last two by 2027. Borei-class submarines can carry 16 of the SS-N-32 Bulava missiles; each missile can carry six warheads. The Bulava missile began development in the late 1990s. It experienced numerous test failures before it entered service in 2018. <4.1.3. Heavy Bombers> Russia's strategic aviation units are part of the Russian Aerospace Forces' Long-Range Aviation Command. This command includes two divisions of Tu-160 (Blackjack) and Tu-95MS (Bear H) aircraft, which are the current mainstay of Russia's strategic bomber fleet. These are located in the Saratov region, in southwestern Russia, and the Amurskaya region, in Russia's Far East. Unclassified sources estimate that Russia has 60 to 70 bombers in its inventory 50 of them count under the New START Treaty. Around 50 of these are Tu-95MS Bear bombers; the rest are Tu-160 Blackjack bombers. The former can carry up to 16 AS-15 (Kh-55) nuclear-armed cruise missiles, while the latter can carry up to 12 AS-15 nuclear-armed cruise missiles. Both bombers can also carry nuclear gravity bombs, though experts contend that the bombers would be vulnerable to U.S. or allied air defenses in such a delivery mission. Russia has recently modernized both of its bombers, fitting them with a new cruise missile system, the conventional AS-23A (Kh-101) and the nuclear AS-23B (Kh-102). A newer version of the Tu-160, which is expected to include improved stealth characteristics and a longer range, is set to begin production in the mid-2020s. Experts believe the fleet will then include around 50-60 aircraft, with the eventual development of a new stealth bomber, known as the PAK-DA, as a part of Russia's long-term plans. <4.1.4. Nonstrategic Nuclear Weapons> Russia has a variety of delivery systems that can carry nuclear warheads to shorter and intermediate ranges. These systems are generally referred to as nonstrategic nuclear weapons, and they do not fall under the limits in U.S.-Soviet or U.S.-Russian arms control treaties. According to unclassified reports, Russia has a number of nuclear weapons available for use by its "naval, tactical air, air- and missile defense forces, as well as on short-range ballistic missiles." It is reportedly engaged in a modernization effort focused on "phasing out Soviet-era weapons and replacing them with newer versions." Unclassified estimates place the number of warheads assigned to nonstrategic nuclear weapons at 1,830. Recent analyses indicate that Russia is both modernizing existing types of short-range delivery systems that can carry nuclear warheads and introducing new versions of weapons that have not been a part of the Soviet/Russian arsenal since the latter years of the Cold War. In May 2019, Lt. Gen. Robert P. Ashley of the Defense Intelligence Agency (DIA) raised this point in a public speech. He stated that Russia has 2,000 nonstrategic nuclear warheads and that its stockpile "is likely to grow significantly over the next decade." He also stated that Russia is adding new military capabilities to its existing stockpile of nonstrategic nuclear weapons, including those employable by ships, aircraft, and ground forces. These nuclear warheads include theater- and tactical-range systems that Russia relies on to deter and defeat NATO or China in a conflict. Russia's stockpile of non-strategic nuclear weapons [is] already large and diverse and is being modernized with an eye towards greater accuracy, longer ranges, and lower yields to suit their potential warfighting role. We assess Russia to have dozens of these systems already deployed or in development. They include, but are not limited to: short- and close-range ballistic missiles, ground-launched cruise missiles, including the 9M729 missile, which the U.S. Government determined violates the Intermediate-Range Nuclear Forces or INF Treaty, as well as antiship and antisubmarine missiles, torpedoes, and depth charges. It is not clear from General Ashley's comments, or from many of the other assessments of Russia's nonstrategic nuclear forces, whether Russia will deploy these new delivery systems with nuclear warheads. Many of Russia's medium- and intermediate-range missile systems, including the Kalibr sea-launched cruise missile and the Iskander ballistic and cruise missiles, are dual-capable and can carry either nuclear or conventional warheads. This is also likely true of the new 9M729 land-based, ground-launched cruise missile, the missile that the United States has identified as a violation of the 1987 INF Treaty. It unclear why Russia retains, and may expand, its stockpile of nonstrategic nuclear weapons. Some argue that these weapons serve to bolster Russia's less capable conventional military forces and assert that as Russia develops more capable advanced conventional weapons, it may limit its nonstrategic modernization program and retire more of these weapons than it acquires. Others, however, see Russia's modernization of its nonstrategic nuclear weapons as complementary to an "escalate to de-escalate" nuclear doctrine and argue that Russia will expand its nonstrategic nuclear forces as it raises the profile of such weapons in its doctrine and warfighting plans. <4.2. Key Infrastructure> <4.2.1. Early Warning> Russia deploys an extensive early warning system. Operated by its Aerospace Forces, the system consists of a network of early warning satellites that transmit to two command centers: one in the East, in the Khabarovsk region, and one in the West, in the Kaluga region. The data are then transmitted to a command center in the Moscow region. Russia also operates an extensive network of ground-based radars across Russia, as well as in neighboring Kazakhstan and Belarus, that are used for early warning of missile launches and to monitor objects at low-earth orbits. Russia uses the Okno observation station, located in Tajikistan, to monitor of objects that orbit at higher altitudes. <4.2.2. Command and Control> The Russian President is the Supreme Commander in Chief of the Russian Armed Forces, and he has the authority to direct the use of nuclear weapons. According to a 2016 DIA report, "The General Staff monitors the status of the weapons of the nuclear triad and will send the direct command to the launch crews following the president's decision to use nuclear weapons. The Russians send this command over multiple C2 systems, which creates a redundant dissemination process to guarantee that they can launch their nuclear weapons." According to DIA, Russia "also maintains the Perimetr system, which is designed to ensure that a retaliatory launch can be ordered when Russia is under nuclear attack." It is unknown whether the order to transfer warheads from central storage and release them to the forces is part of the launch authorization. <4.2.3. Production, Testing, and Storage> Russia has an extensive infrastructure of facilities for the production of nuclear weapons and missiles, although it has consolidated and reduced the size of this infrastructure since the end of the Cold War. Moreover, Russia has improved the security of its nuclear weapons facilities through U.S.-Russian cooperation under the Nunn-Lugar CTR program. Russia has about a dozen research institutes and facilities that participate in the design and manufacture of nuclear and nonnuclear components for its nuclear weapons, provide stockpile support, and engage in civilian nuclear and other research. Russia, which has a significant stockpile of weapons-usable materials, no longer produces highly enriched uranium or plutonium for use in nuclear weapons. Russia's nuclear weapons are stored at approximately 12 national central storage sites. According to analysts, Russia also maintains 34 base-level storage facilities (see Appendix B ). A special unit, the 12 th Main Directorate (GUMO), is responsible for security, transportation, and handling of the warheads. In a period immediately preceding a conflict, it is anticipated that nuclear warheads could be transferred from the national central storage sites to the base-level facilities. Russia ratified the Comprehensive Test Ban Treaty (CTBT) in 2000. Although this treaty has yet to enter into force, Russia claims it has refrained from explosive nuclear testing in accordance with the treaty's requirements. Russia conducts hydrodynamic tests, which do not produce a nuclear yield, at a site located on Novaya Zemlya, an archipelago located in the Arctic Ocean. In his May 2019 speech, DIA Director General Ashley stated that "the United States believes that Russia probably is not adhering to its nuclear testing moratorium in a manner consistent with the 'zero-yield' standard." However, when questioned about this assertion, he said that the U.S. intelligence community does not have "specific evidence that Russia had conducted low-yield nuclear tests" but that the DIA thinks Russia has "the capability to do that." <4.3. Key Modernization Programs> In addition to replacing aging Soviet-era ICBMs, SLBMs, and ballistic missile submarines, Russia is developing several kinds of nuclear delivery vehicles. Some of these, like the Sarmat ICBM, may replicate capabilities that already exist; others could expand the force with new types of delivery systems not previously deployed with nuclear warheads. President Putin unveiled most of these systems during his March 1, 2018, annual State of the Nation address to the Federal Assembly, when he presented a range of weapons systems currently under development in Russia. His speech also featured videos and animations of new weapons systems. During his speech, President Putin explicitly linked Russia's new strategic weapons programs to the U.S. withdrawal from the ABM Treaty in 2002. He said: We did our best to dissuade the Americans from withdrawing from the treaty. All in vain. The US pulled out of the treaty in 2002. Even after that we tried to develop constructive dialogue with the Americans. We proposed working together in this area to ease concerns and maintain the atmosphere of trust. At one point, I thought that a compromise was possible, but this was not to be. All our proposals, absolutely all of them, were rejected. And then we said that we would have to improve our modern strike systems to protect our security . [Emphasis added] In reply, the US said that it is not creating a global BMD system against Russia, which is free to do as it pleases, and that the US will presume that our actions are not spearheaded against the US . the US, is permitting constant, uncontrolled growth of the number of anti-ballistic missiles, improving their quality, and creating new missile launching areas. If we do not do something, eventually this will result in the complete devaluation of Russia's nuclear potential. Meaning that all of our missiles could simply be intercepted. Let me recall that the United States is creating a global missile defence system primarily for countering strategic arms that follow ballistic trajectories. These weapons form the backbone of our nuclear deterrence forces, just as of other members of the nuclear club. As such, Russia has developed, and works continuously to perfect, highly effective but modestly priced systems to overcome missile defence. They are installed on all of our intercontinental ballistic missile complexes. These comments, and President Putin's repeated reference to U.S. ballistic missile defenses, provide a possible context for many of the ongoing modernization programs. <4.3.1. Avangard Hypersonic Glide Vehicle> The Avangard hypersonic glide vehicle (HGV), previously known as Project 4202, is a reentry body carried atop an existing ballistic missile that can maneuver to evade air defenses and ballistic missile defenses to deliver a nuclear warhead to targets in Europe and the United States. Russia views the Avangard system as a hedge to buttress its second-strike capability, ensuring that a retaliatory strike can penetrate U.S. ballistic missile defenses. In his March 2018 remarks, President Putin specifically stressed that Russia would pursue "a new hypersonic-speed, high-precision new weapons systems that can hit targets at inter-continental distance and can adjust their altitude and course as they travel" in response to the U.S. withdrawal from the ABM Treaty. Some U.S. analysts, however, have noted that the Avangard could be used "as a first strike system to be used specifically against missile defenses, clearing the way for the rest of Russia's nuclear deterrent." Others have stressed that the Avangard is likely to serve as a niche capability that adds little to Russia's existing nuclear force structure. The Soviet Union first experimented with HGV technology in the 1980s, partly in response to the expected deployment of U.S. ballistic missile defense systems under the SDI program. The current program has been under development since at least 2004 and has undergone numerous tests. In the most recent test, on December 26, 2018, the glider was launched atop an SS-19 ICBM from the Dombarovskiy missile base in the Southern Urals toward a target on the Kamchatka Peninsula more than 3,500 miles away. According to some sources, Russia might deploy the Avangard on the SS-18, SS-19 and, potentially, on the new Sarmat ICBMs. Experts continue to debate Avangard's true technical characteristics. However, President Putin has stated that the system is capable of "intensive maneuvering" and achieving "supersonic speeds in excess of Mach 20." After the December 2018 test, President Putin announced that the weapon would be added to Russia's nuclear arsenal in 2019. In January 2019, an official with Russia's Security Council confirmed that the Avangard had been integrated onto the SS-19 force. According to the Commander of Russia's Strategic Rocket Forces, the Dombarovskiy Missile Division will stand up a "missile regiment comprising a modified command-and-control post and two silo-based launchers" in 2019. On December 27, 2019, the Russian military announced that the Strategic Rocket Forces had activated two SS-19 missiles equipped with Avangard hypersonic glide vehicles. Although not specified in the Russian announcement, the missiles are likely deployed with the 13 th regiment of the Dombarovskiy (Red Banner) missile division based in the Orenburg region. The regiment has reportedly received two retrofitted UR-100NUTTkH (NATO reporting name: SS-19 Stiletto) ICBMs armed with one Avangard hypersonic boost-glide warhead each. According to earlier reports, the 13 th regiment is expected to eventually receive four more SS-19 ICBMs fitted with Avangard warheads. Reports have stated that the Strategic Rocket Forces will have two missile regiments, each with six Avangard systems by 2027. Each converted missile would carry one HGV. Russian officials have indicated that these missiles will count under the New START Treaty. Consequently, Russians officials conducted an exhibition of the system for U.S. inspectors, as mandated by the New START Treaty, prior to deployment. The exhibition demonstrated that each missile will carry one Avangard HGV, but it is not clear whether or how Russia demonstrated that each HGV would carry only one warhead. <4.3.2. Sarmat ICBM> The RS-28 Sarmat (SS-X-30) missile is a liquid-fueled heavy ICBM that Russia intends to eventually deploy as a replacement for the SS-18 heavy ICBM. Russia has been reducing the number of SS-18 missiles in its force since the 1990s, when the original START Treaty required a reduction from 308 to 154 missiles. Russia likely would have eliminated all of the missiles if the START II Treaty (described below) had entered into force, but it has retained 46 of them under New START, while awaiting the development of the Sarmat. Reports indicate that the Sarmat can carry 10, or according to some sources, 15 warheads, along with penetration aids, and potentially several Avangard hypersonic glide vehicles. Putin stated in his March 2018 speech that Sarmat weighs over 200 tons, but details about the ICBM's true weight, and thus its payload, remain unclear. Russia began testing the Sarmat missile in 2016; reports indicate that it is likely to be deployed in the Uzhur Missile Division around 2021. Russia also may deploy the missile at the Dombarovsky Missile Division, with an eventual total of seven Sarmat regiments with 46 missiles. This number is equal to roughly the number of SS-18 ICBMs that Russia has retained under New START and, therefore, indicates that Russia could be planning to deploy the Sarmat in a manner consistent with the limits in the treaty. Some have speculated, however, that Russia could exceed the limits in the treaty by eventually expanding its deployment of Sarmat missiles or increasing the number of warheads on each missile to exceed the treaty's warhead limits. In his March 2018 speech, President Putin highlighted the Sarmat missile's ability to confound and evade ballistic missile defense systems. As was the case with the SS-18 missile, the large number of warheads and penetration aids are designed to increase the probability that the missile's warhead could penetrate defenses and reach its target. In addition, President Putin noted that Sarmat could attack targets by flying over both the North and South Poles, evading detection by radars seeking missiles flying in an expected trajectory over the North Pole. He also stated that the missile "has a short boost phase, which makes it more difficult to intercept for missile defense systems." He emphasized that Sarmat is a formidable missile and, owing to its characteristics, "is untroubled by even the most advanced missile defense systems." <4.3.3. Poseidon Autonomous Underwater Vehicle> The existence of Poseidon, a nuclear-powered autonomous underwater vehicle (also known as Status 6 or Kanyon, its NATO designation), was first "leaked" to the press in November 2015, when a slide detailing it appeared in a Russian Ministry of Defense briefing. According to that slide, the autonomous underwater vehicle, or drone, could reach a depth of 1,000 meters, go at a speed of 100 knots, and have a range of up to 10,000 km. The slide indicated that the system would be tested between 2019 and 2025. Press reports indicate, however, that Russia has been testing the system since at least 2016, with the most recent test occurring in November 2018. However, the system may not be deployed until 2027. Russia may deploy the Poseidon drone on four submarines, two in the Northern Fleet and two in the Pacific Fleet. Each submarine would carry eight drones. According to some reports, each drone would be armed with a two-megaton nuclear or conventional payload that could be detonated "thousands of feet" below the surface. Russia could release the drone from its submarine off the U.S. coast and detonate it in a way that would "generate a radioactive tsunami" that could destroy cities and other infrastructure along the U.S. coast. When Russia first revealed the existence of this new drone, some analysts questioned whether Russia was developing a new first-strike weapon that could evade U.S. defenses and devastate the U.S. coastline. Russia, however, views the weapon as a second- or third-strike option that could ensure a retaliatory strike against U.S. cities. Like the Avangard and Sarmat, this system, according to Russian statements, would also serve as a Russian response to concerns about the U.S. withdrawal from the ABM Treaty and U.S. advances in ballistic missile defenses. As President Putin noted in his March 2018 speech, "we have developed unmanned submersible vehicles that can move at great depths (I would say extreme depths) intercontinentally, at a speed multiple times higher than the speed of submarines, cutting-edge torpedoes and all kinds of surface vessels . They are quiet, highly manoeuvrable and have hardly any vulnerabilities for the enemy to exploit." <4.3.4. Burevestnik Nuclear-Powered Cruise Missile> The Burevestnik (SSC-X-9 Skyfall) is a nuclear-powered cruise missile intended to have "unlimited" range, because it would be powered by a nuclear reactor. In his March 2018 speech, Putin stressed that the "low-flying stealth missile carrying a nuclear warhead, with almost an unlimited range, unpredictable trajectory and ability to bypass interception boundaries" would be "invincible against all existing and prospective missile defense and counter-air defense systems." According to reports, Russia has been conducting tests with a prototype missile, and with an electric power source instead of a nuclear reactor, since 2016. Tests have continued to take place as recently as January 2019. Reports indicate, however, that most of the tests have ended in failure, and that tests using a nuclear power source are unlikely to occur in the near future, as failed tests could spread deadly radiation. According to some reports, Russia is unlikely to deploy the cruise missile for at least another decade and, even then, the high cost could limit the number introduced into the Russian arsenal. <4.3.5. Kinzhal Air-Launched Ballistic Missile> Russia is developing a nuclear-capable air-launched ballistic missile, known as the Kinzhal, that could be launched on MiG-31K interceptor aircraft or Tu-22M bombers. According to press reports, the Kinzhal is a variant of the Iskander short-range ballistic missile currently in service with the Russian Armed Forces. The air-launched version may be intended to be launched while the aircraft is at supersonic speeds, adding to the system's invulnerability to U.S. air and missile defenses. President Putin noted this capability in his March 2018 speech, when he said that the missile "flying at a hypersonic speed, 10 times faster than the speed of sound, can also maneuver at all phases of its flight trajectory, which also allows it to overcome all existing and, I think, prospective anti-aircraft and anti-missile defense systems, delivering nuclear and conventional warheads in a range of over 2,000 kilometers." Unless Russian aircraft approach U.S. shores before releasing the missile, however, it will not have the range needed to target U.S. territory. Instead, experts believe the missile is intended primarily to target naval vessels. President Putin stated that the system entered service in the Southern Military District in December 2017. Russia's Minister of Defense stated in February 2019 that MiG-31 crews have taken the Kinzhal on air patrols over the Black and Caspian seas. <4.3.6. Tsirkon Anti-Ship Hypersonic Cruise Missile> Russia has been developing the Tsirkon (3M-22, NATO designated SS-N-33), an anti-ship hypersonic cruise missile, since at least 2011. The missile is "designed for naval surface vessels and submarines, able to attack both ships and ground targets." It is intended to replace the SS-N-19 cruise missile on the Kirov-class cruisers and is expected to be test-launched from the new Yasen-class submarine Kazan . In a February 2019 address to the Federal Assembly, Putin stated that Tsirkon is a "hypersonic missile that can reach speeds of approximately Mach 9 and strike a target more than 1,000 km away both under water and on the ground." He also stated that the missile could be launched from submarines. In late 2019, President Putin also noted that Russia would develop a land-based version of this missile as a response to the U.S. withdrawal from the INF Treaty. The Tsirkon is undergoing testing with potential deployment around 2020. <4.3.7. Barguzin Rail-Mobile ICBM> Russia has been developing a rail-mobile ICBM system to replace the SS-24 Mod 3 Scalpel since 2013. An ejection test of the missile appears to have been conducted. However, Russia may have canceled the program in 2017. <4.3.8. RS-26 Rubezh ICBM> Russia has been developing a version of its three-stage RS-24 Yars ICBM with only two stages. According to unclassified reports, Russia conducted four flight tests of this missile in the early part of this decade. Two of these flight tests one that failed in September 2011 and one that succeeded in May 2012 flew from Plesetsk to Kura, a distance of approximately 5,800 kilometers (3,600 miles). The second two tests in October 2012 and June 2013 were both successful. In both cases, the missile flew from Kapustin Yar to Sary-Shagan, a distance of 2,050 kilometers (1,270 miles). These tests raised questions about whether the missile was designed to violate, or circumvent, the limits in the 1987 INF Treaty, as that treaty banned the testing and deployment of missiles with a range between 500 and 5,500 kilometers. Russia appears to have cancelled this missile program in 2018, but some analysts believe it might reappear now that the INF Treaty has lapsed. <5. The Effect of Arms Control on Russia's Nuclear Forces> The number of warheads on Soviet strategic nuclear delivery vehicles reached its peak in the mid-1980s and began to decline sharply by the early 1990s (see Figure 2 ). This decline continued, with a few pauses, through the 1990s and 2000s. While a number of factors likely contributed to this decline, most experts agree that these reductions were shaped by the limits in bilateral arms control agreements. <5.1. The SALT Era (1972-1979)> The United States and the Soviet Union signed their first formal agreements limiting nuclear offensive and defensive weapons in May 1972. The Strategic Arms Limitation Talks (SALT) produced two agreements: the Interim Agreement on Certain Measures with Respect to the Limitation of Strategic Offensive Arms (Interim Agreement) and the Treaty on the Limitation of Anti-Ballistic Missile Systems (ABM Treaty). The parties paired these two agreements, in part, to forestall an offense-defense arms race, where increases in the number of missile defense interceptors on one side would encourage the other to increase the number of missiles needed to saturate those defenses. The United States also sought to limit the number of large ICBMs in the Soviet offensive force, an area where the Soviet Union had an advantage over the United States. As a result, the Interim Agreement imposed a freeze on the number of launchers for ICBMs that the United States and the Soviet Union could deploy. (At the time the United States had 1,054 ICBM launchers and the Soviet Union had 1,618 ICBM launchers.) The two countries also agreed to freeze their number of SLBM launchers and modern ballistic missile submarines, though they could add SLBM launchers if they retired old ICBM launchers. Although the Interim Agreement limited the number of Soviet ICBM and SLBM launchers, it did not restrain the growth in the number of warheads carried on the missiles deployed in those launchers. After signing the agreement, both nations expanded the number of warheads on their missiles by deploying missiles with multiple warheads (MIRVs). The Soviet deployment of MIRVs led to a sharp increase from around 2,000 to more than 6,100 in the number of warheads on ICBMs and SLBMs between 1972 and 1979. The second Strategic Arms Limitation Treaty (SALT II) sought to curb this growth by limiting the number of missiles that could carry multiple warheads. The treaty would have capped all strategic nuclear delivery systems at 2,400 and limited each side to 1,320 MIRVed ICBMs, MIRVed SLBMs, and heavy bombers equipped to carry nuclear-armed, air-launched cruise missiles (ALCMs). The treaty would not have limited the total number of warheads that could be carried on these delivery vehicles, even though the parties agreed that they would not deploy MIRVed ICBMs with more than 10 warheads each and MIRVed SLBMs with more than 14 warheads each. SALT II proved to be highly controversial. Some analysts argued that it would fail to reduce nuclear warheads or curb the arms race, while others argued that the treaty would allow the Soviet Union to maintain strategic superiority over the United States with its force of large, heavily MIRVed land-based ballistic missiles. Shortly after the Soviet Union invaded Afghanistan in December 1979, President Carter withdrew the treaty from the Senate's consideration. The Soviet Union continued to increase the number of warheads on its ICBMs and SLBMs, reaching around 10,000 warheads in 1989. <5.2. INF and START (1982-1993)> President Reagan entered office in 1981 planning 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, but 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 (INF) Treaty in 1987. In the INF Treaty, the United States and Soviet Union agreed to destroy all intermediate-range and shorter-range ground-launched ballistic missiles and ground-launched cruise missiles with ranges between 500 and 5,500 kilometers (between 300 and 3,400 miles). The Soviet Union destroyed 1,846 missiles, including 654 SS-20 missiles that carried three warheads apiece, resulting in a reduction of more than 3,100 deployed warheads. The INF Treaty was seen as a significant milestone in arms control because it established an intrusive verification regime and eliminated entire classes of weapons that both sides regarded as modern and effective. The United States and the Soviet Union began negotiations on the Strategic Arms Reduction Treaty (START) in 1982, although the talks stopped between 1983 and 1985 after a Soviet walkout in response to the U.S. deployment of intermediate-range missiles in Europe. The Soviet Union viewed START as a continuation of the SALT process and initially proposed limits on the same categories of weapons defined in the SALT II Treaty: total delivery vehicles, MIRVed ballistic missiles, and heavy bombers equipped to carry nuclear-armed ALCMs. The United States, however, sought to change the units of account from launchers to missiles and warheads, and proposed deep reductions rather than marginal changes from the SALT II level. The United States specifically sought sublimits on heavy ICBMs (the Soviet SS-18) and heavily MIRVed ICBMs (at the time, the Soviet SS-19), but it did not include any limits on heavy bombers. The nations adjusted their positions in 1985 and 1986 and saw the beginnings of a convergence after the October 1986 summit in Reykjavik, Iceland. However, they were unable to reach agreement by the end of the Reagan Administration. President George H. W. Bush continued the negotiations during his term, and the United States and the Soviet Union signed START in July 1991. The countries agreed that each side could deploy up to 6,000 attributed warheads on 1,600 ballistic missiles and bombers, with up to 4,900 warheads on ICBMs and SLBMs (see Table 4 ). START also limited each side to 1,540 warheads on "heavy" ICBMs, which represented a 50% reduction in the number of warheads deployed on the SS-18 ICBMs. The United States placed a high priority on reductions in Soviet heavy ICBMs during the negotiations (as it had during the SALT negotiations) and seemed to succeed, with this provision, in reducing the Soviet advantage in this category of weapons. When the Soviet Union collapsed at the end of 1991, about 70% of the strategic nuclear weapons covered by START were deployed at bases in Russia, and the other 30% were deployed in Ukraine, Belarus, and Kazakhstan. In May 1992, the four newly independent countries and the United States signed a protocol that made all four post-Soviet states parties to the treaty, and Ukraine, Belarus, and Kazakhstan agreed to eliminate all of the nuclear weapons on their territory. The collapse of the Soviet Union also led to calls for deeper reductions in strategic offensive arms. As a result, the United States and Russia signed a second treaty, known as START II, in January 1993, weeks before the end of the Bush Administration. START II would have limited each side to between 3,000 and 3,500 warheads; reductions initially were to occur by the year 2003, but that deadline would have been extended until 2007 if the nations had approved a new protocol. In addition, START II would have banned all MIRVed ICBMs. As a result, it would have accomplished the long-standing U.S. objective of eliminating the Soviet SS-18 heavy ICBMs. Although START II was signed in early January 1993, its full consideration was delayed until START entered into force at the end of 1994, during a dispute over the future of the Arms Control and Disarmament Agency. The U.S. Senate eventually consented to its ratification on January 26, 1996. The Russian Duma also delayed its consideration of START II as members addressed concerns about some of the limits. Russia also objected to the economic costs it would bear when implementing the treaty, because, with many Soviet-era systems nearing the end of their service lives, Russia would have to invest in new systems to maintain forces at START levels. This proved difficult as Russia endured a financial crisis in the latter half of the 1990s. The treaty's future clouded again after the United States sought to negotiate amendments to the 1972 ABM Treaty. With these delays and disputes, START II never entered into force, although Russian nuclear forces continued to decline as Russia retired its older systems. <5.3. The Moscow Treaty and New START> Although the START Treaty was due to remain in force through December 2009, the United States and Russia signed the Strategic Offensive Reductions Treaty, known as the Moscow Treaty, in May 2002. The United States had not expected to negotiate a new treaty. During a summit meeting with Russian President Putin, President Bush stated that the United States would reduce its "operationally deployed" strategic nuclear warheads to between 1,700 and 2,200 warheads during the next decade. President Putin indicated that Russia wanted to use the formal arms control process to reach a "reliable and verifiable agreement" in the form of a legally binding treaty that would provide "predictability and transparency" and ensure the "irreversibility of the reduction of nuclear forces." The United States preferred a less formal process such as an exchange of letters and, possibly, new transparency measures that would allow the United States to maintain the flexibility to size and structure its nuclear forces in response to its own needs. The resulting treaty satisfied these objectives; it codified the planned reductions to 1,700-2,200 warheads, but it contained no definitions, counting rules, or schedules to guide implementation. Each party would simply declare the number of operationally deployed warheads (a term that remained undefined) in its forces at the implementation deadline of December 31, 2012. The treaty would then expire, allowing both parties to restore forces or remain at the limit. The treaty also lacked monitoring and verification provisions, but because the original START Treaty remained in force, its verification provisions continued to provide insights into Russian forces. Knowing that the verification provisions in START were due to expire in late 2009, the United States and Russia began to discuss options for arms control after START in mid-2006, but they were unable to agree on a path forward. The United States initially did not want to negotiate a new treaty, but it would have been willing to informally extend some of START's monitoring provisions. 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. 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. These talks began in early 2009; the United States and Russia signed the new Strategic Arms Reduction Treaty (New START) in April 2010. The New START Treaty 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. Within that total, it limits each side to no more than 700 deployed ICBMs, SLBMs, and heavy bombers equipped to carry nuclear armaments. The treaty also limits each side to no more than 1,550 deployed warheads; this limit counts the actual number of warheads carried by deployed ICBMs and SLBMs, and one warhead for each deployed heavy bomber equipped for nuclear armaments. New START also contains a monitoring regime, similar to the regime in START, that requires extensive data exchanges, exhibitions, and on-site inspections to verify compliance with the treaty. The limits in New START differ from those in the original START Treaty in a number of ways. First, START contained 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, thereby providing each nation with the freedom to mix their forces as they see fit. Second, under START, to determine the number of warheads that counted against the treaty limits, the United States and Russia tallied the number of deployed launchers, assuming that each launcher contained a missile carrying the number of warheads "attributed" to that type of missile. Under New START, the United States and Russia also count the number of deployed launchers, but instead of calculating an attributed number of warheads, they simply declare the total number of warheads deployed across their force. Table 4 summarizes the limits in START, the Moscow Treaty, and New START. Figure 4 shows how the numbers of warheads and launchers in Russia's strategic nuclear forces have declined over the last 20 years. Because the definitions and counting rules differ, it is difficult to compare the force sizes across treaties. Moreover, Russia's fiscal crisis in the late 1990s and subsequent delays in some of its modernization programs may have produced similar reductions even in the absence of arms control. Nevertheless, while the numbers of warheads on Soviet strategic nuclear forces peaked in the late 1980s, the numbers have declined since the two sides began implementing the reductions mandated by these treaties. <6. Issues for Congress> Congress has held several hearings in recent years where it has sought information about Russian nuclear weapons and raised concerns about the pace and direction of Russia's nuclear modernization programs. Specifically, some Members have questioned whether Russia and the United States are approaching a new arms race as both modernize their forces; they have addressed concerns about the future size and structure of Russia's nuclear forces if the New START Treaty lapses in 2021, and they have sought to understand the content of and debate about Russia's nuclear doctrine. This section reviews some of the key issues discussed in these hearings. <6.1. Arms Race Dynamics> The United States and Russia are both pursuing modernization programs to rebuild and recapitalize their nuclear forces. Each began this process to replace existing systems that have been in service since the Cold War and are reaching the end of their service lives. In many cases, both nations have extended the life of these aging systems. Russia retains some ballistic missiles that the Soviet Union first fielded in the 1980s (and, therefore, were expected to be replaced by the early 2000s); it may retire many of these over the next 10 years as it completes its current modernization programs. The United States extended the life of its Ohio-class submarines from 30 to 42 years by refueling their reactor cores, and it extended the lives of both land-based and submarine-based missiles by replacing the propellant in existing motors and replacing guidance systems. The United States plans to begin fielding new systems in the late 2020s. Many analysts and observers have identified an arms race dynamic in these parallel modernization programs. Some believe that Russia is at fault that the United States is falling behind because Russia began to deploy new missiles and submarines in the early 2000s, while the United States will not field similar systems until the late 2020s, and because Russia is developing new and more exotic systems, as described above. David Trachtenberg, the Principal Deputy Under Secretary of Defense for Policy, raised this point in April 2018, when he noted that "it takes two to race." He stated that the United States is "not interested in matching the Russians system for system. The Russians have been developing an incredible amount of new nuclear weapons systems, including the novel, nuclear systems that President Putin unveiled to great fanfare a number of months ago." Franklin Miller, a former Pentagon and National Security Council official, made a similar point during a Senate Armed Services Committee hearing in early 2019 when he noted that "the [U.S.] program is not creating a nuclear arms race. Russia and China began modernizing and expanding their nuclear forces in the 2008-2010 timeframe and since then have been placing large numbers of new strategic nuclear systems in the field. The United States has not deployed a new nuclear delivery system in this century and the first products of our nuclear modernization program will not be deployed until the mid to late 2020s." Others argue that the United States is spurring the arms race, in that the expansive U.S. modernization program might heighten the mistrust between the two nations and provide Russia with an incentive to expand its programs beyond what was needed to replace aging Soviet-era systems. Former Secretary of Defense William Perry raised this point in an interview in 2015, when the Obama Administration offered its support to the full scope of U.S. nuclear modernization programs. He noted that "we're now at the precipice, maybe I should say the brink, of a new nuclear arms race" that "will be at least as expensive as the arms race we had during the Cold War, which is a lot of money." Some have disputed the notion that the modernization programs are either evidence of an arms race or an incentive to pursue one. Both nations are modernizing their forces because existing systems are aging out; neither is pursuing these programs because the other is modernizing its forces, and neither would likely cancel its programs if the other refrained from its efforts. As former Secretary of Defense Ashton Carter noted in 2016, "In the end, though, this is about maintaining the bedrock of our security and after too many years of not investing enough, it's an investment that we, as a nation, have to make because it's critical to sustaining nuclear deterrence in the 21 st century." Russia seems to be in a similar position; it delayed a planned modernization cycle in the late 1990s and has been pursuing a number of programs at a relatively slow pace since that time. Moreover, the new types of strategic offensive arms introduced recently seem to be more of a response to concerns about U.S. missile defense programs than a response to U.S. offensive modernization programs. <6.2. The Future of Arms Control> The New START Treaty is due to lapse in 2021 unless the United States and Russia agree to extend it for a period of no more than five years. The Trump Administration is reportedly conducting an interagency review of New START to determine whether it continues to serve U.S. national security interests, and this review will inform the U.S. approach to the treaty's extension. Among the issues that might be under consideration are whether the United States should be willing to extend New START following Russia's violation of the INF Treaty, whether the limits in the treaty continue to serve U.S. national security interests, and whether the insights and data that the monitoring regime provides about Russian nuclear forces remain of value for U.S. national security. Russia's nuclear modernization programs, in general, and its development of new kinds of strategic offensive arms have also figured into the debate about the extension of New START. For example, General John Hyten, the commander of U.S. Strategic Command (STRATCOM), has stated that he believes New START serves U.S. national security interests because its monitoring regime provides transparency and visibility into Russian nuclear forces, and because its limits provide predictability about the future size and structure of those forces. However, in testimony before the Senate Armed Services Committee in February 2019, General Hyten expressed concern about Russia's new nuclear delivery systems the Poseidon underwater drone, the Burevestnik nuclear-powered cruise missile, the Kinzhal air-launched ballistic missile, and the Tsirkon hypersonic cruise missile which would not count under New START's limits. He noted that these weapons could eventually pose a threat to the United States and that he believed the United States and Russia should expand New START so they would count them under the treaty. Some analysts have questioned whether this approach makes sense. As noted above, Russia is not likely to deploy these systems until later in the 2020s and, even then, the numbers are likely to be relatively small. On the other hand, Russia began to deploy the Avangard hypersonic glide vehicle in late December 2019 and may deploy the Sarmat heavy ballistic missile in 2020 or 2021. Both will count under New START if it remains in force. If Russia refuses to count the more exotic weapons under New START and the treaty expires, it will no longer be bound by any numerical limits on the number of long-range missiles and heavy bombers it can deploy, or the number of nuclear warheads that could be deployed on those missiles and bombers. Because Russia is already producing new missiles like the Yars, it could possibly accelerate production if New START expires to increase the number of warheads added to the force. Russia could also possibly add to the number of warheads deployed on some of these missiles, increasing them from four warheads to six to eight warheads per missile. In addition, Russia would likely have to limit the deployment of the Sarmat missile and retire old SS-18 missiles to remain under New START limits, but it could deploy hundreds of new warheads on the Sarmat between 2021 and 2026 if the treaty were not in place. According to some analyses, if Russia expanded its forces with these changes, it could possibly add more than 1,000 warheads to its force without increasing the number of deployed missiles between 2021 and 2026. <6.3. The Debate Over Russia's Nuclear Doctrine> The 2018 Nuclear Posture Review (NPR) adheres to the view that Russia has adopted an "escalate to de-escalate" strategy and asserts that Russia "mistakenly assesses that the threat of nuclear escalation or actual first use of nuclear weapons would serve to 'de-escalate' a conflict on terms favorable to Russia." The NPR's primary concern is with a scenario where Russia executes a land-grab on a NATO ally's territory and then presents U.S. and NATO forces with a fait accompli by threatening to use nuclear weapons. The NPR thus recommends that the United States develop new low-yield nonstrategic weapons that, it argues, would provide the United States with a credible response, thereby "ensuring that the Russian leadership does not miscalculate regarding the consequences of limited nuclear first use." While some experts outside government agree with the assessment of Russian nuclear doctrine described in the Nuclear Posture Review, others argue that it overstates or is inconsistent with Russian statements and actions. Some have argued that the NPR's "evidence of a dropped threshold for Russian nuclear employment is weak." They note that, although some Russian authors and analysts advocated such an approach, was not evident in the government documents published in 2010 and 2014. As a result, they argue that the advocates for this type of strategy may have lost the bureaucratic debates. Others have reviewed reports on Russian military exercises and have disputed the conclusion that there is evidence that Russia simulated nuclear use against NATO in large conventional exercises. One analyst has postulated that Russia may actually raise its nuclear threshold as it bolsters its conventional forces. According to this analyst, "It is difficult to understand why Russia would want to pursue military adventurism that would risk all-out confrontation with a technologically advanced and nuclear-armed adversary like NATO. While opportunistic, and possibly even reckless, the Putin regime does not appear to be suicidal." As a study from the RAND Corporation noted, Russia has "invested considerable sums in developing and fielding long-range conventional strike weapons since the mid-2000s to provide Russian leadership with a buffer against reaching the nuclear threshold a set of conventional escalatory options that can achieve strategic effects without resorting to nuclear weapons." Others note, however, that Russia has integrated these "conventional precision weapons and nuclear weapons into a single strategic weapon set," lending credence to the view that Russia may be prepared to employ, or threaten to employ, nuclear weapons during a regional conflict. Appendix A. Russian Nuclear-Capable Delivery Systems Appendix B. Russian Nuclear Storage Facilities

Russia's nuclear forces consist of both long-range, strategic systems—including intercontinental ballistic missiles (ICBMs), submarine-launched ballistic missiles (SLBMs), and heavy bombers—and shorter- and medium-range delivery systems. Russia is modernizing its nuclear forces, replacing Soviet-era systems with new missiles, submarines and aircraft while developing new types of delivery systems. Although Russia's number of nuclear weapons has declined sharply since the end of Cold War, it retains a stockpile of thousands of warheads, with more than 1,500 warheads deployed on missiles and bombers capable of reaching U.S. territory. Doctrine and Deployment During the Cold War, the Soviet Union valued nuclear weapons for both their political and military attributes. While Moscow pledged that it would not be the first to use nuclear weapons in a conflict, many analysts and scholars believed the Soviet Union integrated nuclear weapons into its warfighting plans. After the Cold War, Russia did not retain the Soviet "no first use" policy, and it has revised its nuclear doctrine several times to respond to concerns about its security environment and the capabilities of its conventional forces. When combined with military exercises and Russian officials' public statements, this evolving doctrine seems to indicate that Russia has potentially placed a greater reliance on nuclear weapons and may threaten to use them during regional conflicts. This doctrine has led some U.S. analysts to conclude that Russia has adopted an "escalate to de-escalate" strategy, where it might threaten to use nuclear weapons if it were losing a conflict with a NATO member, in an effort to convince the United States and its NATO allies to withdraw from the conflict. Russian officials, along with some scholars and observers in the United States and Europe, dispute this interpretation; however, concerns about this doctrine have informed recommendations for changes in the U.S. nuclear posture. Russia's current modernization cycle for its nuclear forces began in the early 2000s and is likely to conclude in the 2020s. In addition, in March 2018, Russian President Vladimir Putin announced that Russia was developing new types of nuclear systems. While some see these weapons as a Russian attempt to achieve a measure of superiority over the United States, others note that they likely represent a Russian response to concerns about emerging U.S. missile defense capabilities. These new Russian systems include, among others, a heavy ICBM with the ability to carry multiple warheads, a hypersonic glide vehicle, an autonomous underwater vehicle, and a nuclear-powered cruise missile. The hypersonic glide vehicle, carried on an existing long-range ballistic missile, entered service in late 2019. Arms Control Agreements Over the years, the United States has signed bilateral arms control agreements with the Soviet Union and then Russia that have limited and reduced the number of warheads carried on their nuclear delivery systems. Early agreements did little to reduce the size of Soviet forces, as the Soviet Union developed and deployed missiles with multiple warheads. However, the 1991 Strategic Arms Reduction Treaty, combined with financial difficulties that slowed Russia's nuclear modernization plans, sharply reduced the number of deployed warheads in the Russian force. The 2010 New START Treaty added modest reductions to this record but still served to limit the size of the Russian force and maintain the transparency afforded by the monitoring and verification provisions in the treaty. Congressional Interest Some Members of Congress have expressed growing concerns about the challenges Russia poses to the United States and its allies. In this context, Members of Congress may address a number of questions about Russian nuclear forces as they debate the U.S. nuclear force structure and plans for U.S. nuclear modernization. Congress may review debates about whether the U.S. modernization programs are needed to maintain the U.S. nuclear deterrent, or whether such programs may fuel an arms race with Russia. Congress may also assess whether Russia will be able to expand its forces in ways that threaten U.S. security if the United States and Russia do not extend the New START Treaty through 2026. Finally, Congress may review the debates within the expert community about Russian nuclear doctrine when deciding whether the United States needs to develop new capabilities to deter Russian use of nuclear weapons.

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<1. Introduction> The Constitution grants Congress authority to impeach and remove the President, Vice President, and other federal "civil Officers" for treason, bribery, or "other high Crimes and Misdemeanors." Impeachment is one of the various checks and balances created by the Constitution, serving as a crucial tool for holding government officers accountable for abuse of power, corruption, and conduct considered incompatible with the nature of an individual's office. Although the term impeachment is commonly used to refer to the removal of a government official from office, the impeachment process, as described in the Constitution, entails two distinct proceedings carried out by the separate houses of Congress. First, a simple majority of the House impeaches or formally approves allegations of wrongdoing amounting to an impeachable offense. The second proceeding is an impeachment trial in the Senate. If the Senate votes to convict with a two-thirds majority, the official is removed from office. Following a conviction, the Senate also may vote to disqualify that official from holding a federal office in the future. The House has impeached nineteen individuals: fifteen federal judges, one Senator, one Cabinet member, and two Presidents. Of these, eight individuals all federal judges were convicted by the Senate. The Constitution imposes several requirements on the impeachment process. When conducting an impeachment trial, Senators must be "on Oath or Affirmation," and the right to a jury trial does not extend to impeachment proceedings. If the President is impeached and tried in the Senate, the Chief Justice of the United States presides at the trial. Finally, the Constitution bars the President from using the pardon power to shield individuals from impeachment or removal from office. Understanding the historical practices of Congress on impeachment is central to fleshing out the meaning of the Constitution's impeachment clauses. While much of constitutional law is developed through jurisprudence analyzing the text of the Constitution and applying prior judicial precedents, the Constitution's meaning is also shaped by institutional practices and political norms. James Madison, for instance, argued that the meaning of certain provisions in the Constitution would be "liquidated" over time, or determined through a "regular course of practice." Justice Joseph Story thought this principle applied to impeachment, noting that the Framers understood that the meaning of "high Crimes and Misdemeanors" constituting impeachable offenses would develop over time, much like the common law. Indeed, Justice Story believed it would be impossible to define precisely the full scope of political offenses that may constitute impeachable behavior in the future. Moreover, the power of impeachment is largely immune from judicial review, meaning that Congress's choices in this arena are unlikely to be overturned by the courts. For that reason, examining the history of actual impeachments is crucial to determining the meaning of the Constitution's impeachment provisions. Consistent with this backdrop, this report begins with an examination of the historical background on impeachment, including the perspective of the Framers as informed by English and colonial practice. It then turns to the unique constitutional roles of the House and Senate in the process, followed by a discussion of impeachment practices throughout the country's history. The report concludes by noting and exploring several recurring questions about impeachment, including legal considerations relevant to a Senate impeachment trial. <2. Historical Background on Impeachment> <2.1. English and Colonial Practice> The concept of impeachment and the standard of "high Crimes and Misdemeanors" in the federal Constitution originate from English, colonial, and early state practice. During the struggle in England by Parliament to impose restraints on the Crown's powers, the House of Commons impeached and tried before the House of Lords ministers of the Crown and influential individuals but not the Crown itself who were often considered beyond the reach of the criminal courts. The tool was used by Parliament to police political offenses committed against the "system of government." Parliament used impeachment as a tool to punish political offenses that damaged the state or subverted the government, although impeachment was not limited to government ministers. At least by the second half of the seventeenth century, impeachment in England represented a remedy for "misconduct in high places." The standard of high crimes and misdemeanors appeared to apply to, among other things, significant abuses of a government office, misapplication of funds, neglect of duty, corruption, abridgement of parliamentary rights, and betrayals of the public trust. Punishment for impeachment was not limited to removal from office, but could include a range of penalties upon conviction by the House of Lords, including imprisonment, fines, or even death. In the English experience, the standard of high crimes and misdemeanors appears to have addressed conduct involving an individual's abuse of power or office that damaged the state. Inheriting the English practice, the American colonies adopted their own distinctive impeachment practices. These traditions extended into state constitutions established during the early years of the Republic. The colonies largely limited impeachment to officeholders based on misconduct committed in office, and the available punishment for impeachment was limited to removal from office. Likewise, many state constitutions adopted after the Declaration of Independence in 1776, but before the federal Constitution was ratified, incorporated impeachment provisions limiting impeachment to government officials and restricting the punishment for impeachment to removal from office with the possibility of future disqualification from office. At the state level, the body charged with trying an impeachment varied. <2.2. Choices of the Framers: An "Americanized" Impeachment System> The English and colonial history thus informed the Framers' consideration and adoption of impeachment procedures at the Constitutional Convention. In some ways, the Framers adopted the general framework of impeachment inherited from English practice. The English Parliamentary structure of a bicameral legislature dividing the power of impeachment between the "lower" house, which impeached individuals, and an "upper" house, which tried them was replicated in the federal system with the power to impeach given to the House of Representatives and the power to try impeachments assigned to the Senate. Nonetheless, influenced by the impeachment experiences in the colonies, the Framers ultimately adopted an "Americanized" impeachment practice with a republican character distinct from English practice. The Framers' choices narrowed the scope of impeachable offenses and persons subject to impeachment as compared to English practice. For example, the Constitution established an impeachment mechanism exclusively geared toward holding public officials, including the President, accountable. This contrasted with the English practice of impeachment, which could extend to any individual save the Crown and was not limited to removal from office, but could lead to a variety of punishments. Likewise, the Framers adopted a requirement of a two-thirds majority vote for conviction on impeachment charges, shielding the process somewhat from naked partisan control. This too differed from the English practice, which allowed conviction on a simple majority vote. And in England, the Crown could pardon individuals following an impeachment conviction. In contrast, the Framers restricted the pardon power from being applied to impeachments, rendering the impeachment process essentially unchecked by the executive branch. Ultimately, the Framers' choices in crafting the Constitution's impeachment provisions provide Congress with a crucial check on the other branches of the federal government and inform the Constitution's separation of powers. <2.2.1. Impeachment Trials> The Framers also applied the lessons of English history and colonial practice in determini ng the structure and location of impeachment trials. As mentioned above, most of the American colonies and early state constitutions adopted their own impeachment procedures before the establishment of the federal Constitution, placing the power to try impeachments in various bodies. At the Constitutional Convention, the proper body to try impeachments posed a difficult question. Several proposals were considered that would have assigned responsibility for trying impeachments to different bodies, including the Supreme Court, a panel of state court judges, or a combination of these bodies. One objection to granting the Supreme Court authority to try impeachments was that Justices were to be appointed by the President, casting doubt on their ability to be independent in an impeachment trial of the President or another executive official. Further, a crucial legislative check in the Constitution's structure against the judicial branch is impeachment, as Article III judges cannot be removed by other means. To permit the judiciary to have the ultimate say in one of the most significant checks on its power would subvert the purpose of that important constitutional limitation. Rather than allowing a coordinate branch to play a role in the impeachment process, the Framers decided that Congress alone would determine who is subject to impeachment. This framework guards against, in the words of Alexander Hamilton, "a series of deliberate usurpations on the authority of the legislature" by the judiciary. Likewise, the Framers' choice to place both the accusatory and adjudicatory aspects of impeachment in the legislature renders impeachment "a bridle in the hands of the legislative body upon the executive" branch. That said, the Framers' choice also imposed institutional constraints on the process. Dividing the power to impeach from the authority to try and convict guards against "the danger of persecution from the prevalency of a fractious spirit in either" body. Finally, the Framers made one exception to the legislature's exclusive role in the impeachment process that promotes integrity in the proceedings. The Chief Justice of the United States presides at impeachment trials of the President of the United States. This provision ensures that a Vice President, in his usual capacity as Presiding Officer of the Senate, shall not preside over proceedings that could lead to his own elevation to the presidency, a particularly important concern at the time of the founding, when a President and Vice President could belong to rival parties. <2.2.2. High Crimes and Misdemeanors> The Framers narrowed the standard for impeachable conduct as compared to the English experience. While the English Parliament never formally defined the parameters of what counted as impeachable conduct, the Framers restricted impeachment to treason, bribery, and "other high Crimes and Misdemeanors," the latter phrase a standard inherited from English practice. This standard applied to behavior found damaging to the state, including significant abuses of a government office or power, misapplication of funds, neglect of duty, corruption, abridgement of parliamentary rights, and betrayals of the public trust. The debates at the Constitutional Convention over what behavior should be subject to impeachment focused mainly on the President. In discussing whether the President should be removable by impeachment, Gouverneur Morris argued that the President should be removable through the impeachment process, noting concern that the President might "be bribed by a greater interest to betray his trust," and pointed to the example of Charles II receiving a bribe from Louis XIV. The adoption of the high crimes and misdemeanors standard during the Constitutional Convention reveals that the Framers did not envision impeachment as the proper remedy for simple policy disagreements with the President. During the debate, the Framers rejected a proposal to include in addition to treason and bribery "maladministration" as an impeachable offense, which would have presumably incorporated a broad range of common-law offenses. Although "maladministration" was a ground for impeachment in many state constitutions at the time of the Constitution's drafting, the Framers instead adopted the term "high Crimes and Misdemeanors" from English practice. James Madison objected to including "maladministration" as grounds for impeachment because such a vague standard would "be equivalent to a tenure during pleasure of the Senate." The Convention voted to include "high crimes and misdemeanors" instead. Arguably, the Framers' rejection of such a broad term supports the view that congressional disagreement with a President's policy goals is not sufficient grounds for impeachment. Of particular importance to the understanding of high crimes and misdemeanors to the Framers was the roughly contemporaneous British impeachment proceedings of Warren Hastings, the governor general of India, which were transpiring at the time of the Constitution's formulation and ratification. Hastings was charged with high crimes and misdemeanors, which included corruption and abuse of power. At the Constitutional Convention, George Mason positively referenced the impeachment of Hastings. At that point in the Convention, a proposal to define impeachment as appropriate for treason and bribery was under consideration. George Mason objected, noting that treason would not cover the misconduct of Hastings. He also thought impeachment should extend to "attempts to subvert the Constitution." Mason thus proposed that maladministration be included as an impeachable offense, although, as noted above, this was eventually rejected in favor of "high Crimes and Misdemeanors." While evidence of precisely what conduct the Framers and ratifiers of the Constitution considered to constitute high crimes and misdemeanors is relatively sparse, the evidence available indicates that they considered impeachment to be an essential tool to hold government officers accountable for political crimes, or offenses against the state. James Madison considered it "indispensable that some provision be made for defending the community against incapacity, negligence, or perfidy of the chief executive," as the President might "pervert his administration into a scheme of peculation or oppression," or "betray his trust to foreign powers." Alexander Hamilton, in explaining the Constitution's impeachment provisions, described impeachable offenses as arising from "the misconduct of public men, or in other words, from the abuse or violation of some public trust." Such offenses were " Political , as they relate chiefly to injuries done immediately to the society itself." These political offenses could take innumerable forms and simply could not be neatly delineated. At the North Carolina ratifying convention, James Iredell, later to serve as an Associate Justice of the Supreme Court, noted the difficulty in defining what constitutes an impeachable offense, beyond causing injury to the government. For him, impeachment was "calculated to bring [offenders] to punishment for crime which is not easy to describe, but which every one must be convinced is a high crime and misdemeanor against government. . . . [T]he occasion for its exercise will arise from acts of great injury to the community." He thought the President would be impeachable for receiving a bribe or "act[ing] from some corrupt motive or other," but not merely for "want of judgment." Similarly, Samuel Johnston, then the governor of North Carolina and later the state's first Senator, thought impeachment was reserved for "great misdemeanors against the public." At the Virginia ratifying convention, a number of individuals claimed that impeachable offenses were not limited to indictable crimes. For example, James Madison argued that were the President to assemble a minority of states in order to ratify a treaty at the expense of the other states, this would constitute an impeachable "misdemeanor." And Virginia Governor Edmund Randolph, who would become the nation's first Attorney General, noted that impeachment was appropriate for a "willful mistake of the heart," but not for incorrect opinions. Randolph also argued that impeachment was appropriate for a President's violation of the Foreign Emoluments Clause, which, he noted, guards against corruption. James Wilson, delegate to the Constitutional Convention and later a Supreme Court Justice, delivered talks at the College of Philadelphia on impeachment following the adoption of the federal Constitution. He claimed that impeachment was reserved to "political crimes and misdemeanors, and to political punishments." He argued that, in the eyes of the Framers, impeachments did not come "within the sphere of ordinary jurisprudence. They are founded on different principles; are governed by different maxims; and are directed to different objects." Thus, for Wilson, the impeachment and removal of an individual did not preclude a later trial and punishment for a criminal offense based on the same behavior. Justice Joseph Story's writings on the Constitution echo the understanding that impeachment applied to political offenses. He noted that impeachment applied to those "offences committed by public men in violation of their public trust and duties," duties that are often "political." And like Hamilton, Story considered the range of impeachable offenses "so various in their character, and so indefinable in their actual involutions, that it is almost impossible to provide systematically for them by positive law." At the time of ratification of the Constitution, the phrase "high crimes and misdemeanors" thus appears understood to have applied to uniquely "political" offenses, or misdeeds committed by public officials against the state. Such offenses simply resist a full delineation, as the possible range of potential misdeeds in office cannot be determined in advance. Instead, the type of misconduct that merits impeachment is worked out over time through the political process. In the years following the Constitution's ratification, precisely what behavior constitutes a high crime or misdemeanor has thus been the subject of much debate. <3. The Role of the House of Representatives> The Constitution grants the sole power of impeachment to the House of Representatives. Generally speaking, the impeachment process has often been initiated in the House by a Member by resolution or declaration of a charge, although anyone including House Members, a grand jury, or a state legislature may request that the House investigate an individual for impeachment purposes. Indeed, in modern practice, many impeachments have been sparked by referrals from an external investigatory body. Beginning in the 1980s, the Judicial Conference has referred its findings to the House recommending an impeachment investigation into a number of federal judges who were eventually impeached. Similarly, in the impeachment of President Bill Clinton, an independent counsel a temporary prosecutor given statutory independence and charged with investigating certain misconduct when approved by a judicial body first conducted an investigation into a variety of alleged activities on the part of the President and his associates, and then delivered a report to the House detailing conduct that the independent counsel considered potentially impeachable. Regardless of the source requesting an impeachment investigation, the House has sole discretion under the Constitution to begin any impeachment proceedings against an individual. In practice, impeachment investigations are often handled by an already existing or specially created subcommittee of the House Judiciary Committee. The scope of the investigation can vary. In some instances, an entirely independent investigation may be initiated by the House. In other cases, an impeachment investigation might rely on records delivered by outside entities, such as those delivered by the Judicial Conference or an independent counsel. Following this investigation, the full House may vote on the relevant impeachment articles. If articles of impeachment are approved, the House chooses managers to present the matter to the Senate. The Chairman of the House Managers then presents the articles of impeachment to the Senate and requests that the body order the appearance of the accused. The House Managers typically act as prosecutors in the Senate trial. The House has impeached nineteen individuals: fifteen federal judges, one Senator, one Cabinet member, and two Presidents. The consensus reflected in these proceedings is that impeachment may serve as a means to address misconduct that does not necessarily give rise to criminal sanction. According to congressional sources, the types of conduct that constitute grounds for impeachment in the House appear to fall into three general categories: (1) improperly exceeding or abusing the powers of the office; (2) behavior incompatible with the function and purpose of the office; and (3) misusing the office for an improper purpose or for personal gain. Consistent with scholarship on the scope of impeachable offenses, congressional materials have cautioned that the grounds for impeachment "do not all fit neatly and logically into categories" because the remedy of impeachment is intended to "reach a broad variety of conduct by officers that is both serious and incompatible with the duties of the office." While successful impeachments and convictions of federal officials represent some clear guideposts for what constitutes impeachable conduct, impeachment processes that do not result in a final vote for impeachment and removal also may influence the understanding of Congress, executive and judicial branch officials, and the public over what constitutes an impeachable offense. A prominent example involves the first noteworthy attempt at a presidential impeachment, aimed at John Tyler in 1842. At the time, the presidential practice had generally been to reserve vetoes for constitutional, rather than policy, disagreements with Congress. Following President Tyler's veto of a tariff bill on policy grounds, the House endorsed a select committee report condemning President Tyler and suggesting that he might be an appropriate subject for impeachment proceedings. The possibility apparently ended when the Whigs, who had led the movement to impeach, lost their House majority in the midterm elections. In the years following the aborted effort to impeach President Tyler, Presidents have routinely used their veto power for policy reasons. This practice is generally seen as an important separation of powers limitation on Congress's ability to pass laws rather than a potential ground for impeachment. Likewise, although President Richard Nixon resigned before impeachment proceedings were completed in the House, the approval of three articles of impeachment by the House Judiciary Committee against him may inform lawmakers' understanding of conduct that constitutes an impeachable offense. The approved impeachment articles included allegations that President Nixon obstructed justice by using the office of the presidency to impede the investigation into the break-in of the Democratic National Committee headquarters at the Watergate Hotel and Office Building and authorized a cover-up of the activities that were being investigated. President Nixon was alleged to have abused the power of his office by using federal agencies to punish political enemies and refusing to cooperate with the Judiciary Committee's investigation. While no impeachment vote was taken by the House, the Nixon experience nevertheless established what some would call the quintessential case for impeachment a serious abuse of the office of the presidency that undermined the office's integrity. That said, one must be cautious in extrapolating wide-ranging lessons from the lack of impeachment proceedings in the House. Specific behavior not believed to constitute an impeachable offense in prior contexts might be considered impeachable in a different set of circumstances. Moreover, given the varied contextual permutations, the full scope of impeachable behavior resists specification, and historical precedent may not always serve as a useful guide to whether conduct is grounds for impeachment. For instance, no President has been impeached for abandoning the office and refusing to govern. That this event has not occurred, however, hardly proves that this behavior would not constitute an impeachable offense meriting removal from office. <4. The Role of the Senate> <4.1. Historical Practice> The Constitution grants the Senate sole authority "to try all impeachments." The Senate thus enjoys broad discretion in establishing procedures to be undertaken in an impeachment trial. For instance, in a lawsuit challenging the Senate's use of a trial committee to take and report evidence, the Supreme Court in Nixon v. United States unanimously ruled that the suit posed a nonjusticiable political question and was not subject to judicial resolution. The Court explained that the term "try" in the Constitution's provisions on impeachment was textually committed to the Senate for interpretation and lacked sufficient precision to enable a judicially manageable standard of review. In reaching this conclusion, the Court noted that the Constitution imposes three precise requirements for impeachment trials in the Senate: (1) Members must be under oath during the proceedings; (2) conviction requires a two-thirds vote; and (3) the Chief Justice must preside if the President is tried. Given these three clear requirements, the Court reasoned that the Framers "did not intend to impose additional limitations on the form of the Senate proceedings by the use of the word 'try.'" Thus, subject to these three clear requirements of the Constitution, the Senate enjoys substantial discretion in establishing its own procedures during impeachment trials. While the Senate determines for itself how to conduct impeachment proceedings, the nature and frequency of Senate impeachment trials largely hinge on the impeachment charges brought by the House. The House has impeached thirteen federal district judges, a judge on the Commerce Court, a Senator, a Supreme Court Justice, the secretary of an executive department, and two Presidents. But the Senate ultimately has only convicted and removed from office seven federal district judges and a Commerce Court judge. While this pattern obviously does not mean that Presidents or other civil officers are immune from removal based on impeachment, the Senate's acquittals may be considered to have precedential value when assessing whether particular conduct constitutes a removable offense. For instance, the first subject of an impeachment by the House involved a sitting U.S. Senator for allegedly conspiring to aid Great Britain's attempt to seize Spanish-controlled territory. The Senate voted to dismiss the charges in 1799, and no Member of Congress has been impeached since. The House also impeached Supreme Court Justice Samuel Chase, who was widely viewed by Jeffersonian Republicans as openly partisan for, among other things, misapplying the law. The Senate acquitted Justice Chase, establishing, at least for many, a general principle that impeachment is not an appropriate remedy for disagreement with a judge's judicial philosophy or decisions. <4.2. Requirement of Oath or Affirmation> The Constitution requires Senators sitting as an impeachment tribunal to take a special oath distinct from the oath of office that all Members of Congress must take. This requirement underscores the unique nature of the role the Senate plays in impeachment trials, at least in comparison to its normal deliberative functions. The Senate practice has been to require each Senator to swear or affirm that he will "do impartial justice according to the Constitution and laws." The oath was originally adopted by the Senate before proceedings in the impeachment of Senator Blount in 1798 and has remained largely unchanged since. <4.3. Judgment in Cases of Impeachment> While the Constitution authorizes the Senate, following an individual's conviction in an impeachment trial, to bar an individual from holding office in the future, the text of the Constitution does not make clear that a vote for disqualification from future office must be taken separately from the initial vote for conviction. Instead, the potential for a separate vote for disqualification has arisen through the historical practice of the Senate. The Senate did not choose to disqualify an impeached individual from holding future office until the Civil War era. Federal district judge West H. Humphreys took a position as a judge in the Confederate government but did not resign his seat in the U.S. government. The House impeached Humphreys in 1862. The Senate then voted unanimously to convict Judge Humphreys and separately voted to disqualify him from holding office in the future. Senate practice since the Humphreys case has been to require a simple majority vote to disqualify an individual from holding future office, rather than the supermajority required by the Constitution's text for removal, but it is unclear what justifies this result beyond historical practice. The Constitution also distinguishes the impeachment remedy from the criminal process, providing that an individual removed from office following impeachment "shall nevertheless be liable and subject to indictment." The Senate's power to convict and remove individuals from office, as well as to bar them from holding office in the future, thus does not overlap with criminal remedies for misconduct. Indeed, the unique nature of impeachment as a political remedy distinct from criminal proceedings ensures that "the most powerful magistrates should be amenable to the law." Rather than helping police violations of strictly criminal activity, impeachment is a "method of national inquest into the conduct of public men" for "the abuse or violation of some public trust." Impeachable offenses are those that "relate chiefly to injuries done immediately to the society itself." Put another way, the purpose of impeachment is to protect the public interest, rather than impose a punitive measure on an individual. This distinction was highlighted in the impeachment trial of federal district judge Alcee Hastings. Judge Hastings had been indicted for a criminal offense, but was acquitted. In 1988, the House impeached Hastings for much of the same conduct for which he had been indicted. Judge Hastings argued that the impeachment proceedings constituted "double jeopardy" because of his previous acquittal in a criminal proceeding. The Senate rejected his motion to dismiss the articles against him. The Senate voted to convict and remove Judge Hastings on eight articles, but it did not disqualify him from holding office in the future. Judge Hastings was later elected to the House of Representatives. <5. History of Impeachment in Congress> The Constitution provides that the President, Vice President, and all civil officers are subject to impeachment for "treason, bribery, or other high Crimes and Misdemeanors." The meaning of high crimes and misdemeanors, like the other provisions in the Constitution relevant to impeachment, is not primarily determined through the development of jurisprudence in the courts. Instead, the meaning of the Constitution's impeachment clauses is "liquidated" over time, or determined through historical practice. The Framers did not delineate with specificity the complete range of behavior that would merit impeachment, as the scope of possible "offenses committed by federal officers are myriad and unpredictable." According to one scholar, impeachments are sometimes "aimed at articulating, establishing, preserving, and protecting constitutional norms," or "'constructing' constitutional meaning and practices." At times, impeachment might be used to reinforce an existing norm, indicating that certain behavior continues to constitute grounds for removal; in others, it may be used to establish a new norm, setting a marker that signifies what practices are impeachable for the future. Examining the history of impeachment in Congress can thus illuminate the constitutional meaning of impeachment, including when Congress has established or reaffirmed a particular norm. <5.1. Early Historical Practices (1789 1860)> Congressional understanding of the scope of activities subject to impeachment and the potential persons who may be impeached was first put to the test during the Adams Administration. In 1797, letters sent to President Adams revealed a conspiracy by Senator William Blount in violation of the U.S. government's policy of neutrality on the matter and the Neutrality Act to organize a military expedition with the British to invade land in the American Southwest under Spanish control. The House voted to impeach Senator Blount on July 7, 1797, while the Senate voted to expel Senator William Blount the next day. Before impeaching Senator Blount, several House Members questioned whether Senators were "civil officers" subject to impeachment. But Samuel W. Dana of Connecticut argued that Members of Congress must be civil officers, because other provisions of the Constitution that mention offices appear to include holding legislative office. Despite already having voted to impeach Senator Blount, it was not until early in the next year that the House actually adopted specific articles of impeachment against him. At the Senate impeachment trial in 1799, Blount's attorneys argued that impeachment was improper because Blount had already been expelled from his Senate seat and had not been charged with a crime. But the primary issue of debate was whether Members of Congress qualified as civil officers subject to impeachment. The House prosecutors argued that under the American system, as in England, virtually anyone was subject to impeachment. The defense responded that this broad interpretation of the impeachment power would enable Congress to impeach state officials as well as federal, upending the proper division of federal and state authorities in the young Republic. The Senate voted to defeat a resolution that declared Blount was a "civil officer" and therefore subject to impeachment. The Senate ultimately voted to dismiss the impeachment articles brought against Blount because it lacked jurisdiction over the matter, although the impeachment record does not reveal the precise basis for this conclusion. In any event, the House has not impeached a Member of Congress since. The first federal official to be impeached and removed from office was John Pickering, a federal district judge. The election of President Thomas Jefferson in 1800, along with Jeffersonian Republican majorities in both Houses of Congress, signaled a shift from Federalist party control of government. Much of the federal judiciary at this early stage of the Republic were members of the Federalist party, and the new Jeffersonian Republican majority strongly opposed the Federalist-controlled courts. John Pickering was impeached by the House of Representatives in 1803 and convicted by the Senate on March 12, 1804. The circumstances of Judge Pickering's impeachment are somewhat unique as it appears that the judge had been mentally ill for some time, although the articles of impeachment did not address Pickering's mental faculties but instead accused him of drunkenness, blasphemy on the bench, and refusing to follow legal precedent. Judge Pickering did not appear at his trial, and Senator John Quincy Adams apparently served as a defense counsel. Following debate in a closed session, the Senate voted to permit evidence of Judge Pickering's insanity, drunkenness, and behavior on the bench. The Senate also rejected a resolution to disqualify three Senators, who were previously in the House and had voted to impeach Judge Pickering, from participating in the impeachment trial. The Senate voted to convict Judge Pickering guilty as charged, but the articles did not explicitly specify that any of Pickering's behavior constituted a high crime or misdemeanor. Objections to the framing of the question at issue caused several Senators to withdraw from the trial. On the same day the Senate convicted Judge Pickering, the House of Representatives impeached Supreme Court Justice Samuel Chase. Like the impeachment trial of Judge Pickering, the proceedings occurred following the election of President Thomas Jefferson and amid intense conflict between the Federalists and Jeffersonian Republicans. Justice Chase was viewed by Jeffersonian Republicans as openly partisan, and in fact the Justice openly campaigned for Federalist John Adams in the presidential election of 1800. Republicans also took issue with Justice Chase's aggressive approach to jury instructions in Sedition Act prosecutions. The eight articles of impeachment accused him of acting in an "arbitrary, oppressive, and unjust" manner at trial, misapplying the law, and expressing partisan political views to a grand jury. The Senate trial began on February 4, 1805. Both the House Managers and defense counsel for Justice Chase presented witnesses detailing the Justice's behavior. While some aspects of the dispute focused on whether Justice Chase took certain actions, the primary conflict centered on whether his behavior was impeachable. Before reaching a verdict, the Senate approved a motion from Senator James Bayard, a Federalist from Delaware, that the underlying question be whether Justice Chase was guilty of high crimes and misdemeanors, rather than guilty as charged. Of the eight articles, a majority of Senators voted to convict on three, while the remaining five did not muster a majority for conviction. But the Senate vote ultimately fell short of the necessary two-thirds majority to secure a conviction on any of the articles. The trial raised several questions that have recurred throughout the history of impeachments. For example, is impeachment limited to criminal acts, or does it extend to noncriminal behavior? The opposing sides in the Chase case took differing views on this matter, as they would in later impeachments to come. Due in part to the charged political atmosphere of the historical context, the attempted impeachment of Justice Chase has also come to represent an important limit on the scope of the impeachment remedy. Commentators have interpreted the acquittal of Justice Chase as establishing that impeachment does not extend to congressional disagreement with a judge's opinions or judicial philosophy. At least some Senators who voted to acquit did not consider the alleged offenses as rising to the level of impeachable behavior. By the time of the next impeachment in 1830, both houses of Congress were controlled by Jacksonian Democrats, and the federal courts were unpopular with Congress and the public. The House of Representatives impeached James Peck, a federal district judge, for abusing his judicial authority. The sole article accused the judge of holding an attorney in contempt for publishing an article critical of Peck and barring the attorney from practicing law for eighteen months. The context surrounding Judge Peck's actions involved disputes over French and Spanish land grant titles following the transfer of land in the Louisiana territory from French to U.S. control. Shortly after Missouri was admitted to the United States as part of the Missouri Compromise in 1821, Judge Peck decided a land rights case against the claimants in favor of the United States. The attorney for the plaintiffs wrote an article critical of the decision in a local paper. Judge Peck held the attorney in contempt, sentenced him to jail for twenty-four hours, and barred him from practicing law for eighteen months. The House impeached Judge Peck by a wide margin. Of central concern during the Senate trial were the limits of a judge's common law contempt power, a matter that appeared to be in dispute. The Senate ultimately acquitted Judge Peck, with roughly half of the Jacksonian Democrats voting against conviction. Shortly thereafter, Congress passed a law reforming and defining the scope of the judicial contempt power. Finally, in the midst of the Civil War, federal district judge West H. Humphreys was appointed to a position as a judge in the Confederate government, but he did not resign as a U.S. federal judge. In 1862, the House impeached and the Senate convicted Judge Humphreys for joining the Confederate government and abandoning his position. As in the trial of Judge Pickering previously, Judge Humphreys did not attend the proceedings. Unlike in the case of Judge Pickering, however, no defense was offered in the impeachment trial of Judge Humphreys. <5.2. Impeachment of Andrew Johnson> The impeachment and trial of President Andrew Johnson took place in the shadow of the Civil War and the assassination of President Abraham Lincoln. President Johnson was a Democrat and former slave owner who was the only southern Senator to remain in his seat when the South seceded from the Union. President Lincoln, a Republican, appointed Johnson military governor of Tennessee in 1862, and Johnson was later selected as Lincoln's second-term running mate on a "Union" ticket. Given these unique circumstances, President Johnson lacked both a party and geographic power base when in office, which likely isolated him when he assumed the presidency following the assassination of President Lincoln. The majority Republican Congress and President Johnson clashed over, among other things, Reconstruction policies implemented in the former slave states and control over officials in the executive branch. President Johnson vetoed twenty-one bills while in office, compared to thirty-six vetoes by all prior Presidents. Congress overrode fifteen of Johnson's vetoes, compared to just six with prior Presidents. On March 2, 1867, Congress reauthorized, over President Johnson's veto, the Tenure of Office Act, extending its protections for all officeholders. In essence, the Act provided that all federal officeholders subject to Senate confirmation could not be removed by the President except with Senate approval, although the reach of this requirement to officials appointed by a prior administration was unclear. Congressional Republicans apparently anticipated the possible impeachment of President Johnson when drafting the legislation; Republicans already knew of President Johnson's plans to fire Secretary of War Edwin Stanton, and the Act provided that a violation of its terms constituted a "high misdemeanor." President Johnson then fired Secretary Stanton without the approval of the Senate. Importantly, his Cabinet unanimously agreed that the new restrictions on the President's removal power imposed by the Tenure of Office Act were unconstitutional. Shortly thereafter, on February 24, 1868, the House voted to impeach President Johnson. The impeachment articles adopted by the House against President Johnson included defying the Tenure of Office Act by removing Stanton from office and violating (and encouraging others to violate) the Army Appropriations Act. One article of impeachment also accused the President of making "utterances, declarations, threats, and harangues" against Congress. The Senate appointed a committee to recommend rules of procedure for the impeachment trial which then were adopted by the Senate, including a one-hour time limit for each side to debate questions of law that would arise during the trial. Chief Justice Salmon P. Chase presided over the trial and was sworn in by Associate Justice Samuel Nelson. During the swearing-in of the individual Senators, the body paused to debate whether Senator Benjamin Wade of Indiana, the president pro tempore of the Senate, was eligible to participate in the trial. Because the office of the Vice President was empty, under the laws of succession at that time Senator Wade would assume the presidency upon a conviction of President Johnson. Ultimately, the Senator who raised this point, Thomas Hendricks of Indiana, withdrew the issue and Senator Wade was sworn in. An important point of contention at the trial was whether the Tenure of Office Act protected Stanton at all because of his appointment by President Lincoln, rather than President Johnson. Counsel for President Johnson argued that impeachment for violating a statute whose meaning was unclear was inappropriate, and the statute barring removal of the Secretary of War was an unconstitutional intrusion into the President's authority under Article II. The Senate failed to convict President Johnson with a two-thirds majority by one vote on three articles, and it failed to vote on the remaining eight. But reports suggest that several Senators were prepared to acquit if their votes were needed. Seven Republicans voted to acquit; of those Senators, some thought it questionable whether the Tenure of Office Act applied to Stanton and believe it was improper to impeach a President for incorrectly interpreting an arguably ambiguous law. The implications of the acquittal of President Johnson are difficult to encapsulate neatly. Some commentators have concluded that the failure to convict President Johnson coincides with a general understanding that while impeachment is appropriate for abuses of power or violations of the public trust, it does not pertain to political or policy disagreements with the President, no matter how weighty. Of course, it bears mention that by the time of the Senate trial Johnson was in the last year of his Presidency, was not going to receive a nomination for President by either major political party for the next term, and appears to have promised in private to appoint a replacement for Stanton that could be confirmable. More broadly, the Johnson impeachment also represented a larger struggle between Congress and the President over the scope of executive power, one that arguably reconstituted their respective roles following the Civil War presidency of Abraham Lincoln. <5.3. Postbellum Practices (1865 1900)> The postbellum experience in American history saw a variety of government officials impeached on several different grounds. These examples provide important principles that guide the practice of impeachment through the present day. For example, the Senate has not always conducted a trial following an impeachment by the House. In 1873, the House impeached federal district judge Mark. H. Delahay for, among other things, drunkenness on and off the bench. The impeachment followed an investigation by a subcommittee of the House Judiciary Committee into his conduct. Following the House vote on impeachment, Judge Delahay resigned before written impeachment articles were drawn up, and the Senate did not hold a trial. The impeachment of Judge Delahay shows that the scope of impeachable behavior is not limited to strictly criminal behavior; Congress has been willing to impeach individuals for behavior that is not indictable, but still constitutes an abuse of an individual's power and duties. This period of American history was fraught with partisan conflict over Reconstruction. Besides President Johnson, a number of other individuals were investigated by Congress during this time for purposes of impeachment. For example, in 1873, the House voted to authorize the House Judiciary Committee to investigate the behavior of Edward H. Durrell, federal district judge for Louisiana. A majority of the House Judiciary Committee reported in favor of impeaching Judge Durell for corruption and usurpation of power, including interfering with the state's election. Judge Durrell resigned on December 1, 1874, and the House discontinued impeachment proceedings. The first and only time a Cabinet-level official was impeached occurred during the presidential administration of Ulysses S. Grant. Grant's Secretary of War, William W. Belknap, was impeached in 1876 for allegedly receiving payments in return for appointing an individual to maintain a trading post in Indian territory. Belknap resigned two hours before the House unanimously impeached him, but the Senate still conducted a trial in which Belknap was acquitted. During the trial, upon objection by Belknap's counsel that the Senate lacked jurisdiction because Belknap was now a private citizen, the Senate voted 37-29 in favor of jurisdiction. A majority of Senators voted to convict Belknap, but no article mustered a two-thirds majority, resulting in acquittal. A number of Senators voting to acquit indicated that they did so because the Senate lacked jurisdiction over an individual no longer in office. Notably, although bribery is explicitly included as an impeachable offense in the Constitution, the impeachment articles brought against Belknap instead charged his behavior as constituting high crimes and misdemeanors. Bribery was mentioned at the Senate trial, but it was not specifically referenced in the impeachment articles themselves. <5.4. Early Twentieth Century Practices> The twentieth century saw further development of the scope of conduct considered by Congress to be impeachable, including the extent to which noncriminal conduct can constitute impeachable behavior and the proper role of a federal judge. The question of judicial review of impeachments also received its first treatment in the federal courts. The question of whether Congress can designate particular behavior as a "high crime or misdemeanor" by statute arose in the impeachment of Charles Swayne, a federal district judge for the Northern District of Florida, during the first decade of the twentieth century. A federal statute provided that federal district judges live in their districts and that anyone violating this requirement was "guilty of a high misdemeanor." Judge Swayne's impeachment originated from a resolution passed by the Florida legislature requesting the state's congressional delegation to recommend an investigation into his behavior. The procedures followed by the House in impeaching Judge Swayne were somewhat unique. First, the House referred the impeachment request to the Judiciary Committee for investigation. Following this investigation, the House voted to impeach Judge Swayne based on the report prepared by the committee. The committee was then tasked with preparing articles of impeachment to present to the Senate. The House then voted again on these individual articles, each of which received less support than the single prior impeachment vote had received. The impeachment articles accused Judge Swayne of a variety of offenses, including misusing the office, abusing the contempt power, and living outside his judicial district. At the trial in the Senate, Judge Swayne essentially admitted to certain accused behavior, although his attorneys did dispute the residency charge, and Swayne instead argued that his actions were not impeachable. The Senate vote failed to convict Judge Swayne on any of the charges brought by the House. The impeachability of certain noncriminal behavior for federal judges was firmly established by the impeachment of Judge Robert W. Archbald in 1912. Judge Archbald served as a federal district judge before being appointed to the short-lived U.S. Commerce Court, which was created to review decisions of the Interstate Commerce Commission. He was impeached by the House for behavior occurring both as a federal district judge and as a judge on the Commerce Court. The impeachment articles accused Judge Archbald of, among other things, using his position as a judge to generate profitable business deals with potential future litigants in his court. This behavior did not violate any criminal statute and did not appear to violate any laws regulating judges. Judge Archbald argued at trial that noncriminal conduct was not impeachable. The Senate voted to convict him on five articles and also voted to disqualify him from holding office in the future. Four of those articles centered on behavior that occurred while Judge Archbald sat on the Commerce Court, whereas the fifth described his conduct over the course of his career. In the 1920s, a series of corruption scandals swirled around the administration of President Warren G. Harding. Most prominently, the Teapot Dome Scandal, which involved the noncompetitive lease of government land to oil companies, implicated many government officials and led to resignations and the criminal conviction and incarceration of a Cabinet-level official. The Secretary of the Navy, at the time Edwin Denby, was entrusted with overseeing the development of oil reserves that had recently been located. The Secretary of the Interior, Albert Fall, convinced Denby that the Interior Department should assume responsibility for two of the reserve locations, including in Teapot Dome, Wyoming. Secretary Fall then leased the reserves to two of his friends, Harry F. Sinclair and Edward L. Doheny. Revelations of the lease without competitive bidding launched a lengthy congressional investigation that sparked the eventual criminal conviction of Fall for bribery and conspiracy and Sinclair for jury tampering. President Harding, however, died in 1923, before congressional hearings began. The affair also generated significant judicial decisions examining the scope of Congress's investigatory powers. One aspect of the controversy included an impeachment investigation into the decisions of then-Attorney General Harry M. Daugherty. In 1922, the House of Representatives referred a resolution to impeach Daugherty for a variety of activities, including his failure to prosecute those involved in the Teapot Dome Scandal, to the House Judiciary Committee. The House Judiciary Committee eventually found there was not sufficient evidence to impeach Daugherty. But in 1924, a Senate special committee was formed to investigate similar matters. That investigation spawned allegations of many improper activities in the Justice Department. Daugherty resigned on March 28, 1924. In 1926, federal district judge George W. English was impeached for a variety of alleged offenses, including (1) directing a U.S. marshal to gather a number of state and local officials into court in an imaginary case in which Judge English proceeded to denounce them; (2) threatening two members of the press with imprisonment without sufficient cause; and (3) showing favoritism to certain litigants before his court. Judge English resigned before a trial in the Senate occurred; and the Senate dismissed the charges without conducting a trial in his absence. Federal district judge Harold Louderback was impeached in 1933 for showing favoritism in the appointment of bankruptcy receivers, which were coveted positions following the stock market crash of 1929 and the ensuing Depression. The House authorized a subcommittee to investigate, which held hearings and recommended to the Judiciary Committee that Judge Louderback be impeached. The Judiciary Committee actually voted against recommending impeachment, urging censure of Judge Louderback instead, but permitted the minority report that favored impeachment to be reported to the House together with the majority report. The full House voted to impeach anyway, but the Senate failed to convict him. Shortly thereafter, the House impeached federal district judge Halsted L. Ritter for showing favoritism in and profiting from appointing receivers in bankruptcy proceedings; practicing law while a judge; and failing to fully report his income on his tax returns. The Senate acquitted Judge Ritter on each individual count alleging specific behavior, but convicted him on the final count which referenced the previous articles, and charged him with bringing his court into disrepute and undermining the public's confidence in the judiciary. Congress's impeachment of Judge Ritter was the first to be challenged in court. Judge Ritter sued in the Federal Court of Claims seeking back pay, arguing that the charges brought against him were not impeachable under the Constitution and that the Senate improperly voted to acquit on six specific articles but to convict on a single omnibus article. In rejecting Judge Ritter's suit, the court held that the Senate has exclusive jurisdiction over impeachments and courts lack authority to review the Senate's verdict. <5.5. Effort to Impeach President Richard Nixon> The impeachment investigation and ensuing resignation of President Richard Nixon stands out as a profoundly important experience informing the standard for the impeachment of Presidents. Although President Nixon was never impeached by the House or subjected to a trial in the Senate, his conduct exemplifies for many authorities, scholars, and members of the public the quintessential case of impeachable behavior in a President. Less than two years after a landslide reelection as President, Richard Nixon resigned following the House Judiciary Committee's adoption of three articles of impeachment against him. The circumstances surrounding the impeachment of President Nixon were sparked by the arrest of five men for breaking into the Democratic National Committee Headquarters at the Watergate Hotel and Office Building. The arrested men were employed by the committee to Re-Elect the President (CRP), a campaign organization formed to support President Nixon's reelection. In the early summer of 1973, Attorney General Elliot Richardson appointed Archibald Cox as a special prosecutor to investigate the connection between the five burglars and CRP. Likewise, the Senate Select Committee on Presidential Campaign Activities began its own investigation. After President Nixon fired various staffers allegedly involved in covering up the incident, he spoke on national television disclaiming knowledge of the cover-up. But the investigations uncovered evidence that President Nixon was involved, that he illegally harassed his enemies through, among other things, the use of tax audits, and that the men arrested for the Watergate break-in the "plumbers unit," because they were used to "plug leaks" considered damaging to the Nixon Administration had committed burglaries before. Eventually a White House aide revealed that the President had a tape recording system in his office, raising the possibility that many of Nixon's conversations about the Watergate incident were recorded. The President refused to hand over such tapes to the special prosecutor or Congress. In his capacity as special prosecutor, Cox then subpoenaed tapes of conversations in the Oval Office on Saturday, October 20, 1973. This sparked the sequence of events commonly known as the Saturday Night Massacre. In response to the subpoena, President Nixon ordered Attorney General Elliot Richardson to fire Special Prosecutor Cox. Richardson refused and resigned. Nixon ordered Deputy Attorney General William D. Ruckelshaus to fire the special prosecutor, but Ruckelshaus also refused to do so and resigned. Solicitor General Robert Bork, in his capacity as Acting Attorney General, then fired the special prosecutor. Nixon eventually agreed to deliver some of the subpoenaed tapes to the judge supervising the grand jury. The Justice Department appointed Leon Jaworski to replace Cox as special prosecutor. The House Judiciary Committee began an official investigation of the Watergate issue and commenced impeachment hearings in April 1974. On March 1, 1974, a grand jury indicted seven individuals connected to the larger Watergate investigation and named the President as an unindicted coconspirator. On April 18, a subpoena was issued, upon the motion of the special prosecutor, by the United States District Court for the District of Columbia requiring the production of tapes and various items relating to meetings between the President and other individuals. Following a challenge to the subpoena in district court, the Supreme Court reviewed the case. On July 24, 1974, the Supreme Court affirmed the district court's order. In late July, following its investigation and hearings, the House Judiciary Committee voted to adopt three articles of impeachment against President Nixon. The first impeachment article alleged that the President obstructed justice by attempting to impede the investigation into the Watergate break-in. The second charged the President with abuse of power for using federal agencies to harass his political enemies and authorizing burglaries of private citizens who opposed the President. The third article accused the President of refusing to cooperate with the Judiciary Committee's investigation. The committee considered but rejected two proposed articles of impeachment. The first rejected article accused the President of concealing from Congress the bombing operations in Cambodia during the Vietnam conflict. This article was rejected for two primary reasons: some Members thought (1) the President was performing his constitutional duty as Commander-in-Chief and (2) Congress was given sufficient notice of these operations. The second rejected article concerned receiving compensation in the form of government expenditures at President Nixon's private properties in California and Florida which allegedly constituted an emolument from the United States in violation of Article II, Section 1, Clause 7 of the Constitution and tax evasion. Those Members opposed to the portion of the charge alleging receipt of federal funds argued that most of the President's expenditures were made pursuant to a request from the Secret Service; that there was no direct evidence the President knew at the time that the source of these funds was public, rather than private; and that this conduct failed to rise to the level of an impeachable offense. Some Members opposed to the tax evasion charge argued that the evidence was insufficient to impeach; others that tax fraud is not the type of behavior "at which the remedy of impeachment is directed." President Nixon resigned on August 9, 1974, before the full House voted on the articles. The lessons and standards established by the Nixon impeachment investigation and resignation are disputed. On the one hand, the behavior alleged in the approved articles against President Nixon is arguably a "paradigmatic" case of impeachment, constituting actions that are almost certainly impeachable conduct for the President. On the other hand, the significance of the House Judiciary Committee's rejection of certain impeachment articles is unclear. In particular, whether conduct considered unrelated to the performance of official duties, such as the rejected article alleging tax evasion, can constitute an impeachable offense for the President is disputed. During the later impeachment of President Bill Clinton, for example, the majority and minority reports of the House Judiciary Committee on the committee's impeachment recommendation took different views on when conduct that might traditionally be viewed as private or unrelated to the functions of the presidency constitutes an impeachable offense. The House Judiciary Committee report that recommended articles of impeachment argued that perjury by the President was an impeachable offense, even if committed with regard to matters outside his official duties. In contrast, the minority views in the report argued that impeachment was reserved for "conduct that constitutes an egregious abuse or subversion of the powers of the executive office." The minority noted that the Judiciary Committee had rejected an article of impeachment against President Nixon alleging that he committed tax fraud, mainly because that "related to the President's private conduct, not to an abuse of his authority as President." <5.6. Impeachment of President Bill Clinton> The impeachment of President Bill Clinton stemmed from an investigation that originally centered on financial transactions occurring years before President Clinton took federal office. Attorney General Janet Reno appointed Robert Fiske Jr. as a special prosecutor in January 1994 to investigate the dealings of President Clinton and his wife with the "Whitewater" real estate development during the President's tenure as attorney general and then governor of Arkansas. Following the reauthorization of the Independent Counsel Act in June, the Special Division of the United States Court of Appeals for the District of Columbia Circuit replaced Fiske in August with Independent Counsel Kenneth W. Starr, a former Solicitor General in the George H.W. Bush Administration and federal appellate judge. During the Whitewater investigation, Paula Jones, an Arkansas state employee, filed a civil suit against President Clinton in May 1994 alleging that he sexually harassed her in 1991 while governor of Arkansas. Lawyers for Jones deposed President Clinton at the White House and asked questions about the President's relationship with staffers, including an intern named Monica Lewinsky. Independent Counsel Starr received information alleging that Lewinsky had tried to influence the testimony of a witness in the Jones litigation, along with tapes of recordings between Monica Lewinsky and former White House employee Linda Tripp. Tripp had recorded conversations between herself and Lewinsky about Lewinsky's relationship with the President and hope of obtaining a job outside the White House. Starr presented this information to Attorney General Reno. Reno petitioned the Special Division of the United States Court of Appeals for the District of Columbia Circuit to expand the independent counsel's jurisdiction, and the Special Division issued an order on January 16, 1998, permitting the expansion of Starr's investigation into President Clinton's response to the Paula Jones case. Over the course of the spring and summer a grand jury investigated whether President Clinton committed perjury in his response to the Jones suit and whether he obstructed justice by encouraging others to lie about his relationship with Lewinsky. President Clinton appeared by video before the grand jury and testified about the Lewinsky relationship. Independent Counsel Starr referred his report to the House of Representatives on September 9, 1998, noting that under the independent counsel statute, his office was required to do so because President Clinton engaged in behavior that might constitute grounds for impeachment. The House then voted to open an impeachment investigation into President Clinton's behavior, released the Starr report publicly, and the House Judiciary Committee voted to release the tape of the President's grand jury testimony. Although the House Judiciary Committee had already conducted several hearings on the possibility of impeachment, the committee did not engage in an independent fact-finding investigation or call any live witnesses to testify about the President's conduct. Instead, the Judiciary Committee largely relied on the Starr report to inform the committee's own report recommending impeachment, released December 16, 1998. The committee report recommended impeachment of President Clinton on four counts. The first article alleged that President Clinton perjured himself when testifying to a criminal grand jury about his response to the Jones lawsuit and his relationship with Lewinsky. The second alleged that the President committed perjury during a deposition in the civil suit brought against him by Paula Jones. The third alleged that President Clinton obstructed justice in the suit brought against him by Jones and in the investigation by Independent Counsel Starr. The fourth alleged that the President abused his office by refusing to respond to certain requests for admission from Congress and making untruthful responses to Congress during the investigation into his behavior. On December 19, 1998, in a lame-duck session, the House voted to approve the first and third articles. After trial in the Senate, the President was acquitted on February 12, 1999. Statements of the Senators entered into the record on the impeachment reflect disagreement about what constitutes an impeachable offense for the President and whether Clinton's behavior rose to this level. For instance, Republican Senator Richard G. Lugar voted to convict on both articles, noting in his statement the gravity of the "presidential misconduct at issue" and arguing that the case was "not about adultery." Instead, it centered on the obstruction of justice that occurred when the President "lied to a federal grand jury and worked to induce others to give false testimony." For Senator Lugar, the President ultimately "betrayed [the] trust" of the nation through his actions and should be removed from office. In contrast, Republican Senator Olympia Snowe voted to acquit on both articles. In her statement, she admonished the President's "lowly conduct," but concluded there was "insufficient evidence of the requisite untruth and the requisite intent" to establish perjury with regard to the concealment of his relationship with a subordinate; and the perjury charges regarding his relationship with a subordinate concerned statements that were largely "ruled irrelevant and inadmissible in the underlying civil case" which "undermine[d] [their] materiality." She also stated that she thought one of the allegations in the second impeachment article had been proven the President's attempt to influence the testimony of his personal assistant but that the proper remedy for this was a criminal prosecution. Indeed, a number of Senators indicated that they did not consider the President's behavior to constitute an impeachable offense because the President's conduct was not of a distinctly public nature. For instance, Democratic Senator Byron L. Dorgan voted to acquit on both articles. He described Clinton's behavior as "reprehensible," but concluded that it did not constitute "a grave danger to the nation." The significance of the Clinton impeachment experience to informing the understanding of what constitutes an impeachable offense is thus open to debate. One might point to the impeachment articles recommended by the House Judiciary Committee, but not adopted by the full House, as concerning conduct insufficient to establish an impeachable offense. Specifically, the House declined to impeach President Clinton for his alleged perjury in a civil suit against him as well as for alleged untruthful statements made in response to congressional requests. Likewise, some scholars have pointed to the acquittal in the Senate of both impeachment articles brought by the House as evidence that the Clinton impeachment articles lacked merit or were adopted on purely partisan grounds. The statements of some Senators mentioned above, reasoning that Clinton's conduct did not qualify as an impeachable offense, may support arguments that impeachment is not an appropriate tool to address at least some sphere of conduct by a President not directly tied to his official duties. Even so, the failure to convict President Clinton might instead simply reflect the failure of the House Managers to prove their case, or simply bare political calculation by some Senators. Ultimately, the lessons of the Clinton impeachment experience will be revealed in the future practice of Congress when assessing whether similar conduct is impeachable if committed by future Presidents. <5.7. Contemporary Judicial Impeachments> Congress has impeached federal judges with comparatively greater frequency in recent decades, and some of these impeachments appear to augur important consequences for the practice in the future. In particular, within three years in the 1980s the House voted to impeach three federal judges, each occurring after a criminal prosecution of the judge. One impeached federal judge was not barred from future office and later was elected to serve in the House of Representatives, the body that had earlier impeached him. Another judge challenged the adequacy of his impeachment trial in a case that ultimately reached the Supreme Court, which ruled that the case was nonjusticiable. The House of Representatives impeached federal district judge Harry E. Claiborne in 1986, following his criminal conviction and imprisonment for providing false statements on his tax returns. Despite his incarceration, Judge Claiborne did not resign his seat and continued to collect his judicial salary. The House unanimously voted in favor of four articles of impeachment against him. The first two articles against Judge Claiborne simply laid out the underlying behavior that had led to his criminal prosecution. The third article "rest[ed] entirely on the conviction itself" and stood for the principle that "by conviction alone he is guilty of . . . 'high crimes' in office." The fourth alleged that Judge Claiborne's actions brought the "judiciary into disrepute, thereby undermining public confidence in the integrity and impartiality of the administration of justice" which amounted to a "misdemeanor." The Senate impeachment trial of Judge Claiborne was the first in which that body used a committee to take evidence. Rather than conducting a full trial with the entire Senate, the committee took testimony, received evidence, and voted on pretrial motions regarding evidence and discovery. The committee then reported a transcript of the proceedings to the full Senate, without recommending whether impeachment was warranted. The Senate voted to convict Judge Claiborne on the first, second, and fourth articles. In 1988, the House impeached a federal district judge who had been indicted for a criminal offense but was acquitted. Judge Alcee L. Hastings was acquitted in a criminal trial where he was accused of conspiracy and obstruction of justice for soliciting a bribe in return for reducing the sentences of two felons. After his acquittal, a judicial committee investigated the case and concluded that Judge Hastings's behavior might merit impeachment. The Judicial Conference (a national entity composed of federal judges that reviews investigations of judges and may refer recommendations to Congress) eventually referred the matter to the House of Representatives, noting that impeachment might be warranted. The House of Representatives approved seventeen impeachment articles against Judge Hastings, including for perjury, bribery, and conspiracy. Judge Hastings objected to the impeachment proceedings as "double jeopardy" because he had already been acquitted in a previous criminal proceeding. The Senate, however, rejected his motion to dismiss the articles against him. The Senate again used a trial committee to receive evidence. That body voted to convict and remove Judge Hastings on eight articles, but did not vote to disqualify him from holding future office. Judge Hastings was later elected to the House of Representatives. Before the trial of Judge Hastings even began in the Senate, the House impeached Judge Walter L. Nixon. Judge Nixon was convicted in a criminal trial of perjury to a grand jury and imprisoned. Following an investigation by the House Judiciary Committee's Subcommittee on Civil and Constitutional Rights, the Judiciary Committee reported a resolution to the full House recommending impeachment on three articles. The full House approved three articles of impeachment, the first two involving lying to a grand jury and the last for undermining the integrity of and bringing disrepute on the federal judicial system. The Senate convicted Judge Nixon on the first two articles but acquitted him on the third. Judge Nixon challenged the Senate's use of a committee to receive evidence and conduct hearings. He sued in federal court arguing that the use of a committee, rather than the full Senate, to take evidence violated the Constitution's provision that the Senate "try" all impeachments. The Supreme Court ultimately rejected his challenge in Nixon v. United States , ruling that the issue was a nonjusticiable political question because the Constitution grants the power to try impeachments "in the Senate and nowhere else"; and the word "try" "lacks sufficient precision to afford any judicially manageable standard of review of the Senate's actions. " As a result of this decision, impeachment proceedings appear largely immune from judicial review. Two judges have been impeached in the twenty-first century. As with the three impeachments of judges in the 1980s, the first followed a criminal indictment. District Judge Samuel B. Kent pleaded guilty to obstruction of justice for lying to a judicial investigation into alleged sexual misconduct and was sentenced to thirty-three months in prison. The House impeached Judge Kent for sexually assaulting two court employees, obstructing the judicial investigation of his behavior, and making false and misleading statements to agents of the Federal Bureau of Investigation about the activity. Judge Kent resigned his office before a Senate trial. The Senate declined to conduct a trial following his resignation. Although the four previous impeachments of federal judges followed criminal proceedings, the most recent impeachment did not. In 2010, Judge G. Thomas Porteous Jr. was impeached for participating in a corrupt financial relationship with attorneys in a case before him, and engaging in a corrupt relationship with bail bondsmen whereby he received things of value in return for helping the bondsman develop corrupt relationships with state court judges. Judge Porteous was the first individual impeached by the House and convicted by the Senate based in part on conduct occurring before he began his tenure in federal office. The first and second articles of impeachment each alleged misconduct by Judge Porteous during both his state and federal judgeships. The fourth alleged that Judge Porteous made false statements to the Senate and FBI in connection with his nomination and confirmation to the U.S. District Court for the Eastern District of Louisiana. Judge Porteous's filings in answer to the articles of impeachment argued that conduct occurring before he was appointed to the federal bench cannot constitute impeachable behavior. The House Managers' replication, or reply to this argument, argued that Porteous's contention had no basis in the Constitution. On December 8, 2010, he was convicted on all four articles, removed from office, and disqualified from holding future federal offices. The first article, which included conduct occurring before he was a federal judge, was affirmed 96-0. The second article, approved 90-6, alleged that he lied to the Senate in his confirmation hearing to be a federal judge. A number of Senators explicitly adopted the reasoning supplied by expert witness testimony before the House that the crucial issue over the appropriateness of impeachment was not the timing of the misconduct, but "whether Judge Porteous committed such misconduct and whether such misconduct demonstrates the lack of integrity and judgment that are required in order for him to continue to function" in office. Senator Claire McCaskill explained in her statement entered in the Congressional Record that Judge Porteous's argument for an "absolute, categorical rule that would preclude impeachment and removal for any pre-federal conduct" should be rejected. "That should not be the rule," she noted, "any more than allowing impeachment for any pre-federal conduct that is entirely unrelated to the federal office." Senator Patrick Leahy agreed, noting that he "reject[ed] any notion of impeachment immunity [for pre-federal behavior] if misconduct was hidden, or otherwise went undiscovered during the confirmation process, and it is relevant to a judge's ability to serve as an impartial arbiter." <6. Recurring Questions About Impeachment> <6.1. Who Counts as an Impeachable Officer?> The Constitution explicitly makes "[t]he President, Vice President and all civil Officers of the United States" subject to impeachment and removal. Which officials are considered "civil Officers of the United States" for purposes of impeachment is a significant constitutional question that remains partly unresolved. Based on both the constitutional text and historical precedent, federal judges and Cabinet-level officials are "civil Officers" subject to impeachment, while military officers, state and local officials, purely private individuals, and Members of Congress likely are not. A question that neither the Constitution nor historical practice has answered is whether Congress may impeach and remove lower-level, non-Cabinet executive branch officials. The Constitution does not define "civil Officers of the United States." Nor do the debates at the Constitutional Convention provide significant evidence of which individuals (beyond the President and Vice President) the Framers intended to be impeachable. Impeachment precedents in both the House and Senate are of equally limited utility with respect to subordinate executive officials (i.e., executive branch officials other than the President and Vice President). In all of American history, only one such official has been impeached: Secretary of War William Belknap. Thus, while it seems that executive officials of the highest levels have been viewed as "civil Officers," historical precedent provides no examples of the impeachment power being used against lower-level executive officials. One must therefore look to other sources for aid in determining precisely how far down the federal bureaucracy the impeachment power might reach. The general purposes of impeachment may assist in interpreting the proper scope of "civil Officers of the United States." The congressional power of impeachment constitutes an important aspect of the various checks and balances built into the Constitution to preserve the separation of powers. It is a tool, entrusted to the House and Senate alone, to remove government officials in the other branches of government, who either abuse their power or engage in conduct that warrants their dismissal from an office of public trust. At least one commentator has suggested that the Framers recognized, particularly for executive branch officials, that there would be times when it may not be in the President's interest to remove a "favorite" from office, even when that individual has violated the public trust. As such, the Framers "dwelt repeatedly on the need of power to oust corrupt or oppressive ministers whom the President might seek to shelter." If the impeachment power were meant to ensure that Congress has the ability to impeach and remove corrupt officials that the President was unwilling to dismiss, it would seem arguable that the power should extend to officers exercising a degree of authority, the abuse of which would harm the separation of powers and good government. The writings of early constitutional commentators also arguably suggest a broad interpretation of "civil Officers of the United States." Joseph Story addressed the reach of the impeachment power in his influential Commentaries on the Constitution , asserting that " all officers of the United states [] who hold their appointments under the national government, whether their duties are executive or judicial, in the highest or in the lowest departments of the government , with the exception of officers in the army and navy, are properly civil officers within the meaning of the constitution, and liable to impeachment." Similarly, William Rawle reasoned that "civil Officers" included "[ a ] ll executive and judicial officers, from the President downwards , from the judges of the Supreme Court to those of the most inferior tribunals. . . ." Consistent with the text of the Constitution, these early interpretations suggest the impeachment power was arguably intended to extend to "all" executive officers, and not just Cabinet-level officials and other executive officials at the highest levels. The meaning of "officer of the United States" under the impeachment provisions may be informed by other provisions of the Constitution that use the same phrase. Applying this contextual approach, the most thorough, and perhaps most helpful, judicial elucidation of the definition of "Officers of the United States" comes in the Constitution's Appointments Clause. Indeed, that provision, which establishes the methods by which "Officers of the United States" may be appointed, has generally been viewed as a useful guidepost in establishing the definition of "civil Officers" for purposes of impeachment. The Appointments Clause provides that the President shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments. In interpreting the Appointments Clause, the Court has distinguished "Officers of the United States," whose appointment is subject to the requirements of the Clause, and non-officers, also known as employees, whose appointment is not. The amount of authority that an individual exercises will generally determine his classification as either an officer or employee. As established in Buckley v. Valeo , an officer is "any appointee exercising significant authority pursuant to the laws of the United States," while employees are viewed as "lesser functionaries subordinate to the officers of the United States," who do not exercise "significant authority." The Supreme Court has further subdivided "officers" into two categories: principal officers, who may be appointed only by the President with the advice and consent of the Senate; and inferior officers, whose appointment Congress may vest "in the President alone, in the Courts of Law, or in the Heads of Departments." The Court has acknowledged that its "cases have not set forth an exclusive criterion for distinguishing between principal and inferior officers for Appointments Clause purposes." The clearest statement of the proper standard to be applied in differentiating between the two types of officers appears to have been made in Edmond v. United States when the Court noted that "[g]enerally speaking, the term 'inferior officer' connotes a relationship with some higher ranking officer or officers below the President . . . [and] whose work is directed and supervised at some level by others who were appointed by presidential nomination with the advice and consent of the Senate. " Thus, in analyzing whether one may be properly characterized as either an inferior or a principal officer, the Court's decisions appear to focus on the extent of the officer's discretion to make autonomous policy choices and the authority of other officials to supervise and to remove the officer. Using the principles established in the Court's Appointments Clause jurisprudence to interpret the scope of "civil Officers" for purposes of impeachment, it would appear that employees, as non-officers, would not be subject to impeachment. Thus, lesser functionaries such as federal employees who belong to the civil service, do not exercise "significant authority," and are not appointed by the President or an agency head would not be subject to impeachment. At the opposite end of the spectrum, it would seem that any official who qualifies as a principal officer, including a head of an agency such as a Secretary, Administrator, or Commissioner, would be impeachable. The remaining question is whether inferior officers, or those officers who exercise significant authority under the supervision of a principal officer, are subject to impeachment and removal. As noted above, an argument can be made from the text and purpose of the impeachment clauses, as well as early constitutional interpretations, that the impeachment power was intended to extend to " all " officers of the United States, and not just those in the highest levels of government. Any official exercising "significant authority," including both principal and inferior officers, would therefore qualify as a "civil Officer" subject to impeachment. This view would permit Congress to impeach and remove any executive branch "officer," including many deputy political appointees and certain administrative judges. There is some historical evidence, however, to suggest that inferior officers were not meant to be subject to impeachment. For example, a delegate at the North Carolina ratifying convention asserted that "[i]t appears to me . . . the most horrid ignorance to suppose that every officer, however trifling his office, is to be impeached for every petty offense . . . I hope every gentleman . . . must see plainly that impeachments cannot extend to inferior officers of the United States." Additionally, Governeur Morris, member of the Pennsylvania delegation to the Constitutional Convention, arguably implied that inferior officers would not be subject to impeachment in stating that "certain great officers of State; a minister of finance, of war, of foreign affairs, etc. . . . will be amenable by impeachment to the public justice." Despite this ongoing debate, the authority to resolve any ambiguity in the scope of "civil Officers" for purposes of impeachment lays initially with the House, in adopting articles of impeachment, and then with the Senate, in trying the officer. <6.2. Is Impeachment Limited to Criminal Acts?> The Constitution describes the grounds of impeachment as "Treason, Bribery, or other high Crimes and Misdemeanors." As discussed above, the meaning of "high Crimes and Misdemeanors" is not defined in the Constitution or in statute. Some have argued that only criminal acts are impeachable offenses under the U.S. Constitution; impeachment is therefore inappropriate for noncriminal activity. In support of this assertion, one might note that the debate on impeachable offenses during the Constitutional Convention in 1787 shows that criminal conduct was encompassed in the "high crimes and misdemeanors" standard. As noted above, the notion that only criminal conduct can constitute sufficient grounds for impeachment does not, however, track historical practice. A variety of congressional materials support the notion that impeachment applies to certain noncriminal misconduct. For example, House committee reports on potential grounds for impeachment have described the history of English impeachment as including noncriminal conduct and noted that this tradition was adopted by the Framers. In accordance with the understanding of "high" offenses in the English tradition, impeachable offenses under this view are "constitutional wrongs that subvert the structure of government, or undermine the integrity of office and even the Constitution itself." "[O]ther high crimes and misdemeanor[s]" are not limited to indictable offenses, but apply to "serious violations of the public trust." Congressional materials take the view that "'Misdemeanor' . . . does not mean a minor criminal offense as the term is generally employed in the criminal law," but refers instead to the behavior of public officials. "[H]igh Crimes and Misdemeanors" may thus be characterized as "misconduct that damages the state and the operations of governmental institutions." According to congressional materials, the purposes underlying the impeachment process also reflect that noncriminal activity may constitute sufficient grounds for impeachment. The purpose of impeachment is not to inflict personal punishment for criminal activity. In fact, the Constitution explicitly makes clear that impeached individuals are not immunized from criminal liability once they are impeached for particular activity. Instead, impeachment is a "remedial" tool; it serves to effectively "maintain constitutional government" by removing individuals unfit for office. Grounds for impeachment include abuse of the particular powers of government office or a violation of the "public trust" conduct that is unlikely to be barred by statute. Congressional practice also supports this position. Many impeachments approved by the House of Representatives have included conduct that did not involve criminal activity. For example, in 1803, Judge John Pickering was impeached and convicted for, among other things, appearing on the bench "in a state of total intoxication." In 1912, Judge Robert W. Archbald was impeached and convicted for abusing his position as a judge by inducing parties before him to enter financial transactions with him. In 1936, Judge Halstead Ritter was impeached and convicted for conduct that "br[ought] his court into scandal and disrepute, to the prejudice of said court and public confidence in the administration of justice . . . and to the prejudice of public respect for and confidence in the Federal judiciary." And a number of judges were impeached for misusing their position for personal profit. <6.3. Are the Standards for Impeachable Offenses the Same for Judges and Executive Branch Officials?> Some have suggested that the standard for impeaching a federal judge differs from an executive branch official. While Article II, Section 1, of the Constitution specifies the grounds for the impeachment of civil officers as "Treason, Bribery, or other high Crimes and Misdemeanors," Article III, Section 1, provides that federal judges "hold their Offices during good Behaviour." One argument posits that these clauses should be read in conjunction, meaning that judges can be impeached and removed from office if they fail to exhibit good behavior or if they are guilty of "treason, bribery, or other high Crimes and Misdemeanors." But while one might find some support for the notion that the "good behavior" clause constitutes an additional ground for impeachment in early twentieth century practice, the "modern view" of Congress appears to be that the phrase "good behavior" simply designates judicial tenure. Under this reasoning, rather than functioning as a ground for impeachment, the "good behavior" phrase simply makes clear that federal judges retain their office for life unless they are removed through a proper constitutional mechanism. For example, a 1973 discussion of impeachment grounds released by the House Judiciary Committee reviewed the history of the phrase and concluded that the "Constitutional Convention . . . quite clearly rejected" a "dual standard" for judges and civil officers. The next year, the House Judiciary Committee's Impeachment Inquiry asked whether the "good behavior" clause provides another ground for impeachment of judges and concluded that "[i]t does not." It emphasized that the House's impeachment of judges was "consistent" with impeachment of "non-judicial officers." Finally, the House Report on the Impeachment of President Clinton affirmed this reading of the Constitution, stating that impeachable conduct for judges mirrored impeachable conduct for other civil officers in the government. The "treason, bribery, and high Crimes and Misdemeanors" clause thus serves as the sole standard for impeachable conduct for both executive branch officials and federal judges. Still, even if the "good behavior" clause does not delineate a standard for impeachment and removal for federal judges, as a practical matter, one might argue that the range of impeachable conduct differs between judges and executive branch officials because of the differing nature of each office. For example, one might argue that a federal judge could be impeached for perjury or fraud because of the importance of trustworthiness and impartiality to the judiciary, while the same behavior might not always constitute impeachable conduct for an executive branch official. But given the varied factors at issue including political calculations, the relative paucity of impeachments of nonjudicial officers compared to judges, and the fact that a nonjudicial officer has never been convicted by the Senate it is uncertain if conduct meriting impeachment and conviction for a judge would fail to qualify for a nonjudicial officer. The impeachment and acquittal of President Clinton highlights this difficulty. The House of Representatives impeached President Clinton for (1) providing perjurious and misleading testimony to a federal grand jury and (2) obstruction of justice in regards to a civil rights action against him. The House Judiciary Committee report that recommended articles of impeachment argued that perjury by the President was an impeachable offense, even if committed with regard to matters outside his official duties. The report rejected the notion that conduct such as perjury was "more detrimental when committed by judges and therefore only impeachable when committed by judges." The report pointed to the impeachment of Judge Claiborne, who was impeached and convicted for falsifying his income tax returns an act which "betrayed the trust of the people of the United States and reduced confidence in the integrity and impartiality of the judiciary." While it is "devastating" for the judiciary when judges are perceived as dishonest, the report argued, perjury by the President is "just as devastating to our system of government." And, the report continued, both Judge Claiborne and Judge Nixon were impeached and convicted for perjury and false statements in matters distinct from their official duties. Likewise, the report concluded that President Clinton's perjurious conduct, though seemingly falling outside his official duties as President, nonetheless constituted grounds for impeachment. In contrast, the minority views from the report opposing impeachment reasoned that "not all impeachable offenses are crimes and not all crimes are impeachable offenses." The minority argued that the President is not impeachable for all potential crimes, no matter how minor; impeachment is reserved for "conduct that constitutes an egregious abuse or subversion of the powers of the executive office." Examining the impeachment of President Andrew Johnson and the articles of impeachment drawn up for President Richard Nixon, the minority concluded that both were accused of committing "public misconduct" integral to their "official duties." The minority noted that the Judiciary Committee had rejected an article of impeachment against President Nixon alleging that he committed tax fraud, primarily because that "related to the President's private conduct, not to an abuse of his authority as President." The minority did not explicitly claim that the grounds for impeachment might be different between federal judges and executive branch officials, but its reasoning at least hints in that direction. Its rejection of nonpublic behavior as sufficient grounds for impeachment of the President including its example of tax fraud as nonpublic behavior that does not qualify appears to conflict with the past impeachment and conviction of federal judges on just this basis. One reading of the minority's position is that certain behavior might be impeachable conduct for a federal judge, but not for the President. While two articles of impeachment were approved by the House, the Senate acquitted President Clinton on both charges. Even so, generating firm conclusions from this result is difficult, as there may have been varying motivations for these votes. One possibility is that the acquittal occurred because some Senators though agreeing that the conduct merited impeachment thought the House Managers failed to prove their case. Another is that certain Senators disagreed that the behavior was impeachable at all. Yet another possibility is that neither ideological stance was considered and voting was conducted solely according to political calculations. <6.4. What Is the Constitutional Definition of Bribery?> Civil officers are subject to impeachment for treason, bribery, or "other high Crimes and Misdemeanors." Treason is defined in the constitutional text, but bribery is not. As this report has discussed, Congress has substantial discretion in determining what misconduct constitutes "high Crimes and Misdemeanors" meriting impeachment and removal for government officials. Likewise, Congress could presumably look to several different sources to inform its understanding of what behavior qualifies as bribery under the Constitution. One source might be the current federal criminal code. Under federal statute, it is a criminal offense for a public official to corruptly seek or receive bribes in return for official acts. Another might be the understanding of the crime of bribery at the nation's Founding. At the time of the Constitutional Convention, bribery was a common law crime, although its precise scope is somewhat difficult to determine. According to Blackstone, it included situations where a judge, or other person involved in the administration of justice, took "any undue reward to influence his behavior in office." Though the scope of the crime of bribery was initially narrow, it appears to have expanded to include giving as well as receiving bribes, as well as attempted bribery in certain situations. Some commentators assert that, at the time of the Founding, the English and American common law definition of bribery had developed to apply not just to judges, but also to executive officers . No matter the precise scope of bribery in the common law courts, in Parliamentary practice it was understood to constitute an impeachable offense in England at the time of the nation's Founding. In 1624, the House of Commons impeached the Lord Treasurer (one of the King's ministers) for bribery. Actual debate on the meaning of bribery at the Constitutional Convention was limited. As mentioned above, while discussing presidential impeachment, Gouverneur Morris asserted that the President should be subject to the impeachment process because he might "be bribed by a greater interest to betray his trust," noting the example of Charles II receiving a bribe from Louis XIV. The First Congress enacted a federal bribery statute for customs officers, which provided that those officers convicted of taking or receiving a bribe be fined and barred from holding office in the future, while the payer of a bribe would be fined as well . The same Congress passed another bribery statute that applied to anyone who "directly or indirectly, give[s] any sum or sums of money, or any other bribe, present or reward, or any promise, contract, obligation or security, for the payment or delivery of any money, present or reward, or any other thing to obtain or procure the opinion, judgment or decree of any judge or judges of the United States" as well as the judge who accepted the bribe. Other officers of the United States were added to the federal statute's provisions in 1853. And the states passed their own laws about the time of the Constitution's drafting that prohibited bribery and the closely related crime of extortion by state officers and judges. A number of impeachments in the United States have charged individuals with misconduct that was viewed as bribery. In most of those instances, however, the specific articles of impeachment were framed as "high crimes and misdemeanors" or an "impeachable offense." For instance, the House of Representatives approved articles of impeachment against then-Judge Hastings, including one for the "impeachable offense" of participating in a "corrupt conspiracy to obtain $150,000 from defendants [in a case before him] in return for the imposition of [lighter] sentences." Although the article did not mention bribery, the Judiciary Committee report analyzing the article described Judge Hastings as participating in a "bribery conspiracy" or a "bribery scheme." The Senate convicted Hastings on this article. Likewise, the first article of impeachment against Judge Porteous charged him with "solicit[ing] and accept[ing] things of value" from attorneys without disclosure and ruling in those clients favor. The second charged him with "solicit[ing] and accept[ing] things of value . . . for his personal use and benefit, while at the same time taking official actions that benefitted" a bail bondman and his sister. Neither article explicitly referenced bribery, but much like the Hastings impeachment, the Judiciary Committee report analyzing the articles alleged that Judge Porteous had participated in a "bribery scheme." In sum, the Framers provided that bribery was an impeachable offense for the President, Vice President, and other civil officers. At the time of the Constitution's drafting, bribery was a common law crime whose scope had expanded from its earlier roots. And Parliament had impeached ministers of the Crown for bribery. But the Framers did not adopt a formal definition of bribery in the Constitution, and the debates at the Constitutional Convention and during ratification do not clearly indicate the intended meaning of bribery for impeachment purposes. In any case, the practice of impeachment in the United States has tended to envelop charges of bribery within the broader standard of "other high Crimes and Misdemeanors." <6.5. Impeachment for Behavior Prior to Assuming Office> Most impeachments have concerned behavior occurring while an individual is in a federal office. But some have addressed, at least in part, conduct before individuals assumed their positions. For example, in 1912, a resolution impeaching Judge Robert W. Archbald and setting forth thirteen articles of impeachment was reported out of the House Judiciary Committee and agreed to by the House. The Senate convicted Judge Archbald in January the next year. At the time that Judge Archbald was impeached by the House and tried by the Senate in the 62nd Congress, he was U.S. Circuit Judge for the Third Circuit and a designated judge of the U.S. Commerce Court. The articles of impeachment brought against him alleged misconduct in those positions as well as in his previous position as U.S. District Court Judge of the Middle District of Pennsylvania. Judge Archbald was convicted on four articles alleging misconduct in his then-current positions as a circuit judge and Commerce Court judge, and on a fifth article that alleged misuse of his office both in his then-current positions and in his previous position as U.S. District Judge. While Judge Archbald was impeached and convicted in part for behavior occurring before he assumed his then-current position, that behavior occurred while he held a prior federal office. Judge G. Thomas Porteous, in contrast, is the first individual to be impeached by the House and convicted by the Senate based in part on conduct occurring before he began his tenure in federal office. Article II alleged misconduct beginning while Judge Porteous was a state court judge as well as misconduct while he was a federal judge. Article IV alleged that Judge Porteous made false statements to the Senate and FBI in connection with his nomination and confirmation to the U.S. District Court for the Eastern District of Louisiana. He was convicted on all four articles, removed from office, and disqualified from holding future federal offices. On the other hand, it does not appear that any President, Vice President, or other civil officer of the United States has been impeached by the House solely based on conduct occurring before he began his tenure in the office held at the time of the impeachment investigation, although the House has, on occasion, investigated such allegations. <6.6. Impeachment After an Individual Leaves Office> It appears that federal officials who have resigned have still been thought to be susceptible to impeachment and a ban on holding future office. Secretary of War William W. Belknap resigned hours before the House impeached him, but the Senate still conducted a trial in which Belknap was acquitted. During the trial, upon objection by Belknap's counsel that the Senate lacked jurisdiction because Belknap was now a private citizen, the Senate voted in favor of jurisdiction. That said, the resignation of an official under investigation for impeachment often ends impeachment proceedings. For example, no impeachment vote was taken following President Richard Nixon's resignation after the House Judiciary Committee decided to report articles of impeachment to the House. And proceedings were ended following the resignation of Judges English, Delahay, and Kent. <6.7. What Is the Standard of Proof in House and Senate Impeachment Proceedings?> In the judicial system, the degree of certainty with which parties must prove their allegations through the production of evidence what is known as the burden of persuasion or the standard of proof varies depending on the type of proceeding. In a criminal trial, in which a defendant risks deprivation of life and liberty, the prosecutor's burden of proof is high. Each element of the offense must be proved "beyond a reasonable doubt." In civil litigation between private parties, in which the potential harm to a defendant is less severe, the plaintiff's burden of proof is reduced. The allegations generally need only be proved by a "preponderance of the evidence." An even more generous standard is used by federal grand juries, who may issue an indictment on a finding that there is "probable cause" to believe that a crime has occurred. In yet other settings, an intermediate standard of "clear and convincing evidence" is used. This burden is somewhere below "reasonable doubt" but higher than "preponderance." The Constitution establishes no clear standard of proof to be applied in the impeachment process. Neither has the House in its decision to impeach, nor the Senate in its decision to convict, chosen to establish (either by rule or precedent) a particular governing standard. The question has been repeatedly debated in both chambers, but ultimately individual Members have been free to use any standard they wish in deciding how to cast their respective votes. In short, when deciding questions of impeachment and removal, historical practice seems to indicate that Members need be convinced only to their own satisfaction. Moreover, even if the House or Senate chose to establish a governing standard of proof, it may be hard for such a rule to be enforced. <6.7.1. Standard of Proof in the House> In the House, the debate over the standard of proof that should be applied in determining whether the evidence supports approval of articles of impeachment has generally focused on the lower end of the standards-of-proof spectrum. Those who have argued for the most easily satisfied probable cause standard have often analogized the House's decision to impeach to that of a grand jury's decision to indict. Like a grand jury, the House's role is to ascertain whether sufficient evidence exists to charge an official with an impeachable offense, not to determine guilt. That role is reserved to the Senate, which may apply a different, potentially higher standard of proof. As such, it is argued that the House should apply a similar standard to what is applied by an investigating grand jury a standard such as preponderance of the evidence or "probable cause." This position was perhaps most clearly articulated during the Judiciary Committee's consideration of the impeachment of Judge Charles Swayne in 1904 by Representative Powers, who argued the following: This House has no constitutional power to pass upon the question of the guilt or the innocent of the respondent. He is not on trial before us. We have no right to take from him the presumption of innocence which he enjoys under the law. All we have the right to do is to say whether there has been made out such probable cause of guilt as to entitle the American people to the right to have the case tried before the Senate of the United States. Those who have argued for the more demanding clear and convincing standard have often focused on the gravity of the impeachment process and its impact not only on the impeached official, but in the case of a presidential impeachment, on the entire executive branch. For example, during the House's consideration of articles of impeachment against President Clinton, the President's counsel asserted that the clear and convincing standard was "commensurate with the gravity of impeachment." "Lower standards," it was argued, "are simply not demanding enough to justify the fateful step of an impeachment trial." The House Judiciary Committee's report issued in connection with its approval of articles of impeachment against President Nixon displays the House's historical reluctance to impose any formalized burden of proof on Members. In describing the articles, the report noted that the committee had found "clear and convincing evidence" of the individual impeachable offenses, but did not explicitly contend that such a finding was required, or that "clear and convincing" should represent the governing standard of proof in House impeachments. The dissenting Members took a different approach, arguing that they were persuaded that the applicable standard for proof in House impeachments "must be no less rigorous than proof by 'clear and convincing evidence.'" Even so, the minority not only acknowledged that the House has never sought to "fix by rule" an applicable standard of proof, but also explicitly stated that they would not "advocate such a rule." "The question," the minority concluded, "is properly left to the discretion of individual Members." <6.7.2. Standard of Proof in the Senate> Much like Members of the House, Senators are not bound by any specific burden of proof in the trial of an impeached official. Counsel for the impeached official have generally argued that individual Senators should adopt the most demanding standard of "beyond a reasonable doubt," while the House Managers have generally urged a lower standard. The Constitution's use of words like "try" and "convicted" could be read to suggest an intent that the Senate adopt a criminal-like standard in impeachment trials. Counsel for President Clinton argued this position, at least with respect to presidential impeachments, asserting that the Constitution's phrasing "strongly suggests that an impeachment trial is akin to a criminal proceeding and that the beyond-a-reasonable-doubt standard of criminal proceedings should be used." House Managers, on the other hand, have generally argued that use of the "beyond reasonable doubt" standard is inappropriate. They have noted that "an impeachment trial is not a criminal trial," nor are the consequences of a conviction which are limited to removal from office and possible disqualification from holding future federal office criminal in nature. The Senate's approach of ensuring that its Members retain the ability to make individualized decisions on the standard of proof necessary for conviction was perhaps best exhibited during the impeachment trial of Judge Claiborne. There, counsel for Judge Claiborne submitted a motion to establish "beyond a reasonable doubt" as the applicable standard of proof in the trial. The House Managers disagreed, arguing that standard was inappropriate, and that setting any standards would prevent individual members from exercising their own personal judgment. Judge Claiborne's motion was ultimately rejected by the Presiding Officer, who held that the standard of proof to be applied was left to the discretion of each individual Senator. This approach was affirmed in the Senate's most recent statement on the standard of proof in a Senate trial. During Judge Porteous's trial, the Senate trial committee referenced the resolution of the Claiborne motion, noting that the Senate had "declin[ed] to establish an obligatory standard." Accordingly, the committee report concluded that "Each Senator may, therefore, use the standard of proof that he or she feels is appropriate." As such, rather than impose a specific standard of proof on its members, both the House and Senate have sought to ensure that individual Members remain free to make their own determinations, guided by their individual conscience and judgment, and their oath to do "impartial justice." <6.8. What Are the Applicable Evidentiary Rules and Standards in a Senate Impeachment Trial?> Like most aspects of the Senate impeachment trial, the body's approach to evidentiary questions is unique. The Senate has not bound itself to any specific controlling set of evidentiary rules. Instead, the admissibility of evidence is primarily based on Senate precedent, with objections first ruled on by the Presiding Officer, but ultimately settled by a majority vote of the Senate. The present Senate Impeachment Rules provide a basic procedural framework for how evidentiary questions are to be handled. Under the Rules, objections to the admissibility of evidence "may be made by the parties or their counsel." Those objections are directed to the Presiding Officer who "may rule on all questions of evidence." That ruling is given effect unless challenged by an individual Senator. At that point, the Rules provide that the question be "submitted to the Senate for decision without debate." The Rules set the process by which evidentiary questions are to be decided, but provide only the most basic guidance on the substantive standards to be applied by either the Presiding Officer or individual Senators in making such decisions. The Rules state only that the Presiding Officer's authority to rule on questions of evidence includes, but is not limited to, "questions of relevancy, materiality, and redundancy of evidence and incidental questions." Similarly, the Senate reserves the right to "determine competency, relevancy, and materiality." The Rules therefore suggest only that evidence should meet basic relevancy requirements. To the extent there are additional substantive standards for either the Presiding Officer or individual Senators to apply in making evidentiary determinations, they appear to derive primarily from Senate precedent. Evaluating and understanding those precedents, however, is difficult because evidentiary questions submitted to the Senate are generally made with no debate. As such, the historical record of Senate deliberations on evidentiary questions typically includes the final disposition of the question and perhaps only limited evidence of the particular reasoning that led to the Senate's decision. Given the quasi-judicial aspects of the Senate trial, the parties have often used judicial evidentiary standards, including the Federal Rules of Evidence, to support their motions to either allow or exclude evidence. The Senate has generally been receptive to this approach and in fact arguably supported some adherence to judicial rules of evidence. But more recent trials have made clear that the Senate is "not bound by the Federal Rules of Evidence, although those rules may provide some guidance. . . ." Indeed, it has been argued that the Federal Rules of Evidence, which were designed to protect jurors from prejudicial evidence and to help them judge evidence, have little if any place in a Senate impeachment trial, where each individual Senator must weigh all relevant evidence as he or she deems fit. This approach is consistent with Chief Justice Rehnquist's ruling during the Clinton impeachment trial that the Senators should not be referred to as "jurors" because in an impeachment trial "the Senate is not simply a jury. It is a court. . . ." Accordingly, while judicial principles may guide the Senate, the body primarily "determine[s] the admissibility of evidence by looking to Senate precedents rather than court decisions. A Senate vote is the ultimate authority for determining the admissibility of evidence." In the end, viewing House and Senate impeachment proceedings through the lens of established judicial constructs including rules of procedure, evidence, and standards of proof should be undertaken with caution. The impeachment process does not fit into existing judicial molds of either a criminal or civil proceeding. Indeed, it is not necessarily a judicial proceeding at all. It is instead an exceptional proceeding defined by its distinctive combination of judicial and legislative characteristics that has historically required a unique approach to procedural and evidentiary questions. <6.9. Are Impeachment Proceedings Subject to Judicial Review?> Impeachment proceedings have been challenged in federal court on a number of occasions. Perhaps most significantly, the Supreme Court has ruled that a challenge to the Senate's use of a trial committee to take evidence posed a nonjusticiable political question. In Nixon v. United States , Judge Walter L. Nixon had been convicted in a criminal trial on two counts of making false statements before a grand jury and was sent to prison. He refused, however, to resign and continued to receive his salary as a judge while in prison. The House of Representatives adopted articles of impeachment against the judge and presented the Senate with the articles. The Senate invoked Impeachment Rule XI, a Senate procedural rule which permits a committee to take evidence and testimony. After the committee completed its proceedings, it presented the full Senate with a transcript and report. Both sides presented briefs to the full Senate and delivered arguments, and the Senate then voted to convict and remove him from office. The judge then brought a suit arguing that the use of a committee to take evidence violated the Constitution's provision that the Senate "try" all impeachments. The Supreme Court noted that the Constitution grants "the sole Power" to try impeachments "in the Senate and nowhere else"; and the word "try" "lacks sufficient precision to afford any judicially manageable standard of review of the Senate's actions." This constitutional grant of sole authority, the Court reasoned, meant that the "Senate alone shall have authority to determine whether an individual should be acquitted or convicted." In addition, because impeachment functions as the " only check on the Judicial Branch by the Legislature," the Court noted the important separation of powers concerns that would be implicated if the "final reviewing authority with respect to impeachments [was placed] in the hands of the same body that the impeachment process is meant to regulate." Further, the Court explained that certain prudential considerations "the lack of finality and the difficulty of fashioning relief" weighed against adjudication of the case. Judicial review of impeachments could create considerable political uncertainty, if, for example, an impeached President sued for judicial review. The Court in Nixon was careful to distinguish the situation from Powell v. McC ormack , a case also involving congressional procedure where the Court declined to apply the political question doctrine. That case involved a challenge brought by a Member-elect of the House of Representatives, who had been excluded from his seat pursuant to a House Resolution. The precise issue in Powell was whether the judiciary could review a congressional decision that the plaintiff was "unqualified" to take his seat. That determination had turned, the Court explained, "on whether the Constitution committed authority to the House to judge its Members' qualifications, and if so, the extent of that commitment." The Court noted that while Article I, Section 5, does provide that Congress shall determine the qualifications of its Members, Article I, Section 2, delineates the three requirements for House membership Representatives must be at least twenty-five years old, have been U.S. citizens for at least seven years, and inhabit the states they represent. Therefore, the Powell Court concluded, the House's claim that it possessed unreviewable authority to determine the qualifications of its Members "was defeated by . . . this separate provision specifying the only qualifications which might be imposed for House membership." In other words, finding that the House had unreviewable authority to decide its Members' qualifications would violate another provision of the Constitution. The Court therefore concluded in Powell that whether the three requirements in the Constitution were satisfied was textually committed to the House, "but the decision as to what these qualifications consisted of was not." Applying the logic of Powell to the case at hand, the Nixon Court noted that here, in contrast, leaving the interpretation of the word "try" with the Senate did not violate any "separate provision" of the Constitution. In addition, several other aspects of the impeachment process have been challenged. Judge G. Thomas Porteous sued seeking to bar counsel for the Impeachment Task Force of the House Judiciary Committee from using sworn testimony the judge had provided under a grant of immunity. The impeachment proceedings were started after a judicial investigation of Judge Porteous for alleged corruption on the bench. During that investigation, Judge Porteous testified under oath to the Special Investigatory Committee under an order granting him immunity from that information being used against him in a criminal case. Before the U.S. District Court for the District of Columbia, Judge Porteous argued that the use of his immunized testimony during an impeachment proceeding violated his Fifth Amendment right not to be compelled to serve as a witness against himself. The court rejected his challenge, reasoning that because the use of the testimony for an impeachment proceeding fell within the legislative sphere, the Speech or Debate Clause prevented the court from ordering the committee staff members to refrain from using the testimony. Similarly, Judge Alcee L. Hastings sought to prevent the House Judiciary Committee from obtaining the records of a grand jury inquiry during the committee's impeachment investigation. Prior to the impeachment proceedings, although ultimately acquitted, Judge Hastings had been indicted by a federal grand jury for a conspiracy to commit bribery. Judge Hastings's argument was grounded in the separation of powers: he claimed that permitting disclosure of grand jury records for an impeachment investigation risked improperly allowing the executive and judicial branches to participate in the impeachment process a tool reserved for the legislature. The U.S. Court of Appeals for the Eleventh Circuit, however, rejected this "absolutist" concept of the separation of powers and held that "a merely generalized assertion of secrecy in grand jury materials must yield to a demonstrated, specific need for evidence in a pending impeachment investigation." The U.S. District Court for the District of Columbia initially threw out Judge Hastings's Senate impeachment conviction, because the Senate had tried his impeachment before a committee rather than the full Senate. The decision was vacated on appeal and remanded for reconsideration under Nixon v. United States . The district court then dismissed the suit because it presented a nonjusticiable political question. <7. Conclusion> Influenced by both English and colonial practice, the Framers of the Constitution crafted an Americanized impeachment remedy that ultimately holds government officers accountable for political offenses, or misdeeds committed by public officials against the state. The meaning of the Constitution's impeachment provisions has been worked out over time, informed by the historical practices of the House and Senate in pursuing impeachment for the misconduct of government officers. Impeachment is also generally immune from judicial review, meaning that Congress has substantial discretion in how it structures impeachment proceedings. The Constitution does not delineate the range of misconduct that qualifies as "high Crimes and Misdemeanors," perhaps because the scope of possible offenses by government officers is impossible to delineate in advance. The history of impeachment in the United States shows that the remedy has generally applied against government officers for abuses of power, corruption, and conduct determined incompatible with an individual's office, but does not extend to strictly political or policy disagreements.

The Constitution grants Congress authority to impeach and remove the President, Vice President, and other federal "civil officers" for "Treason, Bribery, or other high Crimes and Misdemeanors." Impeachment is one of the various checks and balances created by the Constitution, a crucial tool for holding government officers accountable for violations of the law and abuse of power. Responsibility and authority to determine whether to impeach an individual rests in the hands of the House of Representatives. Should a simple majority of the House approve articles of impeachment, the matter is then presented to the Senate, to which the Constitution provides the sole power to try an impeachment. A conviction on any one of the articles of impeachment requires the support of a two-thirds majority of the Senators present and results in that individual's removal from office. The Senate also has discretion to vote to disqualify that official from holding a federal office in the future. The Constitution imposes several additional requirements on the impeachment process. When conducting an impeachment trial, Senators must be "on oath or affirmation," and the right to a jury trial does not extend to impeachment proceedings. If the President is impeached and tried in the Senate, the Chief Justice of the United States presides at the trial. The Constitution bars the President from using the pardon power to shield individuals from impeachment or removal from office. Understanding the historical practices of Congress with regard to impeachment is central to fleshing out the meaning of the Constitution's impeachment clauses. While much of constitutional law is developed through jurisprudence analyzing the text of the Constitution and applying prior judicial precedents, the Constitution's meaning is also shaped by institutional practices and political norms. In fact, the power of impeachment is largely immune from judicial review, meaning that Congress's choices in this arena are unlikely to be overturned by the courts. For that reason, examining the history of actual impeachments is crucial to understanding the meaning of the Constitution's impeachment provisions. One major recurring question about the impeachment remedy is the definition of "high Crimes and Misdemeanors." At least at the time of ratification of the Constitution, the phrase appears understood to have applied to uniquely "political" offenses, or misdeeds committed by public officials against the state. Such misconduct simply resists a full delineation, however, as the possible range of potential misdeeds in office cannot be determined in advance. Instead, the type of behavior that merits impeachment is worked out over time through the political process. While this report focuses on the constitutional considerations relevant to impeachment, there are various other important questions that arise in any impeachment proceeding. For a consideration of the legal issues surrounding access to information from the executive branch in an impeachment investigation, see CRS Report R45983, Congressional Access to Information in an Impeachment Investigation , by Todd Garvey. For discussion of the House procedures used in impeachment investigations, see CRS Report R45769, The Impeachment Process in the House of Representatives , by Elizabeth Rybicki and Michael Greene.

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<1. Introduction> Critical infrastructure (CI) refers to the machinery, facilities, and information that enable vital functions of governance, public health, and the economy. Adverse events may occur when CI systems and assets are subject to loss or disruption for any cause, whether by natural disasters or deliberate attack. This report highlights four key areas of enduring policy concern for Congress, and outlines the parameters of ongoing debates within them. A section is devoted below to each key area: defining and identifying CI; understanding and assessing CI risk; federal organization to address CI; and the role of the private sector. <2. Defining and Identifying CI> Presidential Decision Directive 63 (PDD-63) on critical infrastructure protection, released in 1998, was the first high-level policy guidance for critical infrastructure protection in the contemporary era. It framed the critical infrastructure issue in terms of national vulnerability to potentially devastating asymmetric attacks. The directive presented U.S. military economic and military might as "mutually reinforcing and dependent" elements of national power dependent upon critical infrastructure to function properly. The directive provided an austere definition of critical infrastructure as "those physical and cyber-based systems essential to the minimum operations of the economy and government." PDD-63 set ambitious national goals for the elimination of any significant national vulnerability to "non-traditional" asymmetric cyber or physical attacks on CI. In practice, it has proven extremely difficult even to establish consistent criteria for assessing the criticality of specific assets and systems, in part because criticality relates not only to the physical attributes of infrastructure systems and assets, but also to the perspectives, values, and priorities of those making the assessment. The sheer scale, complexity, and interconnectedness of the U.S. and global economies complicate efforts to identify and inventory critical assets and systems. For example, the United States electricity sub-sector alone has nearly 7,000 operational power plants, which in turn depend upon other infrastructure assets and complex supply chains to support continuing operations. <2.1. The Evolving Definition of CI> The most commonly cited statutory definition of critical infrastructure was established in the USA PATRIOT Act of 2001 ( P.L. 107-56 ), and echoes PDD-63 in its focus on protecting the industrial and demographic foundations of national mobilization against catastrophic risks. The USA PATRIOT Act defines critical infrastructure as "systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters." Over time, critical infrastructure policy has expanded from its earlier emphasis on the physical foundations of national power to a wider concern with provision of essential services and customary conveniences to the public. The universe of threats to CI commonly considered by Congress and executive branch departments and agencies has also expanded since the early post-9/11 period. The intelligence community continues to devote significant attention to asymmetric threats to CI posed by state and non-state adversaries who lack the means to directly confront U.S. military power, or for strategic reasons choose to avoid direct military confrontation. Asymmetric attacks may use a combination of physical or cyber means to damage or disrupt domestic CI systems and assets, or cause mass civilian casualties. However, natural disasters and other causes of damage and disruption not directly linked to terrorism or other intentional acts have become more salient elements of critical infrastructure policy and practice in the years since 9/11. Although the USA PATRIOT Act's definition of critical infrastructure remains law and is still commonly cited as a basis for official policy, CI policymakers have lowered the threshold of criticality to include infrastructure-related events with disruptive, but not necessarily catastrophic, effects at all levels of society and government. Policy increasingly reflects local, society-centric perspectives on infrastructure that place emphasis on it as an enabler of prosperity, public safety, and civic life. For example, National Infrastructure Protection Plan (NIPP), published by DHS in 2013 as official policy guidance for interagency coordination and public-private partnerships, defines critical infrastructure as "assets, systems, and networks that underpin American society," and considers impacts of a wide range of natural and manmade hazard events at the national, regional, and local levels. Successive Administrations since 1998 have gradually expanded the aperture of CI policy beyond protection of sectors regarded as essential to national security, the economy, and public health and safety. This reflects a global trend among developed countries toward CI policies favoring society-centric resilience at the system level over security-oriented protection of specific assets deemed at risk. In January 2017, the Department of Homeland Security (DHS) designated U.S. election systems as a sub-sector of the Government Facilities critical infrastructure sector, which also includes national monuments and icons and education facilities. The components of the elections systems as described by DHS include physical locations (storage facilities, polling places, and locations where votes are tabulated) and technology infrastructure (voter registration databases, voting systems, and other technology used to manage elections and to report and validate results). The criticality of these facilities, systems, and assets derives primarily from their essential role in supporting the nation's civic life. Currently, there are 16 critical infrastructure sectors as set forth in Presidential Policy Directive 21 (PPD-21), "Critical Infrastructure Security and Resilience," and elaborated in the 2013 NIPP. The federal government uses CI sectors as an organizing framework for voluntary public-private partnerships with self-identified CI owner-operators. Public-private partnership activities are non-regulatory in nature. DHS has overall responsibility for coordination of partnership programs and activities, but in several cases other federal agencies are assigned leading roles as Sector-Specific Agencies (SSAs). (The roles and responsibilities of the public and private sectors are discussed in the final section of this report, " The Role of the Private Sector .") Together, these sectors represent a broad and diverse array of national economic activity and social life, each with its own distinct characteristics. The expanding multiplicity and breadth of definitions used for critical infrastructure designation has policy implications for Congress. Each officially-designated critical infrastructure sector is represented by formal coordination bodies, which include numerous private sector stakeholder groups and representatives of state, local, tribal, and territorial (SLTT) governments. In addition, industry and non-profit groups may participate in certain sector-wide activities. As sectors mature, new public and private sector communities of interest emerge within the broader critical infrastructure enterprise, each with its own unique perspective on what criticality means as applied to the nation's infrastructure. For this reason, there is no single, consistently applied definition of critical infrastructure. Even though the most commonly cited statutory definition of CI has not changed in nearly two decades, identification and prioritization of critical systems and assets as categories of applied practice reflects diverse interests and perspectives, which continue to evolve. This suggests that definitions of critical infrastructure are not merely a matter of semantics, and the multiplicity of official definitions in common use is not simply a matter of imprecision. Rather, variation reflects diverse constituencies' efforts to negotiate the boundaries of congressional responsibility, the scope of government programs, and the nature and extent of public-private sector relationships at any given point in time. <2.2. CI Protection vs. CI Resilience> Critical infrastructure policy has taken on two distinct orientations that significantly overlap but nonetheless reflect different organizational perspectives and requirements. Critical infrastructure protection (CIP) emphasizes the identification, prioritization, and protection of infrastructure assets. Criticality from this perspective is generally defined in terms of the consequences of asset loss or system disruption (i.e., an infrastructure asset or system is critical to the degree that loss or disruption of service would have system-level impacts on essential functions of society, the economy, or government). Critical infrastructure resilience (CIR) emphasizes broad investments in hazard mitigation and preparedness during steady-state periods, and adaptation during emergencies, to ensure availability of critical infrastructure functions that enable provision of essential services. Much of the major legislation that serves as the foundation for CI policy was passed in the immediate aftermath of the 9/11 attacks, when concerns with physical protection of critical assets predominated in policy circles. However, policy practice in the United States and other developed countries has increasingly favored a focus on system resilience over asset protection. As such, national CI policy reflects a hybrid approach that contains elements of both CIP and CIR. This can exacerbate already complex issues inherent in defining criticality and identifying what exactly is critical in the context of time and place. Recognizing this inherent tension, this report uses the term "critical infrastructure security" to discuss CI policy without favoring CIP or CIR. <2.3. CIP Asset Lists, Catalogs, Databases, and Reports> CIP-focused legislation and government policy directives since 2001 have frequently contained requirements for the creation of asset lists, catalogs, databases, and reports to identify systems and assets that meet a given threshold of criticality, and thus require higher than ordinary levels of protection against plausible threats. The logic is simple on its face: we need to know what we have; what is most important; and what we need to protect. However, application of this logic often introduces many complexities in actual practice, and so national-level issues of asset identification and prioritization persist across all CI sectors. Nonetheless, inventory requirements are typically the first step of the broader risk management strategies applied to critical infrastructure protection, both at the national level and in the private sector at the enterprise level. Definitional criteria of criticality will likely continue to be a subject of considerable debate within the CI policy community, but the forcing mechanism provided by list/no-list decisions serve to define what specific assets are considered critical in actual practice. <2.3.1. Policy Guidance for Asset Identification> One of the earliest examples of a CIP-based inventory requirement is the National Strategy for the Physical Protection of Critical Infrastructures and Key Assets , released in February 2003 just before the newly created Department of Homeland Security began operations. The strategy directed DHS to develop a "uniform methodology for identifying facilities, systems, and functions with national-level criticality," and use it to "build a comprehensive database to catalog these critical facilities, systems, and functions." It was followed by the December 2003 release of Homeland Security Presidential Directive 7: Critical Infrastructure Identification, Prioritization, and Protection (HSPD-7), which served as the basis of CI policy development and implementation for the next decade until it was superseded by PPD-21 in 2013. HSPD-7 shared the CIP-orientation of other early policy documents, directing federal departments and agencies to "identify, prioritize, and coordinate the protection of critical infrastructure and key resources in order to prevent, deter, and mitigate the effects of deliberate efforts to destroy, incapacitate, or exploit them." DHS claimed in the 2006 NIPP the first plan of its type that it had compiled a comprehensive CI database to meet the CI identification requirement. However, a 2006 DHS Inspector General (IG) report found that these early efforts to produce a national database of CI assets suffered from conceptual and methodological shortcomings. The report stated that the Department's National Asset Database had rapidly grown from 160 key assets in 2003 to include 77,069 assets in 2006, and that listed assets included everything from nuclear power plants and dams to local petting zoos and water parks. The IG report concluded that the database contained many entries that listed "unusual, or out-of-place, assets whose criticality is not readily apparent," without providing assurance that truly critical assets were included. Likewise, data collection procedures were not standardized, so that San Francisco listed its entire light rail system as a single asset, while New York City listed its subway stations as multiple individual assets. <2.3.2. Congressional Oversight of Asset Identification> Congress subsequently included provisions for the National Asset Database as part of the Implementing the Recommendations of the 9-11 Commission Act of 2007 ( P.L. 110-53 , The 9-11 Commission Act). The legislation requires compilation of a national database of vital systems or assets, and creation of a separate classified list of "prioritized critical infrastructure," to be updated annually and submitted to Congress. The classified list is to include assets that the Secretary determined would cause national or regional catastrophic effects if subject to disruption or destruction. Other provisions include definitions of infrastructure-related terms, and a requirement for the Secretary to implement certain quality control procedures to ensure that asset nominations from state governments or other sources meet the threshold of criticality as determined by the Secretary. A 2013 Government Accountability Office (GAO) report found that DHS had improved its processes for critical asset identification, but that significant questions regarding reporting criteria and methodology persisted. The report documented frequent changes in nomination and adjudication criteria and reporting format used by National Critical Infrastructure Prioritization Program (NCIPP), which DHS instituted to fulfil the congressional mandate of the 9-11 Commission Act. After 2009, NCIPP assessed criticality of all nominations according to four types of potential adverse consequences above certain designated thresholds: fatalities, economic loss, mass evacuation length, and national security impacts. Methodological adjustments were subsequently made in some cases to account for unique CI characteristics. For example, collapse of the U.S. financial system would likely not cause immediate mass casualties, but might still have debilitating second-order effects on national security, economic security, and public health and safety. The same might also apply to election infrastructure used in federal elections, which was added as a CI sub-sector in 2017. The report noted that asset nomination vetting methods had not undergone an independent peer review. It recommended to Congress that DHS commission such a review to "assure that the NCIPP list identifies the nation's highest priority infrastructure." <2.3.3. Policy and Legal Implications of Criticality Designation> Being listed as a prioritized asset in the NCIPP immediately elevates a given asset making it an object of national significance under relevant statutes. This action may affect government prioritization of certain on-site risk assessments, administration of regulatory regimes and grant programs, conduct of certain criminal prosecutions, and emergency preparedness and response coordination, among other activities. Exact numbers of nominated assets are not publicly available due to classification requirements, but they number in the thousands. Despite the often significant ramifications of the NCIPP list, the 2013 GAO report found that some state governments were opting not to participate in DHS data calls, citing compliance burdens, technical limitations, and cost-benefit calculations. For example, some states said they lacked expertise to develop scenarios and model complex infrastructure systems with sufficient fidelity to assess likely consequences of failure or disruption. For this reason alone, the NCIPP list cannot be regarded as a current and complete national inventory of critical systems and assets. Furthermore, GAO found that DHS was unable to provide documentation to show that it had complied with the statutory annual reporting requirement in recent years. The inherent complexities of CI inventory and categorization as described above also suggest the presence of persistent difficulties in assuring the completeness, quality, and currency of centralized inventories of CI assets requiring protected status. <2.4. CIR Identification of Systems and Assets> CIR prioritizes adaptive use of critical capabilities to enable continuity of service during periods of stress on critical infrastructure systems. This approach to CI inventory expands the scope of data collection to include any and all assets within a given CI sector that might be useful in emergency planning or contingency situations regardless of their inclusion on a particular list. The data can then be used as needed to identify alternative means of maintaining critical functions and providing essential services if systems and assets ordinarily used to provide these services are compromised. The major CI interagency database using the capabilities approach is known as Homeland Infrastructure Foundation Level Data (HIFLD). Four lead agencies DHS, Department of Defense (DOD), the National Geospatial-Intelligence Agency, and the U.S. Geological Survey compile data gleaned from outreach to public and private sector partners, and make it available to eligible law enforcement, emergency management, and other organizations at all levels of government. HIFLD is comprised of hundreds of data "layers," which encompass nearly every conceivable category of asset relevant to homeland security functions and are curated by designated partner agencies, or "stewards" as they are known. Layers include assets considered critical under any definition, which are essential to supporting lifeline CI functions of energy, communications, transportation systems, and water and wastewater systems. However, HIFLD also includes many asset categories that are not necessarily critical according to any given statutory or official definition of criticality, but may become critical in the context of specific emergencies or CI policy decisions for example, truck driving schools, express shipping facilities, and cruise ship terminals. The Department of Health and Human Services (HHS) used HIFLD during the 2017 hurricane season to locate day care centers in impacted areas. These specific day care centers would likely not be defined as critical under the common statutory definition of CI, because they were not so vital to the functioning of the national public health system as a whole that physical loss of the facilities would be debilitating at the national level. However, knowledge of where these centers were located was essential in allowing HHS to provide a critical public health service ensuring the safety of children in a disaster zone. The HIFLD partnership model is intended to enable relevant agencies at all levels of government and certain private sector entities to leverage a large universe of readily-accessible infrastructure data to address real-world use cases. Unlike the NCIPP list, it does not elevate the status of specific systems and assets in ways that directly support official functions of federal oversight, regulation, and administration. However, it is widely used to inform preparedness and incident management activities of federal and SLTT agencies. The robust development of HIFLD partnerships at all levels of government in recent years contrasts with the declining state participation in NCIPP documented by GAO. Nonetheless, CIP-based approaches to inventory of CI assets remain relevant. For example, provisions of the 2017 National Defense Authorization Act related to national preparedness against electromagnetic threats and hazards required DHS to determine, to the extent practicable, "the critical utilities and national security assets and infrastructure that are at risk.... " Likewise, specific chemical manufacturing facilities posing a high risk for malicious exploitation continue to be subject to DHS inspection and regulatory enforcement under Chemical Facility Anti-Terrorism Standards (CFATS) first authorized by Congress in 2007. These regulations require owner-operators to protect their facilities against cyber and physical threats according to specified standards. <2.5. Issues for Congress> Congress may consider the implications of the policy shift towards system-level resilience for legacy programs, such as the NCIPP asset list. Continuing policy changes made by DHS may further reduce the profile of NCIPP specifically, and asset-protection approaches to CI risk management in general. Stakeholder participation in NCIPP is not cost-neutral, so Congress may consider the frequency of data calls, elimination of any overlapping efforts or duplication, or additional appropriations to support data gathering and analysis. Congress may also consider updates to National Asset Database requirements contained in the 9/11 Commission Act to ensure their continuing relevance and applicability to emerging CISA programs and priorities, and their alignment with the requirements of other congressionally authorized programs, such as the Homeland Security Grant Program. <3. Understanding and Assessing CI Risk> Efforts to identify and prioritize CI systems and assets are part of a larger national effort to systematically understand and assess homeland security risks. In recent decades, Congress has frequently sought authoritative assessments of national level risk to CI. Risk assessments may be used to inform planning and resource allocation decisions related to congressional appropriations, emergency preparedness, regulatory oversight of certain industries, federal grant funding, and voluntary security measures by CI owner-operators. DHS, which is responsible for coordination and oversight of the national infrastructure security effort, defines risk as the "potential for an unwanted outcome resulting from an incident, event, or occurrence, as determined by its likelihood and the associated consequences." DHS officially considers three factors as components of risk: threat, vulnerability, and consequence. DHS defines threat as "a natural or man-made occurrence, individual, entity, or action that has or indicates the potential to harm life, information, operations, the environment, and/or property." Threat assessments usually include data on human adversaries or natural hazards, such as extreme weather events. In the case of the former, threat estimates are based on available information about the identity of threat actors or groups, and their motivations, capabilities, and observed targets. Information on likely timing, methods, and frequency of attacks may also be incorporated if available. In the case of natural hazards, likelihood and severity of event occurrence is usually estimated using databases of past similar events in conjunction with predictive modeling of weather, tectonic activity, and the like. DHS defines vulnerability as the "physical feature or operational attribute that renders an entity, asset, system, network, or geographic area open to exploitation or susceptible to a given hazard." Vulnerability assessments provide information about characteristics of assets or systems that may leave them open to exploitation or damage from a threat or hazard. This may include, for example, software design characteristics or structural weaknesses in a levy system. Assessments may contain recommendations for adoption of resilience measures to mitigate identified vulnerabilities. DHS defines consequence as the "effect of an event, incident, or occurrence." As discussed in the previous section, criticality assessments focus on potential consequences of adverse events that disrupt or destroy infrastructure systems and assets. These assessments use a range of technical and non-technical methods of assessment. Research centers, universities, and industry groups develop and refine many different modeling methodologies to inform infrastructure security investments and activities of federal agencies and SLTT jurisdictions. In other cases, recognized subject-matter experts and responsible officials make non-technical assessments based upon accumulated knowledge and experience. Consequence-based criticality assessments can be used to inform risk assessments when combined with threat and vulnerability assessments. Since 2007, DHS has applied these elements of risk to its various planning, programs, and budget activities as a function: "risk is a function of threat, vulnerability, and consequence," or R=f(TVC). Critics have challenged the usefulness of this formula on several grounds. They assert DHS has not demonstrated the capability to accurately assign probabilities to rare events like terrorist attacks, or otherwise determine precise values for all the terms in the equation. Likewise, the terms of the equation are not necessarily independent from one another. Complex interactions between threat, vulnerability, and predicted consequences make application of this formula to grant applications and other resource allocation decisions related to risk mitigation problematic. DHS recognized in 2018 the need to provide a "complete systemic risk picture" for CI, and has proposed revision or updates to risk assessment approaches described above. Several significant legislative and executive branch initiatives related to CI risk assessment were instituted in 2018-2019 to establish the organizational basis for significant changes. The Cybersecurity and Infrastructure Security Agency Act of 2018 (CISA Act; P.L. 115-278 ) created the eponymous agency (CISA) as an operational component of DHS to take over the functions previously carried out by the National Protection and Programs Directorate (NPPD) as a DHS headquarters organization. The creation of a dedicated agency for infrastructure security elevates CI risk management as an area of policy focus. CISA has established the National Risk Management Center (NRMC) as a "planning, analysis, and collaboration center" to manage national CI risk. According to CISA, the NRMC will adopt an "evolved approach" to CI risk management, which emphasizes cross-sector analysis, and capabilities-oriented approaches to identification and prioritization of CI. <3.1. Issues for Congress> Congress may request information from CISA on its efforts to institutionalize new risk management methods and approaches, and to ensure that these are validated by qualified external reviewers. The National Laboratories, the relevant university-based DHS Centers of Excellence, certain other universities and research centers, industry research groups, and the Homeland Security Advisory Council may provide relevant expertise in infrastructure risk assessment methodology. The Homeland Security Act specifies how the Secretary of Homeland Security may leverage these organizational resources in support of homeland security activities. Congress may choose to exercise its discretion in establishing funding priorities and program guidance for these organizations as appropriate to support national CI security goals. <4. Federal Organization to Address CI> Federal organization to address CI issues has changed significantly in response to evolving threats and the accompanying maturation of the homeland security enterprise. Three distinct periods of development are covered below: the initial policy development and coordination initiatives of the late 1990s; the post-9/11 reorganization of federal government to counter terrorist threats to infrastructure; and the ongoing transition to the all-hazards resilience framework for infrastructure security. <4.1. From the 1990s to the Homeland Security Act> Federal attention to CI policy increased in the 1990s as concerns grew about the potential for malicious exploitation of the expanding interface between computing technologies and physical infrastructure. The Clinton Administration established the Commission on Critical Infrastructure Protection in 1996 with a mandate to produce a report on infrastructures "that constitute the life support systems" of the nation, with a focus on emerging cyber threats. Two years later the Administration issued PDD-63 based in part on the Commission's report, requiring the government "to swiftly eliminate any significant vulnerability" of critical infrastructures to "non-traditional" cyber or physical attack within five years. The organizational directives set forth in PDD-63 focused on increasing interagency coordination by leveraging existing federal entities. The National Coordinator for Security, Infrastructure Protection and Counter-Terrorism, the senior executive position created by the directive, did not report directly to the President, and his duties were confined largely to leadership of an interagency coordination group and service as executive director of a stakeholder advisory group. Congress chartered a blue ribbon commission in 1999 to assess both terrorist threats to national security and early efforts to implement PDD-63. The Gilmore Commission, as it was known, submitted a report to Congress and the White House in December of 2000 titled "Toward a National Strategy for Combating Terrorism." The report found that implementation of PDD-63 was incomplete, and that the nascent CIP enterprise had developed only fitfully since it was signed in 1998. Specifically, it found Information Sharing and Analysis Centers (ISACs) created to facilitate broader risk awareness in government and industry about infrastructure vulnerabilities and threats were "still embryonic." The National Coordinator for Security, Infrastructure Protection, and Counterterrorism had broad authorities that left little time for CIP responsibilities, and lacked program and budget authority. No overall national CIP strategy existed to guide government actions. The National Infrastructure Protection Center (NIPC), responsible for CI threat and vulnerability assessments, warning and response coordination, and law enforcement investigation and response activities, had taken few concrete actions to establish its basic functions under Federal Bureau of Investigation (FBI) auspices. <4.2. Consolidation and the Creation of DHS> The 9/11 attacks had a galvanizing effect on homeland security policy, and, by extension, critical infrastructure protection. Policy initiatives that had previously languished became matters of urgent national concern overnight. Two broad tracks of legislative action emerged. The first favored reestablishing the Office of Homeland Security and the national coordination role under statute, with the addition of certain budget authorities, responsibilities, and oversight requirements, similar in organization and scope to the National Office of Drug Control Policy. This option followed the recommendations of the Gilmore Commission, and would have left much of the existing federal government structure intact, focusing on improved interagency coordination to ensure increased protection against major terrorist attacks. The second legislative track favored comprehensive consolidation of government counterterrorism functions under a single federal agency to be named the National Homeland Security Agency. This track followed the recommendations of a blue ribbon panel chartered by DOD in 1998 to study 21 st century security issues, known as the Hart-Rudman Commission. Key supporters in Congress believed that dispersion of homeland security-related functions across federal departments and agencies whose missions were not primarily security related had left the nation vulnerable to terrorist attacks. They favored consolidation to ensure clearer lines of executive authority, centralization of relevant counterterrorism functions, and better interagency coordination, among other anticipated benefits. The Homeland Security Act of 2002 generally reflected the approach that the Hart-Rudman Commission had advocated for. The Homeland Security Act P.L. 107-296 transferred many infrastructure security functions to DHS functions which previously had been regarded as properly belonging to the various diverse spheres of business, finance, commerce, energy, public health, agriculture, and environmental protection. GAO designated creation of DHS as high risk in 2003 because of the large number of agencies being transferred, and the management challenges this presented to the new department. DHS ultimately incorporated nearly three dozen federal agencies and other entities into four major directorates: Information Analysis and Infrastructure Protection, Science and Technology, Border and Transportation Security, and Emergency Preparedness and Response. Although several long-established agencies such as the Coast Guard retained customary missions not related to homeland security, the new departmental structure prioritized their homeland security related missions, especially counterterrorism. <4.2.1. Policy and Budgetary Implications of Organizational Change> This approach represented a change from what infrastructure policy had previously been. The White House had regarded CIP as only tangentially related to counterterrorism functions of government before 9/11. The Office of Management and Budget (OMB) stated in a report to Congress on federal counterterrorism programs, submitted in August 2001, that "CIP is a separate but related mission." The authors justified this distinction on the grounds that infrastructure risks were diverse, and included many hazards beyond terrorism to include equipment failure, human error, weather and natural disasters, and criminal activity. They wrote, "This year's report focuses on combating terrorism, mentioning CIP efforts only where they directly impact the combating terrorism mission." That direct impact, according to budget estimates in the 2001 report, was negligible. CIP funding that overlapped counterterrorism amounted to less than half of one percent of the total CIP funding of $2.6 billion requested by the White House for the 2002 fiscal year. 9/11 changed the budget picture significantly, as seen in the 2003 OMB report to Congress. Infrastructure programs and activities that had not previously been seen as directly impacting the combating terrorism mission were included in the report, and their relation to counterterrorism efforts highlighted. Requested budget increases for FY2004 reflected the newfound centrality of counterterrorism priorities across federal departments and agencies with infrastructure-related programs. The White House request for FY2004 was $12.1 billion, representing an increase of more than 450% over its final pre-9/11 request, and included 28 federal entities outside the newly-created DHS. The 2003 report did not provide a separate estimate of the proportion of the CIP-related budget that overlapped counterterrorism, as the 2001 report had. This was hardly necessary in any case, because CIP in all its diverse aspects had largely been redefined as a counterterrorism mission. <4.3. Evolution of CI Policy Since the Establishment of DHS> Creation of a new purpose-built department was intended to ensure that CIP and other core homeland security missions were institutionalized as top federal priorities under unified leadership. Under the new consolidation of functions, more than half of the government's pre-9/11 homeland security funding was transferred to a single agency. However, the amalgam of independent agencies transferred to DHS retained significant independence as operational components of the new Department. Likewise, other departments and agencies outside DHS retained many of the infrastructure security functions they had before 9/11. Therefore, despite significant changes, CIP remains a highly distributed enterprise that competes for limited resources with other priorities across the federal government. <4.3.1. Perceived Threat of Terrorism and CIP Priorities> As long as the threat of terrorism continued to be an overriding national priority, counterterrorism continued to be a focal point for critical infrastructure security policy. However, by the time Hurricane Katrina struck the Gulf Coast in August 2005, nearly four years after the 9/11 attacks, public perception of the terrorist threat had already softened considerably. In the immediate aftermath of the attacks, 46% of Americans surveyed by Gallup named terrorism as the most important problem facing the United States. By the second half of 2005, the percentage hovered between 6%-8%. This broad trend has continued, with periodic upticks caused by high-profile incidents. Gallup surveys in early 2019 did not list terrorism as a category of public concern, because it did not garner sufficient responses to be included in results. After Katrina, the well-publicized failure of the extensive levy system designed to protect New Orleans from catastrophic floods further highlighted the vulnerability of critical systems and assets to diverse hazards besides terrorism. Issues of equipment failure, human error, weather and natural disasters, and criminal activity highlighted in the pre-9/11 OMB report (described above) reemerged as national-level policy concerns. <4.3.2. New Strategic Directions> In 2006, the Critical Infrastructure Task Force of the Homeland Security Advisory Council initiated a public policy debate arguing that the government's critical infrastructure policies were focused too much on protecting assets from terrorist attacks and not focused enough on improving the resilience of assets against a variety of threats. According to the Task Force, such a defensive posture was "brittle." Not all possible targets could be protected and adversaries could find ways to defeat defenses, still leaving the nation having to deal with the consequences. In 2008, as part of its oversight function, the House Committee on Homeland Security held a series of hearings addressing resilience. At those hearings, DHS officials argued that government policies and actions did encourage resilience as well as protection. Even so, subsequent policy documents made greater reference to resilience. The 2010 Quadrennial Homeland Security Review (QHSR), the first top-level DHS strategic review submitted to Congress under Title VII of the Homeland Security Act, highlighted the diversity of missions and stakeholders in what had become an expansive enterprise. The QHSR stated that, "while the importance of preventing another terrorist attack in the United States remains undiminished, much has been learned since September 11, 2001, about the range of challenges we face." Examples of threats and hazards included natural disasters (specifically, Hurricane Katrina), widespread international cyberattacks, the expansion of transnational criminal activities, and contagious diseases. The QHSR noted the leadership role of DHS in managing risks to critical infrastructure, as well as other homeland security missions related to immigration, border security, cybersecurity, and disaster response. However, it presented homeland security as a decentralized enterprise shared by diverse stakeholders in the public and private sector. "[A]s a distributed system," the report read, "no single entity is responsible for or directly manages all aspects of the enterprise." In 2013, PPD-21 superseded HSPD-7, which had provided authoritative policy guidance for federal infrastructure protection for a decade. PPD-21, which remains in force, informed development of the 2013 NIPP. It placed less emphasis protection of physical infrastructure assets against terrorist threats than HSPD-7 did. Rather, it emphasized all-hazards CI resilience as part of a broader national disaster preparedness effort. "Critical infrastructure must be secure and able to withstand and rapidly recover from all hazards," it stated. "Achieving this will require integration with the national preparedness system across prevention, protection, mitigation, response, and recovery." The 2014 QHSR further expanded the boundaries of critical infrastructure security beyond terrorism-related threats to include factors such as aging and neglect of critical systems and assets recasting once-ordinary issues of investment, maintenance, and utility service provision as homeland security concerns. DHS did not submit a QHSR to Congress in 2017 as required by the Homeland Security Act. This means there is no current departmental-level statement that specifies DHS strategic direction and priorities for infrastructure security or other homeland security goals. The boundaries of responsibility for critical infrastructure security as well as the definition of critical infrastructure itself continue to be negotiated among Congress, executive branch departments and agencies, SLTT jurisdictions, and a diverse array of private-sector stakeholders. For example, in 2002 Congress directed the U.S. Department of Agriculture (USDA) to transfer the Plum Island Animal Disease Center to DHS under the Homeland Security Act ( P.L. 107-296 ), based partly on concerns that terrorists might target the nation's food and agriculture sector with contagious pathogens. However, in 2018 Congress authorized transfer of a replacement facility and its functions back to USDA from the DHS Science and Technology Directorate under the Consolidated Appropriations Act of 2018 ( P.L. 115-141 ), as proposed by the White House in its FY2019 budget request. After a relatively brief period of extensive consolidation in the early 2000s, critical infrastructure security in the federal government has evolved into a distributed enterprise loosely structured by institutionalized partnerships and policy frameworks that increasingly emphasize an all-hazards approach to critical infrastructure security. <4.4. Issues for Congress> Congress may consider which aspects of critical infrastructure security properly reside within the homeland security enterprise, and which relate more closely to government responsibilities in areas of commerce, trade, and public utilities regulation. The distributed enterprise model of critical infrastructure security based on an all-hazards approach potentially elides boundaries between homeland security and other dimensions of infrastructure policy. Likewise, the definition of homeland security itself continues to evolve beyond its counterterrorism roots. DHS has not submitted a top-level strategy to Congress since the 2014 QHSR. (As noted above, a quadrennial review was due to Congress no later than December 31, 2017.) A more current strategy or other high-level policy statement might serve to more clearly define current Departmental goals, the parameters of its activities related to critical infrastructure security, and how these relate to activities of interagency partners with infrastructure-related responsibilities. Congressional interest in homeland security strategy was indicated by the Quadrennial Homeland Security Review Technical Corrections Act of 2019 ( H.R. 1892 ), which passed the House of Representatives unanimously and was referred to the Senate Committee on Homeland Security and Governmental Affairs on May 15, 2019. The proposed act would require DHS to consult with relevant advisory committees when developing its capstone strategy, and to more directly link the strategy with budgeting, program management, and prioritization, among other provisions, including new deadlines linked to the budget cycle rather than the end of the calendar year. Congress has periodically acted to define organizational relationships within DHS. The Department was originally formed with four main directorates, each of which corresponded with a primary homeland security mission. The centralized directorate structure under headquarters management has given way to a more federated structure that emphasizes the operational role and organizational identity of its operational components. Most recently, the National Protection and Programs Directorate, which administered many of the Department's infrastructure partnership programs, was made an agency within DHS through the 2018 CISA Act. Congress may consider the nature of intra-Departmental organization and relationships within DHS as appropriate, and what degree of centralization or federation best supports the critical infrastructure security mission. <5. The Role of the Private Sector> Although much of the nation's CI is privately owned, the public may be put at risk if these privately owned critical systems fail. Management of CI risk within a complex ownership and regulatory environment presents enduring policy challenges. Legislators and other policymakers have generally favored variations of the federated partnership model first elaborated in PDD-63, which relies on voluntary collaboration between the public and private sectors (as opposed to regulatory mandates) to guide investment in critical infrastructure security. Under this model, CI owner-operators, not the government, have ultimate responsibility for assessing and mitigating risk at the enterprise level. At the same time, Congress has directed executive branch agencies to assess and manage risk at the national level. Infrastructure risk management is structured under this framework as a collaborative endeavor between the public and private sectors reliant on incentives, information sharing, and voluntary investments in security. Investments in critical infrastructure security in the private sector are largely the purview of private individuals or entities, but many of the most serious risks are borne collectively by the public and larger business community. Under the current partnership structure, government and private-sector representatives collaboratively ascertain what individual enterprise-level investments in security and resilience are necessary to manage CI risk at the societal level. While there is little question that businesses, government, and society have a "clear and shared interest" in CI resilience, it is often difficult at the policy level to work out exactly who should bear responsibility for up-front costs of investment, and what mandatory requirements, regulatory oversight measures, and cost-recovery mechanisms might be necessary in a given case. <5.1. Incentives for Private Sector Participation> By and large, the federal government relies upon the private sector to voluntarily develop CI risk management strategies and mitigation investments to support national resilience goals. The 2013 NIPP states that, "Government can succeed in encouraging industry to go beyond what is in their commercial interest and invest in the national interest through active engagement in partnership efforts." In practice, government efforts to encourage voluntary investments in infrastructure resilience through public-private partnerships have varied in extent and effectiveness, particularly when risks in question are diffuse and involve low-probability/high-consequence events such as major terrorist attacks or earthquakes. The main incentives for industry participation are threefold: improved access to risk information from government sources on security threats and hazards; the value of analyses of national-level risks that exceed the capabilities of most private companies to provide for themselves; and the opportunity to engage with government to influence CI policy. Congress acted to reduce barriers to information sharing between the public and private sectors through the Critical Infrastructure Information Act of 2002, which is designed to ensure confidentiality of industry information shared with DHS in good faith under the Protected Critical Infrastructure Information (PCII) program. Likewise, a number of public-private coordination councils established under the authority of Presidential directives provide a forum for policy discussions and deliberation. A 2019 report by the Organization for Economic Cooperation and Development (OECD) found that voluntary information sharing and collaboration partnerships in advanced industrialized economies "[do not] necessarily guarantee a strong enough incentive structure to ensure that sufficient investments are effectively made to attain expected resilience targets." Most developed countries augment voluntary policy instruments with regulatory mandates to spur investments in resilience in certain sectors. Regulatory mandates tend to be favored for CI sectors or sub-sectors where incident impacts are potentially catastrophic and elicit broad public concern, such as nuclear meltdowns, gas pipeline explosions, airliner crashes, or terrorist theft of chemicals for use in explosives. According to an academic survey of public-private partnerships for CI security, collaborative approaches more broadly apply "as risks become more privatized" and "harms are more divisible and isolated with respect to their impacts." <5.2. Federal Regulation> Policymakers have generally sought to limit the regulatory reach of government within CI security enterprise. For example, PDD-63 stated that "we should, to the extent feasible, seek to avoid outcomes that increase government regulation or expand unfunded government mandates to the private sector." The Homeland Security Act created an organization DHS with wide-ranging responsibilities, but relatively narrow regulatory mandates. The Transportation Security Administration has (but does not exercise) regulatory oversight over oil and gas pipeline security. The Coast Guard regulates certain aspects of port security a mission that long predates the transfer of the service to DHS under the Homeland Security Act. Finally, CISA directly regulates certain chemical facilities under the Chemical Facilities Anti-Terrorism Standards program to prevent terrorist exploitation of the chemical industry. Many other federal, state, and local agencies exercise regulatory authorities that are related to infrastructure security, but are not necessarily specific to homeland security. For instance, the Nuclear Regulatory Commission (NRC) regulates civilian nuclear facilities and enforces extensive safety and reporting requirements. Many of these requirements are traceable to the partial reactor meltdown at Three Mile Island in 1979, and as such are treated as industrial safety and reliability issues in most cases. Many of the aspects of infrastructure security most relevant to homeland security, such as facility protection against deliberate attacks, are overseen by the NRC, not DHS. Agencies with dual responsibilities for regulation and partnership typically separate the two roles a lesson learned from early experience with NIPC, which was not clearly separated from the law-enforcement functions of the FBI, and thus had difficulty eliciting participation from private sector entities in its early stages. (See " From the 1990s to the Homeland Security Act " section). The preponderance of DHS infrastructure security programs focus on enhancing voluntary collaboration with infrastructure security partners through development of information sharing, analysis, training, and coordination capabilities, as well as voluntary on-site assessments in certain cases. <5.3. The Voluntary CI Partnership Structure> Current CI partnership structures are organized under the authority of PPD-21. The directive is implemented through sector and cross-sector partnership structures described in the 2013 NIPP. The 2013 NIPP outlined an infrastructure protection effort that was less centralized and less focused on critical asset protection than previous iterations of the NIPP, instead emphasizing distributed responsibility among an expansive group of stakeholders committed to common national resilience goals. NIPP partnerships at the federal level are administered by CISA in partnership with other DHS components, and other federal departments and agencies. <5.3.1. Government Coordinating Councils and Sector-Specific Agencies> Each of the 16 CI sectors under the NIPP framework has its own Government Coordinating Council (GCC) and Sector Coordinating Council (SCC). GCCs are made up of federal and SLTT agencies, and, according to the NIPP, enable "interagency, intergovernmental, and cross-jurisdictional coordination" on infrastructure issues of common concern. Each GCC is led by a designated federal agency with sector-relevant responsibilities and expertise, known as a Sector-Specific Agency (SSA). DHS leads or co-leads 10 of the 16 GCCs as the SSA. Other SSAs include the Environmental Protection Agency, the Government Services Agency, and the departments of Agriculture, Defense, Energy, Health and Human Services, Transportation, and Treasury. (See Table 1 for description of CI sectors and SSAs, and Appendix C for visualization of CI partnership structure). SSAs leverage various NIPP partnership structures to formulate sector-specific infrastructure protection plans that support the overall goals of the NIPP, taking unique sector characteristics and requirements into account. The sector-specific plans contain broad analyses of sector risks, interdependencies with other CI sectors, and stakeholders and partners, which together are used to develop sector-specific resilience goals and measures of effectiveness. <5.3.2. Sector Coordinating Councils> Each SCC is made up of private-sector trade associations and individual CI owner-operators. SCCs are self-organized and self-governed, but must be recognized by the corresponding GCC as "appropriately representative" of the sector. They have an advisory relationship with the federal government, and also have coordination and information-sharing functions between government and private-sector stakeholders. SCCs may also support independently organized Information Sharing and Analysis Centers (ISACs) specific to their sector to facilitate information sharing among stakeholders. The National Council of ISACs currently lists 24 member organizations. ISACs maintain operations centers, deploy representatives to the National Cybersecurity and Communications Integration Center (NCCIC) and National Infrastructure Coordinating Center (NICC), conduct preparedness exercises, and prepare a range of informational products for their members. Reliable data on the scale and scope of private-sector participation in SCC activities across CI sectors is not available, but it varies widely depending on sector characteristics. <5.3.3. Cross-Sector Councils> Four cross-sector councils serve to represent key stakeholder groups whose broad interests are not specific to one sector. The State, Local, Territorial, and Tribal Government Coordinating Council (SLTTGCC) is intended to enhance infrastructure resilience partnerships between SLTT jurisdictions, and to represent their common governance-related interests in GCC and SCC deliberations. The Critical Infrastructure Cross-Sector Council consists of the chairs and vice-chairs of the SCCs, and coordinates cross-sector issues among private-sector CI stakeholders. The Regional Consortium Coordinating Council represents regional CI resilience coalitions and encourages sharing of best practices among them. The Federal Senior Leadership Council (FSLC) is composed of senior officials from federal departments and agencies responsible for implementation of the NIPP, and is chaired by the CISA Director or his designee. It exercises leadership over the other cross-sector councils. According to its charter, the FSLC forges policy consensus among federal agencies on CI risk management strategies, coordinates "issue management resolution" among the other cross-sector councils, develops coordinated resource requests, and advances collaboration with international partners, among other activities. <5.3.4. Advisory Councils> The various NIPP partnership councils may organize certain deliberations under the auspices of the Critical Infrastructure Partnership Advisory Council (CIPAC), which was first established in 2006. The CIPAC Charter has been renewed several times since then, most recently in 2018. Under certain circumstances, CIPAC provides NIPP coordinating councils and member organizations legal exemption from Federal Advisory Committee Act (FACA) provisions for open meetings, chartering, public involvement, and reporting in order to facilitate discussion between CI stakeholders on sensitive topics relating to infrastructure security. CIPAC engages its government and private-sector stakeholders through the NIPP partnership structure to develop consensus policy advice and recommendations for DHS and other relevant agencies. The Homeland Security Advisory Committee (HSAC) provides advice and recommendations to the Secretary of Homeland Security on matters related to homeland security. Members are appointed by the Secretary, and include leaders from state and local government, first responder communities, the private sector, and academia. The Secretary may also establish subcommittees to focus attention on specific homeland security issues as needed. CI-relevant subcommittees have focused on cybersecurity and emerging technologies. The National Infrastructure Advisory Council is a committee made up of senior industry leaders who advise the President and SSAs on CI policy. It is not formally part of the NIPP partnership structure, but plays an intermediary role between the various coordination councils, the Secretary of Homeland Security, and the President by providing a mechanism for consultation between public and private sector representatives at the highest levels of government. First established by executive order on October 16, 2001, it is tasked with monitoring "the development and operations of critical infrastructure sector coordinating councils and their information sharing mechanisms" and encouraging private industry to improve risk management practices, among other activities. This partnership structure is more flat than hierarchical, and is realized in multiple formats to include symposia, research collaborations, working groups, policy deliberations, and emergency preparedness and response activities. By design, participation in these activities often crosses organizational lines and includes governmental and non-governmental stakeholders. Increasingly, partnership activities include representatives from multiple CI sectors, due to recognition of the interdependencies inherent in complex CI systems and the general policy trend favoring system resilience over asset protection. <5.3.5. Operational Elements of the Partnership System> The distributed partnership structure has several operational elements maintained by DHS that provide centralized hubs for various non-regulatory coordination and information sharing functions. The National Infrastructure Coordinating Center (NICC) collects, analyzes, and shares threat or other operational information throughout the critical infrastructure partnership network on a real-time basis. It also conducts training and exercises and provides decision support to private sector partners. It is part of the DHS National Operations Center, which serves as the principal operations center for the Department of Homeland Security. Additionally, the National Cybersecurity and Communications Integration Center (NCCIC) serves as a monitoring and incident response center for incidents affecting cybersecurity and communications networks, and also performs several related analytic functions. CISA administers both the NICC and the NCCIC. <5.4. Assessing the Effectiveness of This Approach> The underlying policy premise of the current partnership system is that removing or mitigating disincentives to information sharing and increasing trust between the public and private sector will lead to greater industry willingness to invest in system-level resilience. Three related questions may be considered: To what extent are private sector owner-operators actually embracing collaboration and information-sharing initiatives offered by federal departments and agencies under the current partnership system? Is private-sector participation in these initiatives incentivizing effective investments (beyond those made for business reasons) in programs to reduce overall public risk? What legislative remedies are appropriate in cases where broader and more effective investments in risk reduction are necessary? Given the diversity and breadth of the critical infrastructure enterprise as currently defined, the answers to these questions vary across sectors. Rigorous empirical analyses that might shed light on the extent and effectiveness of collaboration within the voluntary framework are scarce. A 2013 study found that fewer than half of the 16 CI sectors had strong "communities of interest" that actively engaged in CIP issues through NIPP partnership structures. CI communities of interest were strongest in those sectors with strong trade or professional associations unified by relatively specific threats posing individual risk to member companies. A 2011 study found that the most important factor in private-sector risk mitigation investment is a company's own cost-benefit analysis; and that many CI owner-operators believed government will (or should) cover externalized social costs incurred by loss or disruption of company facilities due to a terrorist attack. GAO testimony provided to Congress in 2014 asserted that DHS partnership efforts faced challenges, and identified three key factors that impact effectiveness of the partnership approach: recognizing and addressing barriers to sharing information, sharing the results of DHS assessments with industry and other stakeholders, and measuring and evaluating the performance of DHS's partnership efforts. GAO found that DHS did not systematically collect data on reasons for industry participation or non-participation in security surveys and vulnerability surveys, and whether or not security improvements were made as a result. GAO asserted that DHS cannot adequately evaluate program effectiveness absent these measures. Although DHS concurred and agreed to corrective measures, GAO reported that it had not verified DHS's progress in implementing them. Overall, the picture that emerges from this testimony and other sources is one of extensive partnership activity across multiple CI sectors, but relatively few measures to systematically assess effectiveness of this activity in meeting CI resilience goals. <5.5. Issues for Congress> Congress may explore the progress DHS has made in implementing GAO recommended data gathering and analysis initiatives. Availability of data and rigorous analyses may enable Congress to better ascertain the effectiveness of the partnership system in incentivizing industry information sharing and investments in risk reduction. CISA and its predecessor organizations have not been able to provide reliable data indicating the reach and effectiveness of public-partnership programs in incentivizing bidirectional information sharing and efficient private investments in national level (as opposed to enterprise level) resilience. (The volume and quality of industry information shared with DHS through the PCII program may be one of several useful indicators of program effectiveness.) Congress may address this gap, such as through introduction of appropriate reporting requirements. Congress may also consider enhancement of regulatory authorities of federal departments and agencies as appropriate to meet national CI resilience goals in cases where voluntary measures do not result in effective industry action to mitigate risk, or emergent threats make immediate action necessary. One recent example is the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), which expands the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS) to prevent foreign adversaries from exploiting the legitimate trade system to gain control of CI assets or related information. Likewise, Congress may exercise oversight in cases where regulatory authorities related to infrastructure security exist but are not exercised, as in the case of TSA described above. CISA plans to maintain the current sector specific public-private partnership structures as the preferred vehicle for information sharing and policy coordination. Congress may consider whether adjustment or replacement of these structures is needed to streamline and better align partnership efforts with the emerging federal risk management approach, which emphasizes inter-sectoral analysis and resilience rather than sector-specific asset identification and protection. Appendix A. National Critical Functions Appendix B. Key Terms Appendix C. Sector and Cross-Sector Coordinating Structures

Protection of the nation's critical infrastructure (CI) against asymmetric physical or cyber threats emerged in the late 1990s as a policy concern, which was then further amplified by the 9/11 terrorist attacks. Congress created the Department of Homeland Security (DHS) in the wake of the attacks, and directed the new Department to identify, prioritize, and protect systems and assets critical to national security, the economy, and public health or safety. Identification of CI assets was, and remains, a complex and resource-intensive task. Many governmental and non-governmental stakeholders increasingly advocate for a fundamentally different approach to critical infrastructure security, maintaining that criticality is not a fixed characteristic of given infrastructure assets. Rather, they argue, criticality should be understood in the context of ensuring system-wide resilience of American government, society, and economic life against the full range of natural and manmade hazards. Congress further elevated resilience as a priority when it passed the Cybersecurity and Infrastructure Security Agency (CISA) Act into law in late 2018. As the name indicates, CISA was created to lead the national cybersecurity and infrastructure security effort as an operational component of DHS. In April 2019, leadership of the new agency identified a set of 56 National Critical Functions (NCF) (" Appendix A : National Critical Functions") which it plans to use as the basis of a resilience-based CI risk management approach. However, implementation will rely to a large degree on repurposed legacy programs. Thus, CI policy is currently at an inflection point that raises several potentially pressing issues for Congress: Scope of federal CI policy: The CI security enterprise has expanded significantly from its early focus on protecting systems and assets "essential to the minimum operations of the economy and government" against deliberate attack. Congress may consider narrowing the scope of CI policy. The legacy policy framework: National CI policy retains many legacy mandates and programs designed to support asset protection despite a long-term policy shift towards an all-hazards resilience framework. Congress may consider revising existing asset identification and reporting requirements statutorily linked to federal homeland security grant award processes. Validity of new risk management methods: Congress may assess the potential advantages and drawbacks of the resilience framework, and NCF as the basis for national-level infrastructure risk assessments and investment prioritization. In the past, Congress has called for external validation of DHS risk management methods and may wish to do so in the present case given its comparative novelty. Roles and responsibilities of federal agencies: The Homeland Security Act of 2002 created DHS and consolidated many of the federal government's CI security functions in a large-scale reorganization of government and its mission that is still ongoing. Congress may consider transfer of certain infrastructure security related functions to or from DHS as appropriate. Scope of regulation: Congress may consider legislating compulsory compliance with security standards in cases where voluntary private-sector measures are deemed insufficient to protect national security, the economy, and public health or safety. Appropriateness of existing public-private partnership structures: CISA plans to maintain the current sector specific public-private partnership structures as the preferred vehicle for information sharing and policy coordination. Congress may consider whether adjustment or replacement of these structures is needed to better align partnership efforts with the emerging federal emphasis on system-level resilience. Effectiveness of public-private partnerships: CISA and its predecessor organizations have not been able to provide reliable data indicating the reach and effectiveness of public-partnership programs in incentivizing efficient private investments in national level (as opposed to enterprise level) resilience. Congress may consider whether new or revised reporting requirements are necessary.

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<1. Introduction> As the technological needs of an increasingly mobile society increase, the choices in how and when we use energy are growing. An increase in the power requirements for smaller and smaller devices has resulted in new technologies improving the density of energy storage in these devices. With these improvements has also come a wider array of applications for power storage on the electric grid and in electric vehicles (EVs). Energy storage is being increasingly investigated for its potential to provide significant benefits to the interstate transmission grid, and perhaps to local distribution systems and thus to retail electric customers. Interest in reducing greenhouse gas (GHG) emissions in the energy sector to mitigate climate change risks has increased the focus on renewable sources of electricity. While energy storage is seen as an enabling technology with the potential to reduce the intermittency and variability of wind and solar resources, energy storage resources would have to be charged by low or zero emission or renewable sources of electricity to ensure a reduction of greenhouse gases. This report will describe technologies for storing electric power, with an emphasis on battery systems, focusing on the readiness of the technologies for various storage applications for electric power services to the electric grid. Congress has held hearings in the 116 th session on a number of topics including climate change mitigation, electric power system resilience, incorporation of more renewable energy into the grid all of which have considered the opportunities for increasing energy storage. As of September 2019, more than 40 bills have been introduced in the 116 th session addressing various aspects energy storage technologies and research. Given the many uses for energy storage both current and projected this report will discuss some of the main drivers for energy storage. This report will also discuss the challenges for energy storage and potential options for Congress to further explore, if it chooses to advance the technologies to meet societal or other goals. <2. Why the Need for Grid Electricity Storage> Electricity, as it is currently produced, is largely a commodity resource that is interchangeable with electricity from any other source. Since opportunities for the large-scale storage of electricity are few, and electricity is transmitted almost instantaneously, it is essentially a just-in-time resource, produced as needed to meet the demand of electricity-consuming customers. The electric power system is largely designed to support electric system reliability, and sized to ensure that electricity generation resources will be available to meet the maximum load demand the system is expected to see. Given that most electric power is produced in bulk, at large power plants located at some distance from where the power is consumed, keeping power generation in balance with demand is an important function of system managers. Regional balancing authorities seek to ensure electricity supply is in balance with the demand for power. The normal frequency of the U.S. grid is 60 Hertz (i.e., cycles per second), and operational issues can arise with even with a small fluctuation of as little as 1% above or below this parameter. If the supply of power is less than demand (causing the frequency of power transmission to decrease) or if the supply of power is greater than demand (causing the frequency of transmitted power to increase), then damage to equipment or system infrastructure can result. Some regions of the United States have their maximum demand for electricity in the summer months (driven by air-conditioning loads), and some regions have a maximum demand for electricity in winter months (to meet residential and building heating purposes). Given that this variation in use can lead to some of the larger, less flexible generation resources being underutilized (especially during the night or even seasonally), some observers argue that the electric grid is overbuilt. Additionally, some have suggested that energy storage may be able to help reduce the need for large power generation projects in the future, and provide support for less costly renewable energy systems. Figure 1 is illustrative of the daily cycle of demand for electricity (i.e., the load), and how generation resources may be used to meet that demand. The figure also illustrates how "frequency regulation," a service currently provided by some generators, is used to reconcile the momentary differences caused by the fluctuations between generation and demand. The thicker gray line in the figure shows a smoother system response after damping of the fluctuations (shown by the undulating yellow line) with frequency regulation. Peaking generation is power generation normally operated only during the hours of highest daily, weekly, or seasonal loads. Intermediate load generation is normally operated on a daily cycle to serve on-peak loads during the day but not off-peak loads during nights and weekends. Baseload generation serves the minimum level of electric power demand of a utility, region, or utility customer delivered or required over a given period of time at a steady rate. Renewables generation (in this instance) represents variable electric generation primarily from intermittent wind or solar photovoltaic sources whose peak generation does not necessarily coincide with electricity system periods of peak demand. Energy storage is one way to decrease the need for power generation on the grid at peak demand periods. But storage is not the only means of meeting these goals. Other means of potentially reducing the generation of electricity from large, central station power plants include: End-use efficiency (also called energy conservation) requires the reduction of consumption through improved efficiency. However, upgrading the technologies used by electric power customers to utilize equipment and appliances that are more efficient may be required to achieve end-use efficiency goals. End-user demand reduction (or demand response) is a process by which customers respond to a price signal from a utility or other power provider in return for incentive payments. While most demand response programs are focused on large industrial users with the flexibility to reduce or move consumption to other times of lower demand, commercial, apartment and other residential customers may be signed to aggregation agreements to gain the scale needed for participation in such programs. Distributed generation utilizing renewable sources such as wind, and tidal energy can potentially accomplish similar goals. Smaller gas turbines, if there are no local air quality or other environmental concerns, can also be used to meet peak demand. The capacity for storing large amounts of energy on the electric grid is presently limited. In one study, curtailing excess energy was reportedly seen as a possibly cost-effective alternative to deploying expensive energy storage options (at higher levels of solar photovoltaic (PV) penetration). However, with improvements in energy storage technologies, and regulatory regimes encouraging economic deployment of energy storage, the applications and opportunities to use storage on the grid are growing. <2.1. Energy Storage and the Arbitrage Opportunity> The ability to store energy presents an opportunity to add flexibility in how electricity is produced and used, and provides an alternative to address peak loads on the system using renewable electricity stored at low-demand times. An arbitrage opportunity also exists under some circumstances to take advantage of power storage in regulatory regimes that attach value to such opportunities. Under such a scenario, electricity can be purchased from the grid and stored during times of lower demand. An energy storage system can be charged at this time so that the stored energy can be used or sold at another time when the price or costs are higher. Alternatively, energy storage can provide the opportunity to store excess energy production that may otherwise be curtailed from renewable sources such as wind or solar PV. However, the number opportunities for the storage system to perform efficiently in an arbitrage role can be limited by the technology. Additionally, opportunities for arbitrage may be limited by the number of storage participants potentially providing the service thus possibly reducing the sell-back price. <3. Energy Storage and Electricity Storage> Energy storage can take many forms, and can involve the storage of electricity directly or as potential (or kinetic) energy that can be used to generate electricity when it is needed. Electricity can also be stored in the chemical systems of batteries, both in bulk scale and in modular forms as summarized below. Storage systems generally replenish their energy using electricity generated at low-demand (off-peak) times. Storage of energy is measured both in terms of the maximum rated power capacity (for storage charge/discharge) measured in megawatts (MW) or in terms of energy storage capacity over time, measured in megawatt-hours (MWh). Hydropower pumped storage (HPS), compressed air energy storage (CAES), and cryogenic energy storage are examples of technologies that store potential (or kinetic) energy. These examples of the mostly large, monolithic systems used for energy storage today do not store electricity directly, but provide a means of producing electricity by use of a stored medium (e.g., water or air). The gradual release of the stored medium physically turns the shaft of a turbine connected to an electric generator, converting potential energy from the stored medium to electricity. Other opportunities for energy storage from the production of hydrogen gas are being explored, but are not a focus of this report. Batteries are chemical systems that produce electricity when the component parts and chemicals combine to create a flow of electrons, thus creating an electrical current. The potential to produce an electrical charge can be stored directly in large chemical systems (e.g. flow batteries) or in modular battery systems composed of smaller cells (such as lead-acid or lithium ion batteries). The smaller cells of modular battery systems do not store large amounts of electricity individually, but can be aggregated in battery systems to provide larger amounts of power. The major potential energy and battery storage technologies for energy storage discussed in this report are summarized below: Hydropower pumped storage : Water stored in an upper reservoir is released to a lower reservoir through a turbine to generate electricity. Water is pumped in reverse at times of low demand to store energy. HPS is the most widely-used technology for storing energy on the electric grid. Compressed air energy storage : Compressed air is heated and expanded in a turbine to generate electricity. Compressing air causes it to cool, and it is stored in a tank or cavern using off-peak electricity to store energy. Liquid air (cryogenic) energy storage : Ambient air cooled to a liquid state is re-gasified and injected into a turbine when used to generate electricity. Ambient air is cooled and compressed to a liquid state to restore the system, and is stored in insulated tanks. Flywheels : A cylinder rotating around a core in a vacuum at high speeds stores kinetic energy. Slowing the cylinder releases energy to turn a generator to produce electricity, and speeding up the cylinder stores energy. Flow Batteries : Liquid electrolytes with positive and negative charges are stored in large, separate tanks. Electric charge is drawn from the electrolytes by electrodes as they are pumped through a central tank where the liquids are separated by a membrane based on charge, and the spent liquids returned to separate tanks. Lead-acid batteries : One of the oldest and most used methods of energy storage uses connected compartments (cells) made of a lead alloy and lead, immersed in a water-sulfuric acid electrolyte, which combine to generate an electric charge. Lithium ion (Li Ion) batteries : Movement of lithium ions from the positive electrode (cathode) to the negative electrode (anode) through an electrolyte (commonly a lithium salt solution) creates an electric charge. Li Ion batteries have a cathode made of lithium-cobalt oxide, and an anode made of carbon. When batteries are recharged, the lithium ions move in reverse. Nickel Cadmium (NiCad), Nickel-metal Hydride (NiMH), Sodium S ulfur (NaS) , Sodium-Nickel C hloride (NaNiCl 2 ) batteries : Different chemical systems can be used for battery storage. Commonly, the movement of charged particles from cathode to anode through an electrolyte generates an electric current. These technologies are described in more detail in Appendix A of this report. <3.1. Summary of Grid Energy Storage Opportunities> Energy storage can help maintain the balance between supply and demand on an electricity system, and assist with system reliability by providing back-up power (for several hours at a time) during electricity outages. Since the storage of potential energy in larger, monolithic systems (e.g., HPS) is well established on the grid, this report focuses on the relatively new use of modular batteries for grid level storage. Battery storage technologies can also supply energy to the grid, and can also provide many of the ancillary services necessary to ensure the grid's stability. These services are described in more detail in Appendix B of this report. Currently, however, the best value of grid energy storage for energy storage project developers is likely to come from supplying energy to the grid, and additionally providing the ancillary services best-suited to the storage technology, when available (as the storage resource cannot do both simultaneously). Once stored energy is sent to the grid, how quickly the energy storage technology can recharge may influence when and how often recharging of the system is accomplished. When recharging, the energy storage system is a load on the grid, and is not a generation resource. The timing of the charging and recharging cycle during a day can affect the value proposition of storage, since it is unlikely that recharging would be scheduled at times of peak demand. The ability of an energy storage system to provide several services to the grid may also bear on the economics of a system. Figure 2 presents a current view of the opportunities for energy storage technologies to provide capacity and energy for the grid and various ancillary services. It provides a general summary and comparison of energy storage technologies for applications over various timescales for electric grid services. Larger, more monolithic bulk power energy storage projects (such as HPS or CAES) can supply electric power in a discharge time over tens of hours. Battery systems and flywheel energy storage are sometimes used for uninterruptible power supply (UPS) in backup power applications. UPS applications solely for energy storage typically have enough energy to operate for up to several minutes. UPS systems may also incorporate generation (e.g., diesel generation) which can provide power over an extended period. Energy storage can also provide a power quality service by storing power and quickly discharging energy to smooth out variations in voltage supply or frequency, or service interruptions from a fraction of a second to several minutes, which could negatively affect a customer's manufacturing process or operations. Energy storage for transmission and distribution (T&D) systems can support the grid in several ways. For example, a T&D upgrade project can be deferred by using modular storage to provide electric energy to customers until a permanent upgrade can be made. Another example may allow a utility to "avoid making a potentially unneeded investment in more T&D capacity by using transportable, modular storage to serve peak demand for one or two years until there is more certainty." Energy storage can also potentially help to alleviate the bottlenecks of transmission congestion by providing a non-transmission alternative, and thus provide power locally at times of high demand. By using energy stored in off-peak hours, customers of utilities can potentially shift their energy use from one time period to another. Alternatively, utilities or energy storage providers can store energy in periods of low demand to serve loads in times of higher demand. Supercapacitors may be used in energy storage applications undergoing frequent charge and discharge cycles at high current and a very short duration. Similarly, superconducting magnetic energy storage (SMES) has rapid discharge capabilities that have been implemented in some instances for industrial pulsed-power, and system-stability applications on electric power systems. However, the components for SMES limit its uses, as the cost of high-temperature superconducting wires would make grid-scale SMES systems prohibitively expensive." SMES has long been pursued as a large-scale technology because it offers instantaneous energy discharge and a theoretically infinite number of recharge cycles. <3.2. Energy Storage Considerations> Matching an energy storage technology to the opportunity is key, and considerations will include: The application . For example, ancillary services in electricity markets provide an opportunity for storage by providing "services necessary to support the transmission of electric power from seller to purchaser, given the obligations of control areas and transmitting utilities within those control areas, to maintain reliable operations of the interconnected transmission system." The duration of the application . For example, the duration may be relatively short (e.g., 30 minutes) requiring the quick provision of a large amount of power in applications such as frequency regulation. Alternatively, the duration may be relatively long (perhaps two hours or more) requiring energy to be provided such as for peak load shaving. The rates of charge . Storage resources used to provide power must be recharged. For potential energy resources, the resource used must be restored so it can be used again to provide electric power. <4. Structure of Modular Batteries> All rechargeable batteries have a similar physical structure that allows for the flow of electricity from an outside source to recharge the chemical system once depleted. As shown in Figure 4 , the cathode is the positive terminal, and the anode is the negative terminal. The anode of a device is the side where current flows in, while the cathode is where current flows out. A conductive electrolyte allows the flow of electrons between the anode and the cathode. When a battery is discharged, electrons are released from the negative end and captured by the positive end. Cells can be built by stacking parallel plates (i.e., prismatic or box-shaped cells) or from single long strips rolled onto themselves into a cylinder or flattened cylinder (i.e., cylindrical or wound cells). They have the same chemistry with the main difference residing in their construction and ability to dissipate internally generated heat. Wound cells, and small cylindrical cells in particular, are cheaper to manufacture than the larger prismatic ones for a given capacity. They also have a higher volumetric energy density, but their round cross-section prevents from packing them together without gaps and this advantage does not extend to the assembled battery. The gaps between the cells can present an advantage for cooling when thermal management is necessary due to very high currents.... Mechanically, cylindrical cells are very robust and very resilient to mechanical damage from shocks and vibrations, which is good in electric vehicles. <4.1. Battery Characteristics> The evaluation of the performance and suitability of modular batteries for an application is typically based on several key characteristics, including: Specific Energy the capacity a battery can hold (defined in terms of Watt-hours per kilogram (Wh/kg)). For example, specific energy can determine the battery weight required to achieve range of a vehicle given its energy consumption. Specific Power the ability to deliver power (defined in terms of Watts per kilogram (W/kg)). For example, specific power can determine the battery weight required to achieve a given performance target for an engine. Energy Density the battery energy per unit volume (defined in terms of Watt-hours per liter (Wh/L). The three characteristics listed above are functions of the battery chemistry and its packaging, with the controlling characteristic being dependent on the particular application. For photovoltaic systems, the key technical considerations are that the battery experience a long lifetime under nearly full discharge conditions. Common rechargeable battery applications do not experience both deep cycling and being left at low states of charge for extended periods of time. For example, in batteries for starting cars or other engines, the battery experiences a large, short current drain, but is at full charge for most of its life. Similarly, batteries in uninterruptible power supplies are kept at full charge for most of their life. For batteries in consumer electronics, the weight or size is often the most important consideration. <4.1.1. Utility-Scale Battery Storage> According to the U.S. Energy Information Administration (EIA), energy storage projects can be used in a variety of electricity production applications. Electricity storage can be deployed throughout an electric power system functioning as generation, transmission, distribution, or end-use assets an advantage when it comes to providing local solutions to a variety of issues. Sometimes placing the right storage technology at a key location can alleviate a supply shortage situation, relieve congestion, defer transmission additions or substation upgrades, or postpone the need for new capacity. Utility scale battery storage consists of projects of one MW or greater in capacity. Utility-scale battery storage operating in the United States has reportedly quadrupled from a total of 214 MW at the end of 2014 to 899 MW (through March 2019). EIA expects U.S. utility-scale battery storage capacity to grow to perhaps 2,500 MW by 2023 "assuming currently planned additions are completed and no current operating capacity is retired." As of March 2019, the two largest U.S. operating utility-scale battery storage projects each provide 40 MW of power capacity, and there were another 16 operating battery storage sites with a power capacity rated at 20 MW or greater. For comparison, there is approximately 16,500 MW of HPS capacity deployed in the United States. <4.1.2. Balance of Plant Costs> Grid-connected battery storage projects commonly require a power management system to protect the battery and prevent uses that would damage or destroy the system. Of these systems for battery storage, balance of plant (BOP) costs are the most significant. BOP includes basic infrastructure (such as a building foundation and security fencing), and on-site electrical systems comprised of any equipment required to interconnect a battery storage system to the electric utility transmission or distribution grid. A 2018 study by the National Renewable Energy Laboratory (NREL) estimated the costs of Li Ion battery storage systems, both as standalone projects (e.g., with storage connected to the grid only), and projects connected to solar PV projects and the grid. A project capacity of 60 MW was used for the estimates. For standalone systems, a battery price of $209 per kilowatt-hour (KWh) was assumed, with total system costs varying from $380 per kWh (e.g., for a four hour duration system) to $895 per kWh (e.g., for a 0.5-hour duration system). The battery cost in these estimates accounted for 55% of total system cost in the 4-hour system, as compared to 23% in the 0.5-hour system. According to NREL, "the per-energy-unit battery cost remains constant at $209/kWh, the total battery cost and the proportion of the cost attributed to the battery decrease as system duration decreases." The report also stated that co-locating the solar PV and storage subsystems produces cost savings by "reducing costs related to site preparation, land acquisition, permitting, interconnection, installation labor, hardware (via sharing of hardware such as switchgears, transformers, and controls), overhead, and profit." For comparison, a 2019 report from the Energy Information Administration estimates the overnight capital cost of a new natural gas-fired combined cycle powerplant (with a capacity of 1,100 MW) at approximately $794 per Kwh, and the overnight cost of a new onshore wind powerplant (with a capacity of 100 MW) at $1,624 per Kwh (before application of the investment tax credit). A solar PV powerplant with a capacity of 150 MW had an estimated overnight cost of $1,783 per Kwh. The report also estimated an overnight capital cost for a 30 MW capacity battery storage project at $1,950 per Kwh (but with no specific battery technology or length of storage duration identified). <5. Energy Storage and Grid Resilience> Most power outages occur in electric distribution systems where wind or other weather cause vegetation (e.g., trees and tree limbs or branches) to contact power lines and cause damage to the line or associated equipment. Power outages can also result from equipment failure, vehicle accidents knocking down distribution poles, and even animal incursions into equipment. Outages caused by these factors typically last in the range from minutes to a few hours. Most of the longer-lived power outages (i.e., lasting from hours to days or longer) are due to weather-related events causing extensive damage to power lines and associated equipment. More extreme events (i.e., those affecting a larger part of the electric power grid) can result in a widespread shutdown of generating plants/units and the de-energization of the transmission and distribution system. In 2007, DOE stated that since weather is the primary reason for reliability problems, and conclude that there is a need for resilient systems to ensure that when power outages occur "they are short-lived and affect the fewest number of customers as possible." In the wake of recent major weather events in the United States (e.g., Superstorm Sandy), there has been an increased focus by federal and state officials on electric reliability and the need for investments in the grid. A recent study examined the statistical relationship between annual changes reported by U.S. distribution utilities in electricity reliability over a period of 13 years, and a broad set of variables (including various measures of weather and utility characteristics), and concluded that severe weather is causing longer, more severe power outages: We find statistically significant correlations between the average number of power interruptions experienced annually by a customer and a number of explanatory variables including wind speed, precipitation, lightning strikes, and the number of customers per line mile . In addition, we find a statistically significant trend in the duration of power interruptions over time especially when major events are included. This finding suggests that increased severity of major events over time has been the principal contributor to the observed trend. FERC recently proposed defining resilience as "the ability to withstand and reduce the magnitude and/or duration of disruptive events, which includes the capability to anticipate, absorb, adapt to, and/or rapidly recover from such an event." Energy storage could conceivably help reduce the impact of power outages in these instances. However, storage would have to be energized and available, which underscores the source of the electricity used to charge the batteries (or other storage media). Wind power is variable, and often the winds are strongest at night, while solar photovoltaic storage only charges in the daytime. The discharge characteristics would also determine the usefulness of battery storage, as power form these sources may only last for several hours. The type of event causing a power outage would also be key, as a severe weather event could stress or potentially take down power lines over a wide, possibly multistate region. Power can only reach electricity customers if the electrical wires (particularly the distribution lines) are still serviceable and connected. <6. Electric Vehicles and Grid Storage> The plug-in hybrid and battery electric share of the U.S. light vehicle market in 2018 was 2.1%. Nearly all automakers offer electric vehicles for sale: 42 different models were sold in 2018, with Tesla and Toyota recording the largest number of vehicle sales. A recent study from NREL assumed that EVs would be an increasing part of an electrified U.S. transportation sector, estimating that "electric vehicles would account for up to 76% of vehicle miles traveled in 2050," and could result in an increased demand for electricity to charge them. Some utilities have been considering whether EVs will be a longer-term avenue for increasing electricity demand, providing opportunities for vehicle-to-grid (V2G) energy storage and related services. Under V2G, EV batteries could eventually be used as storage of off-peak energy for the grid, and help provide demand response when the vehicles are not in use. A report from the Smart Power Electric Alliance observed that "utilities do not want to just serve this new load they want to take advantage of EVs as a distributed energy resource (DER) with the ability to modulate charge (i.e., managed charging), or even dispatch energy back into the grid (i.e., vehicle-to-grid)." However, while the V2G concept has been discussed for well over a decade in the United States, some have expressed doubts about its adoption. The idea is attractive because of the growing amount of lithium-ion battery capacity tied up in electric vehicles, and the fact that this capacity is not being used for around 95 percent of the time. Ten new Nissan Leafs can store as much energy as a thousand homes typically consume in an hour.... However, despite numerous pilot studies over the last decade, V2G has yet to become a commercial reality. Among the major concerns expressed about V2G is the effect on the vehicle's batteries. V2G allows a utility to draw on energy storage from stationary vehicles, which could increase the stress on the batteries, one of the most expensive parts of the vehicle. As at least one observer has noted, it is unclear who would cover the cost of this usage or battery replacements under a V2G regime, or how vehicle owners might be otherwise compensated for taking part in V2G programs. A potential driver for further EV adoption (and perhaps V2G itself) could be GHG reduction in the transportation sector. Electrification of the transportation sector can conceivably reduce GHG emissions depending on the electricity generation source, among other factors seen as a contributor to potential climate change. According to projections by the U.S. Energy Information Administration, new sales of battery electric vehicles may increase by a factor of seven by the year 2025, over model year 2018, under a reference case scenario. Other studies project the possibility for an almost complete transition of U.S. automobiles from internal combustion engines to EVs by 2050, should that be a policy goal. The potential for a large scale GHG reduction from such a transition would depend, in part, on the electricity generation sources used across the life cycle of the vehicles assuming that U.S. policy is focused on almost exclusive use of low or zero-carbon fuels and sources. Batteries charged from renewable electricity sources may reduce climate change concerns, and aid renewable energy growth goals. However, fuel cell vehicles could present a competitive or alternative pathway to a potential transportation future dominated by battery-powered EVs. <6.1. A California Case Study> A team of researchers from Lawrence Berkeley National Laboratory (LBL) examined EV charging in California as a case study. The team suggested that controlling when EV charging happened could help accomplish California's goals for renewable electricity integration less expensively than its 2010 mandate for deploying grid energy storage. The LBL case study discussed California's growing system-wide balancing problems forecast out to 2025, as more renewables (especially solar PV) are deployed. This has been epitomized as the "California Duck Curve" issue. By implementing a policy regime to charge EVs in the middle of the day (when renewable solar generation is greatest, instead of the evening or overnight), EVs could use excess renewable electricity available at this time and help balance the grid, thus avoiding the cost of ramping up and down other electric generation. This regime is referred to as V1G, representing the "one-way" charging of EVs. According to the LBL researchers, the technology for a one-way charging regime largely exists (i.e., grid to vehicle charging) and could possibly be implemented for about $150 million in California. In addition, implementing a regime to also allow a V2G two-way flow of power from EVs could potentially allow the benefits of EV batteries to become even more pronounced. In the V1G only case, down-ramping and up-ramping are both mitigated by more than 2 GW/h by 2025. In the case with a mix of V1G and V2G vehicles, however, substantially larger gains are seen both down-ramping and up-ramping are substantially mitigated, by almost 7GW/h, equivalent to avoiding construction of 35 natural gas 600 MW plants for ramping mitigation. The LBL researchers estimated that such a proposal could save California the equivalent of $12.8 billion to $15.4 billion in stationary storage investment. <6.2. Grid Reuse of EV Batteries> While up to 98% of lead-acid battery component materials may be recycled at the end of a battery's useful life, estimates are that Li Ion battery recycling is less than 5% in the United States. This may become a growing concern as transportation electrification is expected to increase the use of Li Ion battery packs. Finding ways to increase the recycling and reuse of Li Ion battery components would seem to be an option, given the potential cost and difficulty of obtaining the lithium and cobalt used in battery manufacture. However, since it has been estimated that Li Ion battery packs in EVs may retain about 70% of their storage capacity at the end of the battery's service life to a vehicle, the potential for a second use in home energy storage may exist (especially for solar PV storage systems). Therefore, reuse in electric grid applications may present a larger opportunity. Reuse can provide the most value in markets where there is demand for batteries for stationary energy-storage applications that require less-frequent battery cycling (for example, 100 to 300 cycles per year). Based on cycling requirements, three applications are most suitable for second-life EV batteries: providing reserve energy capacity to maintain a utility's power reliability at lower cost by displacing more expensive and less efficient assets (for instance, old combined-cycle gas turbines), deferring transmission and distribution investments, and taking advantage of power-arbitrage opportunities by storing renewable power for use during periods of scarcity, thus providing greater grid flexibility and firming to the grid. In 2025, second-life batteries may be 30 to 70 percent less expensive than new ones in these applications, tying up significantly less capital per cycle. <7. FERC Authority to Promote Grid Storage> Under the Federal Power Act (FPA), the Federal Energy Regulatory Commission (FERC) has authority over the sale and transmission of wholesale power, the reliability of the bulk power system, utility mergers and acquisitions, and certain utility corporate transactions. FERC is required by the FPA to ensure that wholesale electric power rates are "reasonable, nondiscriminatory, and just to the consumer." The Energy Policy Act of 1992 ( P.L. 102-486 ; EPACT) opened wholesale electricity markets to competition by allowing wholesale buyers to purchase electricity from any generator, requiring transmission line owners to transport (or "wheel") power for other generators and purchasers of wholesale power at "just and reasonable" rates. The next step was to ensure that these transactions could take place as efficiently as possible, and momentum for allowing access to the transmission grid for all users was realized with the issuance of FERC Order No. 888 in 1996. FERC oversees the competitive electricity markets served by regional transmission organizations (RTOs) and Independent System Operators (ISOs) established in accord with Order No. 888. The order required electricity transmission owners to allow open, non-discriminatory access to their transmission systems, thus promoting wholesale competition. In 2018, FERC issued its final version of Order No. 841 to remove what it saw as barriers to the participation of electric storage resources in RTO/ISO markets. Each RTO/ISO has until December 3, 2019 to revise and implement the Order No. 841 market rules. Subsequently, in April 2019, FERC issued Order No. 845, which changed "the definition of "Generating Facility" to explicitly include electric storage resources." Order No. 845 also changed the interconnection rules to allow "interconnection customers to request a level of interconnection service that is lower than their generating facility capacity." This could potentially allow some electric generators to add storage capacity to their facility (i.e., co-location), and use that storage capacity to send energy to the grid. This may provide an opportunity for renewable generators, in particular, to sell power when the renewable capacity is unavailable. <7.1. Discussion of FERC Order No. 841> In Order No. 841, FERC recognized that HPS has been operating in the competitive electricity markets that it regulates for years. However, FERC also acknowledged that existing market rules for traditional resources can create barriers to entry for emerging technologies. Order No. 841 defined an energy storage resource as "a resource capable of receiving electric energy from the grid and storing it for later injection of electric energy back to the grid." FERC designed Order No. 841 to require "each regional grid operator to revise its tariff to establish a participation model for electric storage resources that consist of market rules that properly recognize the physical and operational characteristics of electric storage resources." The participation model is to: ensure that electricity storage resources are eligible to provide all capacity, energy, and ancillary services that they are technically capable of providing in competitive markets; ensure that electricity storage resources can be dispatched, and can set the wholesale market clearing price as both a wholesale seller and wholesale buyer consistent with existing market rules; recognize that markets must account for the physical and operational characteristics of electricity storage resources through bidding parameters or other means; and establish a minimum size requirement for participation in the Regional Transmission Organization/Independent System Operator markets that does not exceed 100 kW. Electric storage resources may be a buyer and a seller of electricity from the markets, since they must charge and discharge their resources. FERC requires that the sale of electric energy from the wholesale electricity market to an electric storage resource (that the resource then resells back to those markets) must be at the wholesale locational marginal price (i.e., the market-clearing price for electricity at the location the energy is delivered or received). FERC recognized that various energy storage resources had the potential to provide ancillary services (e.g., battery storage can provide frequency regulation, voltage support, and spinning reserves), and provide energy to serve peak demand loads. FERC also recognized that "electric storage resources tend to be capable of faster start-up times and higher ramp rates than traditional generators and are therefore able to provide ramping, spinning, and regulating reserve services without already being online and running." <7.1.1. Some RTO/ISO Comments on the Order> The compliance filings submitted by the RTO/ISO stakeholders had various degrees of existing energy storage participation. Several compliance responses are discussed in the following summaries. <7.1.1.1. PJM> The PJM RTO (PJM) submitted its compliance filing to FERC in two submissions. One filing submitted details of PJM's proposed energy storage resource participation model (i.e., the "Markets and Operations Proposal." PJM said that its energy storage resource (ESR) participation model is designed to ensure that "ESRs are eligible to provide services in a manner consistent with other resources providing that service." PJM stated that its capacity, energy and ancillary services markets offer a number of products that participating resources can provide to serve load and to ensure the reliability of the electric grid. However, PJM noted that although ESRs are currently eligible to provide services in each of these markets, the ESR participation model explicitly addresses each available product to ensure that ESRs are eligible to provide all services which they are technically capable of providing. PJM said that its review of its markets and operations indicated that "certain changes are needed to fully support the ESR participation model required by Order No. 841," and include: Modal Operation in Energy Markets : PJM proposes to allow ESRs to participate in the Day-ahead and Real-time Energy Markets under three different modes: (1) Continuous Mode; (2) Charge Mode; and (3) Discharge Mode. This feature provides significant flexibility and allows Market Participants of ESRs to best manage a resource's changing and discharging cycles. Reserves : PJM proposes to allow ESRs to participate in the Synchronized Reserve market without an energy offer. If an ESR is physically disconnected from the grid and capable of providing energy within ten minutes, then the resource's reserve MWs shall be treated as Non-Synchronized Reserve. An ESR wishing to clear in the Day-Ahead Scheduling Reserve market would require an energy schedule and must inform PJM that it would like to be considered. Cost-Based Offers : PJM proposes to continue to apply the same offer development rules applied to all generation resources. PJM proposes to modify the Operating Agreement to clarify that ESR fuel costs include charging costs for later injection to the grid. Make-Whole Payments : PJM proposes to allow ESRs to receive make-whole payments when moved off economic dispatch. Billing for ESR Charging : PJM proposes to adopt several different categories of ESR charging to account for the resource's behavior and later resale of the charging energy. PJM also proposes to modify the Tariff to exempt "Direct Charging Energy" from certain "load" charges related to administrative costs, uplift, and meter/scheduling reconciliation. PJM was developing a methodology to determine wholesale vs. non-wholesale charges for stored energy, since ESRs can be connected to transmission, distribution, or behind the meter (i.e., storage designed for a specific building or residential use). PJM says that this may be complicated since ESRs that are behind the customer meter (or that otherwise directly serve retail load) may not, in some cases, resell that energy to PJM per its proposed rules. A second response was filed separately by PJM focusing on metering, accounting and market settlement issues (i.e., the "Energy Storage Resource (ESR) Accounting Proposal") to address such issues. <7.1.1.2. NYISO> While noting that it did not have a single participation model as required by FERC Order No. 841, the New York ISO (NYISO) filed its existing plans for electric storage. NYISO stated that while electric storage can currently participate in its energy, ancillary services, and installed capacity markets under various existing participation models, it also recognized that energy storage be a component of a demand side plan in certain demand response programs. Nevertheless, NYISO proposed to establish a participation model with energy storage resources as a subset of generators under its tariffs. Electric storage facilities unable to satisfy a qualification as generators would be able to elect to participate in existing participation models that accommodate their physical and operational characteristics. For example, some storage resources may be able to participate as "energy limited resources," e.g., installed capacity suppliers that are unable to operate continuously on a daily basis but that can provide energy for at least four contiguous hours each day. Alternatively, other energy storage resources may be able to participate as "limited energy storage resources," i.e., generators that are not able to sustain continuous operation at maximum energy withdrawal or maximum energy injection for a minimum period of one hour. <7.1.1.3. CAISO> The California ISO (CAISO) expressed support for FERC Order No. 841, stating that its rules were already in compliance with Order No. 841, and are not, generally, technology specific. But there were areas on which CAISO requested clarification. These included whether metering would be required for storage resources, and how storage resources should be treated under models of dispatch for energy (i.e., providing spinning reserves) or when acting as a load and consuming energy from the grid. <7.1.2. Compliance Deficiency Letters to RTOs/ISOs> FERC was apparently not satisfied with the RTO/ISO compliance filings for Order no. 841. Requests for more information (as filing deficiency letters) were sent to each of the RTOs/ISOs. As one example of the information requested, FERC asked each grid operator to provide details of various aspects of energy storage market participation models, including size requirements, state of charge management, and how storage resources can participate as both buyers and sellers in wholesale market. <8. Senate Hearing on Grid Scale Energy Storage> In June 2019, the Senate Energy and Natural Resources Committee held a hearing to examine opportunities for the expanded deployment of grid-scale energy storage in the United States. Among the key statements from witnesses were observations on the developing nature of battery storage systems. Among the observations from Dr. George Crabtree, the director of the Joint Center for Energy Storage Research and Argonne National Laboratory was a statement on the readiness of battery technologies for long-term grid support: The present cost of lithium-ion battery packs, about $200/kWh, must fall by a factor of two or more to make storage economically appealing across all its uses in the grid. In addition, we must be able to purpose-design batteries for a diversity of applications in the grid spanning generation, transmission, and distribution. An example is long duration storage, needed to fill in for renewable generation when the wind does not blow or the sun is blocked by clouds for as many as seven days in a row. These long, cloudy, or calm periods are common in weather patterns in the Northeast and Midwest. The present generation of lithium-ion batteries can optimally discharge for about four hours, much too short to span many weather-related generation gaps. New battery materials, concepts, and technology are needed to meet the challenges of long-duration-discharge energy storage. Among other observations, the witness from Xcel Energy, Mr. Ben Fowke noted that Xcel Energy's long-term carbon strategy depends on the deployment of advanced clean technologies. He said that grid-scale storage helps with renewable integration, allowing higher renewable energy levels than would otherwise be possible. Storage can also provide other system benefits, including more reliable grid operations, voltage support and frequency control. At the same time, he pointed out that storage today still has limitations. Two significant challenges for storage were described in his testimony: First, storage cannot today solve the problem of the wide seasonal variation in renewable energy generation, which is the chief factor preventing the creation of fully renewable electricity system. Second, while storage can initially help integrate renewables by moving energy from the time it is produced to when it is needed, the value of each additional increment of storage capacity declines as more is added to the system. Finally, although storage can bring multiple services to the grid power quality and grid support, for example the value of all of these services are not all additive (or "stackable"). As a general rule, these services are not all available at the same time. Mr. Fowke also pointed to potential areas for further energy storage research: While lithium ion batteries are the dominant technology in the battery storage industry today, a federal research agenda should target those technologies that have the greatest potential to address long-term system needs and reach commercialization. Those technologies include pumped storage, flow batteries, compressed air energy storage, and other forms of mechanical, thermal and ice storage. The federal research agenda should also encourage the development of hydrogen and other power-to-gas technologies that have the potential to link renewables and other sources of clean electricity to the rest of the economy and dramatically increase the amount of energy storage capacity in the nation. Among other comments, the witness from the PJM RTO, Mr. Andrew Ott, discussed the readiness of ESRs for grid applications. He also discussed the potential for competition between demand response resources, ESRs, and other generation resources. One issue that has garnered attention is how energy storage resources can participate in PJM's capacity market and therefore displace a coal, nuclear or natural gas unit to be available on call to provide energy when needed in system emergencies. Consistent with FERC's requirements, we have indicated that battery storage resources can be deemed capacity resources and be fully paid to the extent to which they have the duration capability to be available on call when needed. We require the same of a coal, natural gas or nuclear unit, and we require the same of pumped storage hydro or a demand response resource. Our approach is consistent with FERC's directive that the markets need not create undue preferences for energy storage resources but instead must be open to their participation consistent with their "technical capability" of providing the service in question. Today, in PJM and in other areas of the country, battery duration is generally limited duration could be anything from 15 minutes to one or two hours (typically never longer than four hours) at their rated capacity before they need to be recharged. However, even with these relatively short durations compared to other resource types on the grid today, we don't exclude these batteries from participating in the capacity market. Instead, short-duration batteries are prorated based on their capability (just as we do with renewable resources) to recognize this limited duration. In short, we are treating batteries comparably to any other resource that seeks to serve as a capacity resource. As capacity resources are integral to ensuring reliability and keeping the lights on, we think it is only fair, as well as consistent with the FERC Order, to pay them comparably to what we would pay a cleared nuclear, coal or natural gas resource when they provide a comparable service. I would note that the duration requirements for energy storage capacity resources that we submitted to FERC are, in-part, driven by the success that demand response has had in our capacity market. The advent of demand response, in which industrial operations or buildings and other facilities agree to curtail their load during system emergencies, has worked to "flatten" our expected load curve when demand response is called upon. In effect, this has transformed our capacity design requirements from serving what used to be a one-hour "needle" peak demand into a lower, wider but more sustained multi-hour peak demand. <9. Key Issues for Congress> As the U.S. electric grid is modernized to incorporate new technologies capable of making the system more efficient and responsive to the needs of the future, energy storage is increasingly seen as a key component in that future. Energy storage systems have the potential to provide many essential services to the electric grid that can potentially benefit electricity customers in a number of ways. Interest in reducing GHG emissions in the energy sector to mitigate climate change risks has increased the focus on renewable sources of electricity. While energy storage is seen as an enabling technology with the potential to reduce the intermittency and variability of wind and solar resources (in particular), energy storage resources would have to be charged by low or zero emission or renewable sources of electricity to ensure a reduction of greenhouse gases. Congress may look at providing guidance for regimes or incentives that promote energy storage in a manner that can ensure a decrease in greenhouse gas emissions. Energy storage resources can potentially delay the need or avoid the cost of constructing traditional power plants, depending on how, where used, and what type of storage system is used. For such a scenario, storage resources must be capable of providing the more than four hours of energy often mentioned as available from current battery storage resources. Congress may consider whether further research and development is needed to develop longer duration, higher capacity energy storage resources capable of a higher number of charging/discharging cycles. DOE and the national laboratories may be able to lead cooperative efforts in basic research to address basic science issues. As state governments, local communities, and U.S. businesses aim to increase their intake of renewable electricity, energy storage technologies are seen aiding increased renewable energy deployment and integration. While the cost of battery storage technologies is falling, a potential area for Congress to consider is efforts to reduce the cost of the many different items in balance of plant systems that may represent 20% to over 50% of a battery storage project's overall cost. Further electrification of the economy may be required if reducing emissions seen as contributing to climate change is a driver of federal policy. Electrification of the transportation sector may be a key part of such a strategy. Options for charging electric vehicles sometimes discuss V2G as an option or V1G to promote grid efficiency. Congress may want to define goals for battery storage technologies to support such goals, pathways for the infrastructure needs, a regulatory framework, and/or the interoperability of technologies, if transportation electrification is a policy goal. Recycling of spent Li Ion batteries and/or their components may be one way to ensure the sustainability of modular batteries systems. Over time however, the efficiency of any such technology for charging and discharging will diminish. Congress may want to investigate ways to promote a more efficient, less resource intensive future for modular battery systems, if electrification of the transportation sector to reduce GHG emissions is a policy goal. While Li Ion battery systems are currently the most prevalent form of modular storage, and a key technology for EVs, several issues exist with the procurement of materials for battery components, and the safety of Li Ion battery systems. Congress may want to direct further research into modular battery system materials and charging technologies to reduce the cost, improve the safety of systems, increase system performance and cycle efficiency, and to assure the sustainable development of modular battery systems. <9.1. Selected Bills in 116th Congress> To-date, over 40 bills have been introduced in the 116 th Congress on various topics concerning energy storage. This section summarizes several bills considered representative of the overall goals and directions of the proposed legislative efforts. <9.1.1. In the House> The Advancing Grid Storage Act of 2019 ( H.R. 1743 ), introduced in March 2019, would authorize a research program, loan program, and technical assistance and grant program, among other purposes. DOE would be required to carry out a program for research of energy storage systems, and provide to eligible entities loans for the demonstration of and deployment of energy storage systems. Included in the objectives of the programs improvements to energy storage for microgrids, improved security of emergency response infrastructure, use of energy storage for optimization of transmission and distribution system operation and power quality, and the use of energy storage to meet peak energy demand and make better use of existing grid assets. A public program for technical assistance would be established, and grants would be made available to eligible entities for technical assistance to identify, evaluate, plan, and design energy storage systems. Projects to be prioritized would be those that facilitate the use of renewable energy resources, strengthen reliability and resiliency, improve the feasibility of microgrids in rural areas (including rural areas with relatively high electricity costs), and that minimize environmental impacts and greenhouse gas emissions. The Promoting Grid Storage Act of 2019 ( H.R. 2909 ), introduced in May 2019, would authorize an energy storage research program, a demonstration program, and a technical assistance and grant program, among other purposes. DOE would be required to establish a cross-cutting national program within the Department of Energy for the research of energy storage systems, components, and materials. DOE would also be required to establish a technical assistance and grant program to disseminate information and provide technical assistance directly to eligible entities so the eligible entities can identify, evaluate, plan, design, and develop processes to procure energy storage systems. DOE would be authorized to make grants to eligible entities so that the eligible entities may contract to obtain technical assistance to identify, evaluate, plan, design, and develop processes to procure energy storage systems. DOE would also administer a competitive grant program for pilot energy storage systems for eligible entities to improve the security of critical infrastructure and emergency response systems. The goal of these demonstrations would be to improve the reliability of the transmission and distribution system, particularly in rural areas, including high energy cost rural areas; and, to optimize transmission or distribution system operation and power quality to defer or avoid costs of replacing or upgrading electric grid infrastructure, including transformers and substations, among other purposes. <9.1.2. In the Senate> The Better Energy Storage Act ( S. 1602 ), introduced in May 2019, would authorize a research, development, and demonstration (RD&D) program for grid-scale energy storage, among other purposes. The bill would amend the U.S. Energy Storage Competitiveness Act of 2007 (42 U.S.C. 17231) to promote RD&D for grid-scale energy storage. DOE would be required to develop goals priorities, and cost targets for the program, and submit a report on a 10-year strategic plan for the program to the Senate Committee on Energy and Natural Resources, and the House Committee on Science, Space and Technology. The focus of the program would be to develop cost-effective energy storage systems able to provide output for 6 hours, over not less than 8,000 cycles at full output, capable of operating 20 years, and systems capable of storing energy over several months to address seasonal variations in supply and demand. Cost targets for the systems are to updated every five years. Not more than five grid-scale projects would be required to be ready by 2023 for DOE to enter agreements for demonstration. The Joint Long-Term Storage Act of 2019 ( S. 2048 ), introduced in June 2019, would authorize a demonstration initiative focused on the development and commercial viability of long-duration energy storage technologies, including a joint program to be established in consultation with the Secretary of Defense, and for other purposes. The Secretary of Energy, acting through the Director of the Advanced Research Projects Agency-Energy, would be required to establish a demonstration initiative composed of demonstration projects focused on the development of long-duration energy storage technologies. Among the goals of the initiative would be to demonstrate how long-duration energy storage could benefit the resilience of the electricity grid, and improve the efficient use of the grid by peak load reduction and avoiding investment in traditional grid infrastructure. Appendix A. Energy and Electricity Storage Technologies Storage of Potential Energy The large monolithic systems that are used for energy storage today do not store electricity directly, but provide a means of producing electricity by use of a stored medium (e.g., water or air). The gradual release of the stored medium physically turns the shaft of a turbine connected to an electric generator, converting potential energy from the stored medium to electricity. Several technologies storing potential energy for conversion to electricity are described in the next section. Hydropower Pumped Storage The largest current system and use of energy storage on the electric grid is from hydropower pumped storage (HPS) projects. Approximately 94% of U.S. energy storage capacity is from HPS, representing about 23 GigaWatts (GW - a gigawatt equals 1,000 megawatts) as of 2018. The generation of electricity from falling water takes the potential energy of water held behind an impoundment and coverts it to kinetic energy as it moves the blades of a turbine to generate electricity. A typical HPS design is illustrated in Figure A-1 . While traditional hydropower relies solely on favorable topography to allow for the gravity-aided flow of water to generate electricity on demand, HPS systems can be developed where the suitable geographic and ecological conditions exist. HPS systems also consider the time-related value of when electric power is needed on a system. Pumped storage projects move water between two reservoirs located at different elevations (i.e., an upper and lower reservoir) to store energy and generate electricity. Generally, when electricity demand is low (e.g., at night), excess electric generation capacity is used to pump water from the lower reservoir to the upper reservoir. When electricity demand is high, the stored water is released from the upper reservoir to the lower reservoir through a turbine to generate electricity. Most HPS projects operating today are "open-loop" systems, which utilize water from free-flowing sources for the upper or lower reservoir. According to the Federal Energy Regulatory Commission (FERC), approximately 24 HPS systems are currently operating with a total installed capacity of over 16.5 GW. However, FERC states that most of these systems were authorized more than 30 years ago. HPS systems are estimated to have an efficiency of conversion for energy to electricity of between 70% and 75%. A newer technology for HPS utilizes water that is not free-flowing (e.g., possibly from groundwater), and is therefore described as a "closed-loop" system. FERC states that it has issued three licenses since 2014 for closed-loop HPS with a total capacity of 2.1 GW. One of these projects will have an estimated 400 MW generation capacity and be able to provide an estimated annual energy generation of 1,300 GWh, and may see construction begin in 2020. With closed-loop pumped HPS systems, neither the upper reservoir nor the lower reservoir is located on a dammed stream. To qualify as a closed-loop pumped storage facility for the purpose of the expedited [hydropower] licensing process, a project should cause little or no change in existing surface and groundwater flows and uses and must not adversely affect threatened or endangered species under the Endangered Species Act. The final rule also adds qualifying criteria to ensure that a qualifying pumped storage project utilizes only reservoirs situated at locations other than natural waterways, lakes, wetlands, and other natural surface water features; and relies only on temporary withdrawals from surface waters or groundwater for the sole purposes of initial fill and periodic recharge needed for project operation. Compressed Air Energy Storage Compressed Air Energy Storage (CAES) facilities use ambient air that is compressed and stored under pressure in an underground cavern. When electricity is required, the pressurized air is heated and expanded in an expansion turbine driving a generator for power production. There are two CAES power plants currently operating in the world. Both plants store air underground in excavated salt caverns. The older plant in Huntorf, Germany has a 290 MW capacity, and was commissioned in 1978. A second plant was commissioned in McIntosh, Alabama in 1991, with a capacity of 110 MW. The Huntorf plant is reported to be capable of delivering power at its rated capacity for up to 4 hours, while the McIntosh plant is reported as able to provide generation at its rated capacity for 26 hours. Air heats up when it is compressed for storage. This heat energy is largely lost to the environment in the two CAES plants currently operating, as they use a diabatic process. When the air is decompressed to generate electric power, it loses this thermal energy and cools down. Therefore, the stored high-pressure air must be heated with natural gas before it is returned to the surface and expanded through a turbine that runs a generator. However, new systems may be able to store the thermal energy produced in the compression phase, thus avoiding the use of natural gas and its emissions. Compression and expansion of air introduces energy losses, resulting in a relatively low efficiency of energy to electricity conversion of 42%. CAES plants can use lower cost energy from the grid during off-peak hours for the compression cycle, including renewable electricity from excess wind generation at night that might not otherwise be used. While the McIntosh plant recovers some waste heat to reduce fuel consumption, some new designs for CAES power plants are looking at ways to increase energy conversion efficiency by capturing the waste heat from the compression process and storing it in molten salt for the decompression cycle. Since geological salt formations are rare, the U.S. Department of Energy (DOE) is looking at adapting CAES technology to more common porous and permeable rock formations. Underground CAES storage systems are most cost-effective with storage capacities up to 400 MW and discharge times of 8 to 26 hours. Siting such plants involves finding and verifying the air storage integrity of a geologic formation appropriate for CAES in a given utility's service territory. Liquid Air (Cryogenic) Energy Storage Liquid air or cryogenic is a type of thermal energy storage that uses liquefied air to create an energy storage resource in a manner with characteristics of both HPS and CAES. Electricity, generated at off-peak demand times, can be used to cool air until it liquefies (as mostly liquid nitrogen since air is approximately 78% nitrogen). The process uses currently available equipment and technologies, and proceeds as follows: Charging the system an air liquefier uses electrical energy to draw air from the surrounding environment, clean it, and then cool the air to subzero temperatures until the air liquefies. Seven hundred liters of ambient air become 1 liter of liquid air. Storing the energy the liquid air is stored in an insulated tank at low pressure, which functions as the energy store. These tanks are currently used for bulk storage of liquid nitrogen, oxygen and liquefied natural gas, and have the potential to hold several GWh of stored energy. Generating power when power is required, liquid air is drawn from the tank(s) and superheated to ambient temperature, producing a high-pressure gas that drives a turbine. According to one developer of cryogenic technology, the energy storage capacity is determined by the size of the tanks. The tanks can be located anywhere they need to be, unlike HPS which depends on the water resource and geography. Off peak renewable energy can be used to charge the system which, when fully charged, can provide electricity to support a large peak demand load for several hours. Storage of excess cold produced during the liquefaction of air can be captured and reused in a later liquefaction cycle. The low boiling point of liquefied air means the efficiency of the system cycle (from liquefaction and storage to power production) can be improved with the capture and storage of heat produced during the liquefaction process that can be used in the expansion process when power is generated. Flywheels Flywheel energy storage systems are comprised of a rotating cylinder (i.e., the flywheel rotor), balanced in a vacuum over an electricity-producing stator via magnetically levitated bearings. The rotor in many flywheels was often made of steel, but some newer, higher speed flywheels use fiber composite materials able to store more energy per unit of mass. Flywheels store kinetic energy in the cylinder that spins in a nearly frictionless environment. To charge the flywheel, a small electric motor using electricity from an external source brings the cylinder up to an extremely high speed up to 60,000 rotations per minute. As the rim in the flywheel spins faster, it stores energy kinetically in the rotating mass, with a small amount of power used to maintain the operating speed. When energy is needed, the flywheel is slowed and the kinetic energy is converted back to electrical energy. Flywheels are used in applications where a large amount of power is needed over a short timeframe. While they are generally charged using power from the grid, they can go from a discharged to a fully charged state within a few seconds. According to the Energy Storage Association, flywheels generally require low maintenance. Some flywheel technologies can undergo more than 100,000 full discharge cycles or more without performance impacts. Today's flywheel systems are shorter energy duration systems and not generally attractive for large-scale grid support services that require many kWh or MWh of energy storage. They have a very fast response time of four milliseconds or less, can be sized between 100 kW and 1650 kW, and may be used for short durations of up to one hour. They have lifetimes estimated at 20 years. Storage of Electricity in Battery Systems This section describes several technologies for the storage of electricity in battery systems. These systems can be large, monolithic systems (such as flow batteries) or modular battery systems aggregating the capacity stored in smaller cells to provide larger amounts of power. Flow Battery Systems Flow batteries are large battery systems that store an electrical charge in tanks of a liquid electrolyte (e.g., a liquid solution with dissolved chemicals that stores energy). Electric charge is drawn from the electrolyte as it is pumped through electrodes to extract the electrons, and the spent liquid returns to the storage tank. Flow battery technology is scalable. The active chemicals are stored separately until power is needed, thus reducing fire safety concerns. Most flow batteries require the electrolyte to be separated by a membrane, as shown in Figure A-2 . Some newer flow battery technologies use a single flow loop design with no membrane, where "energy is stored in a plated metal on the surface of titanium electrodes." Vanadium and zinc bromine are currently the most-used liquid electrolytes. Vanadium has become a popular electrolyte component because the metal charges and discharges reliably for thousands of cycles. However, one article cited vanadium's increasing price and its toxicity as leading researchers to look at other cheaper and less toxic chemistries (e.g., such as iron or organic compounds) for flow batteries. New electrolyte chemistries are being investigated that are able to maintain a high number of charge cycles, and retain a low viscosity to ease pumping between tanks. Any source of power can be used to charge flow batteries, including renewable electricity from wind and solar sources. Since flow batteries are scalable in size and able to undergo a large number of charging and discharging cycles, they are considered as a potential option to store off-peak electricity generation from renewable sources. Redox Flow Batteries Redox batteries are a specific type of flow battery. The name "redox" refers to the chemical reduction and oxidation reactions employed in the redox flow battery to store energy in liquid electrolyte solutions which flow through a battery of electrochemical cells during charge and discharge. Redox batteries can be further classified as either aqueous or nonaqueous systems, with aqueous systems using water as the electrolyte solvent. While aqueous flow batteries are generally safer, they do not currently store as much energy per unit of volume as nonaqueous chemistries. Redox flow batteries are said to offer an economical, low vulnerability means of storing electrical energy at scale, with greater flexibility to design a system based on power and energy rating for a given application. Redox flow batteries are suitable for energy storage applications with power ratings ranging from kiloWatts (kW) to the tens of MW over periods from two to 10 hours, and are capable of 10,000 or more charging cycles. The redox flow battery concept shown in Figure A-2 produces power by pumping liquid from external tanks into the battery's stack, a central area where the liquids are mixed. When the battery is fully discharged, both tanks hold the same electrolyte solution (which is a mixture of the positively charged ions and negatively charged ions. When power is needed, the two liquids are pumped into the central stack. Inside the stack, positive ions pass through a selective membrane and change into a solid on the stack's negative side thus generating electricity. According to EPRI, vanadium redox flow batteries have an important advantage among flow batteries as the two electrolytes are identical when fully discharged, which simplifies electrolyte management during operation. Modular Battery Technologies Modular batteries are used in many aspects of everyday life. They generally store electrical energy in chemical form, and consist of standardized individual cells. The individual cells have relatively small power and voltage capacities that can be aggregated to serve larger power loads. Battery energy storage can also provide ancillary services for the electric grid such as frequency regulation, voltage support and spinning reserves. This section of the report focuses on some of the major rechargeable modular battery technologies that currently serve applications from cell phones to electric or hybrid vehicles, and can provide some backup power or services to the electric grid. Modular battery systems may be suited to arbitrage opportunities. Such opportunities may be economically available to storage systems ranging from one to 500 MW, with a discharge duration range of one hour or greater. Some storage projects may be able to cycle their charging and discharging to meet such opportunities perhaps 250 or more times in a year. Lithium Ion Batteries Lithium ion (Li Ion) represents a family of battery chemistries, each with its own strengths and weaknesses regarding different applications and uses. Li Ion batteries store and release energy through a process called "intercalation," which involves lithium ions entering and exiting microscopic spaces in between the atoms of a battery's two electrodes. The most commonly used type of Li Ion cell has a positive electrode (i.e., the cathode) of made of lithium-cobalt oxide (LiCoO 2 ), and a negative electrode made of carbon. Batteries are charged as ions of lithium move through the electrolyte (typically a lithium salt solution) from the positive to the negative electrode (i.e., the anode), and attach to the carbon. When discharged, lithium ions move back to the positive electrode. Li Ion batteries are used in many applications because lithium is highly reactive and has a high specific energy, which means it can store approximately 150 Wh of electricity in a one kilogram battery. Li Ion batteries hold their charge well over time, losing only about 5% per month, and generally have no memory effect. Li Ion battery packs have electronic circuitry built in to regulate charging and discharging of the batteries to prevent overcharging and excess heating of the batteries, which can potentially result in explosions or fires. However, the components of fuel, oxygen, and an ignition source exist in the battery system providing the prerequisites for combustion. Unlike other rechargeable batteries, Li Ion does not require a deep-discharge cycle to maintain the battery's ability to recharge to full capacity. Over time however, that ability to fully recharge weakens. Nevertheless, the Li Ion battery packs used for EV systems may still have as much as 50% to 70% of their original energy storage capacity at the end of their EV service life. This would allow EV Li Ion battery packs to have a second life in a variety of electricity storage uses from residential storage to renewable generation and other back-up power applications. However, Li Ion battery packs can catch fire (due to a flammable liquid electrolyte) if, for example, an electric vehicle car crash punctures the battery pack. The development of a solid-state battery (i.e., a battery with a solid instead of a liquid electrolyte) may make Li Ion batteries safer. It may also remove the issue with dendrite formation, the crystal-like buildup of lithium metal in the electrolyte that can puncture the cathode-anode separator, causing a short circuit that will destroy the battery and can cause a fire. The potential uses of Li Ion batteries at end-of-life highlights issues with the materials used in the construction of the battery cells. Cobalt is used in the construction of the cathode of the battery. While cobalt is not on a list of "conflict materials" that the federal government regulates from conflict zones, cobalt is mostly mined in the Democratic Republic of Congo (DRC), a recognized conflict zone from which about 70% of the world's cobalt originates. Until recently, as much as 20% of Congolese cobalt was estimated to be produced in unregulated artisanal mines (i.e., informal mines, often small-scale operations in local communities) that reportedly use child laborers in unhealthy conditions. The DRC regulates the large mines responsible for most of the cobalt supply, but unrest and economic conditions has driven people to artisanal mining. Even after a recent collapse of cobalt prices, child labor in Congolese artisanal mines reportedly continues to be a problem. However, a recovery of cobalt use from projected growth in EV adoption could exacerbate the issue. Due largely to concerns about child labor in artisanal mines, companies have been under pressure to document their cobalt supply chain to show where their cobalt is sourced. While some companies are now buying cobalt directly from the regulated mines in the DRC, the mixing of cobalt supplies in the refining process (which was reported as taking place mostly in China) complicates tracking efforts. Other companies are reducing their use of cobalt to "minimize" exposure to the issue. Since Li Ion battery manufacture utilizes a number of potentially toxic elements if improperly disposed of (i.e., in landfills where groundwater contamination could occur), and have rare earth and other valuable components with potential value, some countries have passed laws to ensure recycling of the batteries. China, where about half the world's EVs are sold, was reportedly implementing rules to make carmakers responsible for expired batteries. The European Union also has regulations for EV battery disposal. Recycling of Li Ion batteries may also help to reduce the need for new supplies from mining of cobalt. But the reuse of EV Li Ion batteries was reported to be more attractive than recycling at this time. Projected demand growth for EVs may overtake the immediate benefits of recycling on supply needs. Lithium Iron Phosphate Lithium Iron Phosphate (LFP) is another Li Ion chemistry for rechargeable battery cathodes. LFP can be used in similar high power applications as lithium-cobalt oxide cells, but LFP's chemistry has a lower specific energy at about 120 Wh/kg (compared to the LiCoO 2 chemistry with a specific energy of about 150 Wh/kg). However, LFP has a longer cycle life than lithium-cobalt oxide, and is reportedly a safer battery chemistry as it is less flammable. Nickel Cadmium and Nickel-Metal Hydride Batteries Nickel cadmium (NiCad) has been in use as a rechargeable battery since about 1910, and was the mostly widely used chemistry for rechargeable batteries until the commercialization of NiMH. NiCad and nickel-metal hydride (NiMH) were the mainstay of rechargeable battery applications before the widespread adoption of Li Ion batteries just over a decade ago. NiMH began to replace NiCad in applications requiring a higher power density in smaller package applications or where performance was more important, and can store about 70 watt-hours per kilogram. NiMH also does not suffer from a memory effect, thus will not require a full discharge cycle to maintain the ability to fully charge. But NiCad retains a charge longer and performs better than NiMH in cold weather applications, or in off-grid renewable energy storage or telecom operations (e.g., situations where near maintenance-free operation is needed with respect to the electrolyte). Lead-Acid Batteries One of the oldest and most widely used forms of energy storage is the lead-acid battery. These batteries are a mainstay of gasoline-powered vehicles, providing energy storage for the spark ignition system of internal combustion engines (ICEs). Lead-acid batteries used in passenger cars commonly have six cells, each with an electromotive force of about 2 volts (V). They can be discharged at a high rate but can require more than 14 hours to recharge. The battery cells are constructed in a grid made of a lead alloy that holds an electrolyte solution of water and sulfuric acid. Figure A-3 shows a wet-cell (also called a "flooded" battery due to the liquid electrolyte) lead-acid battery design with several cells with the electrodes connected to each cell. Wet-cell lead-acid batteries are usually made with vents and removable caps to allow for gases to escape while charging, and refilling with water when too much of the electrolyte has been converted to gas. A lead-acid battery can store perhaps 25 watt-hours of electric power per kilogram. Passenger car batteries are often called "starter" batteries as they provide a surge of power during the ignition stage to start the engine, and store power generated by the electrical system to prevent damage to system components. Lead-acid batteries can also be designed as "deep cycle" batteries to provide a low, steady level of power for a longer duration than a starting battery. Some applications require "dual purpose" batteries with characteristics designed to have a high starting power for cranking engines, but are able to withstand the cycle service demands from multiple accessory loads. Lead-acid batteries can be aggregated for "back-up" power applications to supply electrical power to critical systems in the event of a power outage. Batteries used for back-up power can also function as voltage stabilizers that smooth out fluctuations in electrical generation systems. However, a lead-acid battery would require six kilograms to store the same amount of energy that a one kilogram lithium-ion battery could store. Batteries designed for industrial uses provide a low, steady power for a longer duration than a typical deep cycle battery. This makes a higher amount of total energy available for a longer period of time. Industrial batteries have the ability to last for years and can be used in stationary applications that provide critical back-up power to systems that need constant power supply. Industrial batteries are often not called upon to deliver power, but when they are, it is required that they deliver an abundance of power that will last long enough for reserve generators to take over. Often times, industrial batteries are configured as systems to accommodate large power demands. Lead-acid battery components are often recycled at the end of the battery's useful service life. Even the spent sulfuric acid can be "neutralized" or converted to sodium sulfate and reused. Advanced Lead-Acid Batteries A key problem with lead-acid batteries is the growth of lead sulfate crystals in the electrolyte that eventually limits lead battery performance and is a key cause of battery failure. Researchers at the Argonne National Laboratory announced that they are working with industry to better understand the underlying chemistry of lead-acid batteries to find a solution to sulfation, and resulting dissolution issues (i.e., as the electrolyte loses much of its dissolved sulfuric acid and becomes primarily water). A main goal of the research effort is to unlock "a significant portion of unused potential [in lead-acid batteries that] would result in even better low-cost, recyclable batteries for mobile and stationary market applications." Since lead-acid batteries do not have as high a fire risk as Li Ion batteries, some researchers are investigating new technologies that may allow for a greater use of lead-acid batteries in electric grid and transportation applications. Lead-acid carbon technologies use a fundamentally different approach to lead-acid batteries through the inclusion of carbon, in one form or another, both to improve the power characteristics of the battery and to mitigate the effects of partial states of charge. Certain advanced lead-acid batteries are conventional valve-regulated lead-acid batteries with technologies that address the shortcomings of previous lead-acid products through incremental changes in the technology. Other advanced lead-acid battery systems incorporate solid electrolyte-electrode configurations, while others incorporate capacitor technology as part of anode electrode design. Sodium Sulfur Batteries Sodium sulfur (NaS) batteries are a liquid metal technology that operates at high temperatures to keep sulfur molten at both the positive and negative electrodes. A solid ceramic separates the electrodes and serves as the electrolyte, allowing only positively charged sodium-ions to pass through during the charging cycle. As the battery is discharged, electrons are stripped from the sodium metal producing free sodium-ions that move to the cathode compartment. One battery set currently available has a one MW capacity providing up to 6 MWh of energy from 20 modules each capable of supplying 50 kW. Sodium Nickel Chloride Batteries Sodium nickel chloride batteries are another high-temperature battery. When charging a Sodium-nickel-chloride battery at normal operating temperatures, salt (NaCl) and nickel (Ni) are transformed into nickel-chloride (NiCl2) and molten sodium (Na), with the chemical reactions reversed during discharge. The electrodes are separated by a ceramic electrolyte that is conductive for sodium ions but an isolator for electrons. Therefore, the cell reaction can only occur if an external circuit allows electron flow equal to the sodium ion current. Cells are hermetically sealed and packaged into modules of about 20 kWh each. The DOE/EPRI report says that utility systems were beginning to be deployed systems in the size range of 50 kW to 1 MW. New Modular Battery Technologies According to one observer of the modular battery industry, a new technology for grid scale storage "will be needed to hit the cost levels for continuous deployment," if battery storage deployment is to be sustained beyond 2020. In that timeframe, a potential consolidation of the Li Ion industry was suggested by the observer, which would lead suppliers to potentially focus on new liquid metal technologies to achieve a "necessary cost-competitive, 20-year life performance." Research into permeable membranes may result in replacements for brittle ceramic separators in today's NaS batteries. A team from the Massachusetts Institute of Technology (MIT) described how novel mesh membranes could lead to new grid-scale batteries with electrodes made of sodium and nickel chloride. The MIT team projected that the membranes could result in new types of liquid metal batteries, enabling "inexpensive battery technology" to make intermittent power sources such as wind and solar capable of delivering reliable baseload electricity. Appendix B. Ancillary Services for the Grid Ancillary services are used by grid operators to ensure the reliability and stability of the power system, by helping to match power generation and demand. The Federal Energy Regulatory Commission (FERC) defines ancillary services as: Those services necessary to support the transmission of electric power from seller to purchaser, given the obligations of control areas and transmitting utilities within those control areas, to maintain reliable operations of the interconnected transmission system. Ancillary services supplied with generation include load following, reactive power-voltage regulation, system protective services, loss compensation service, system control, load dispatch services, and energy imbalance services. According to one source, ancillary services can be put into three main categories. These include: Flexibility-related services, which balance supply and demand, are provided by operating reserves, Frequency-related services, which maintain a constant rate of 60 Hertz, and are provided by regulating reserves, and, Voltage-related services, which control stability across the system. Flexibility-related ancillary services include: Ramping or load following relate to the vital task of bringing online, or taking offline, power plants typically over the course of a few seconds or minutes to several hours to meet changing load or supply conditions. Such activity has long been a part of daily grid operations, particularly to meet expected changes in demand throughout the day. Demand for power commonly fluctuates sub-hourly, hourly, daily and seasonally. Natural gas-fired power plants, for example, have the flexibility to quickly ramp up or down their energy output as system conditions change throughout a given day. Operating reserves are ancillary services that explicitly provide the ability to quickly fill in new energy supply when needed because of unexpected changes in the supply/demand balance, as well as supporting voltage and frequency. Most systems rely on two types of operating reserves: (1) contingency spinning (or synchronous) reserves that usually can respond very quickly, within ten to fifteen minutes, and (2) non-spinning (or supplemental) reserves that typically have response times on the order of ten to 30 minutes or more. A reserve margin is the "percentage of installed capacity exceeding the expected peak demand during a specified period," and varies according to regional regulatory requirements. For instance, a reserve margin of 15% means that an electric system has excess capacity in the amount of 15% of expected peak demand. Spinning reserves are provided by generation units that are actively generating (and whose turbines are "spinning") and thus can quickly increase or decrease their output when called upon within the required time. Non-spinning or non-synchronized reserves are provided by generation resources that are not actively generating, but are ready and able to start up quickly and begin providing energy to the grid within a specified timeframe. In some regions, these non-spinning reserves are referred to as fast-start resources. Frequency-related services include: Regulating reserves are actions that can respond in seconds to grid fluctuations or emergencies to stabilize frequency and to rebalance supply with demand. Technical Considerations: Storage System Size Range: 10-100 MW Target Discharge Duration Range: 10 minutes-1 hour Minimum Cycles/Year: 20-50 Down regulation can be provided by energy storage resources as they charge and absorb energy from the grid. However, the storage operator must pay for that energy. That is notable especially for storage with lower efficiency because the cost for that energy may exceed the value of the regulation service. Technical Considerations: Storage System Size Range: 10-40 MW. Target Discharge Duration Range: 15-60 minutes. Minimum Cycles/Year: 250-10,000. The rapid-response characteristic (i.e., fast ramp rate) of most storage systems makes it valuable as a regulation resource. Voltage-related ancillary services include: Voltage control is managed by injecting or absorbing "reactive power" at the site of generation, transmission, and distribution to maintain the appropriate level of voltage at a given location. Reactive power (measured in kilovolt-amperes reactive (KVAR)) is an integral part of generating alternating current, along with active (or real) power. Real power is what most would refer to as electricity, measured in kiloWatts (kW). Reactive power must be available locally to transfer active power across the network. In other words, to get and maintain the desired voltage at a given location, a precise amount of reactive power must be present. Normally, designated power plants are used to generate reactive power to offset reactance in the grid. Many smaller coal-fired power plants that were transitioned to provide reactive power as they aged, are now being retired. These power plants could potentially be replaced by strategically-placed energy storage within the grid at central locations or taking the distributed approach and placing multiple VAR-support storage systems near large loads. Technical Considerations: Storage System Size Range: 1-10 mega volt-ampere reactive (MVAR).

Electricity, as it is currently produced, is largely a commodity resource that is interchangeable with electricity from any other source. Since opportunities for the large-scale storage of electricity are few, it is essentially a just-in-time resource, produced as needed to meet the demand of electricity-consuming customers. Climate change mitigation has increased the focus on the use of renewable electricity. While energy storage is seen as an enabling technology with the potential to reduce the intermittency and variability of wind and solar resources, energy storage resources would have to be charged by low- or zero-emission or renewable sources of electricity to ensure a reduction of greenhouse gases. Energy storage is being increasingly investigated for its potential to provide significant benefits to the interstate transmission grid, and perhaps to local distribution systems and thus to retail electric customers. The ability to store energy presents an opportunity to add flexibility in how electricity is produced and used, and provides an alternative to address peak loads on the system using renewable electricity stored at low-demand times. In addition to providing power on demand, energy storage technologies have the potential to provide ancillary services to the electricity grid to ensure the reliability and stability of the power system, and better match generation to demand for electricity. Hydropower pumped storage (HPS), compressed air energy storage, and cryogenic energy storage are examples of technologies that store potential (or kinetic) energy. These are examples of the mostly large, monolithic systems used for energy storage today do not store electricity directly, but provide a means of producing electricity by use of a stored medium (e.g., water or air). According to the Federal Energy Regulatory Commission (FERC), approximately 24 HPS systems are currently operating with a total installed capacity of over 16.5 Gigawatts. HPS is approximately 94% of existing U.S. energy storage capacity. Since the storage of potential energy systems is well established on the grid, this report focuses on the relatively new use of modular batteries for grid level storage. Modular battery technologies generally store electrical energy in chemical media that can be converted to electricity, and consist of standardized individual cells with relatively small power and voltage capacities that are typically aggregated to serve larger power loads. Lead-acid batteries and lithium ion (Li Ion) cells are the most used modular battery technologies for utility scale (i.e., projects of one megawatt or greater in capacity) applications on the electric grid. Li Ion cells are being used for a variety of applications, due largely to their high energy density and ability to undergo a number of full power charging cycles. However, battery technologies, in general, can provide energy for only a few hours, and vary with regard to the time required to recharge battery systems. Procurement of cobalt for Li Ion batteries has also been controversial due to child labor and safety concerns in many Congolese artisanal mines. While Li Ion battery systems are currently the most prevalent form of modular storage, and a key technology for electric vehicles, several issues exist with system cost, materials used, and the safety of these systems. Congress may want to direct further research into modular battery system materials and charging technologies to reduce the cost, improve the safety of systems, increase system performance and cycle efficiency, and to assure the sustainable development of modular battery systems. Congress may also want to look at providing guidance for policy regimes or incentives that promote energy storage in a manner that can decrease greenhouse gas emissions. FERC acknowledged that existing market rules for traditional resources can create barriers to entry for emerging technologies, and energy storage in particular. FERC designed its Order No. 841 to require "each regional grid operator to revise its tariff to establish a participation model for electric storage resources that consist of market rules that properly recognize the physical and operational characteristics of electric storage resources."

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<1. NIH Funding: FY1995-FY2021> This report provides a historical overview of federal funding provided to the National Institutes of Health (NIH) between FY1995 and FY2021. It also provides a brief explanation of the discretionary spending funding sources for NIH associated with the annual appropriations process (via the Labor, HHS, and Education and Interior/Environment Appropriations Acts) and the mandatory funding for special program on type 1 diabetes research. NIH is the primary federal agency for medical, health, and behavioral research. It is the largest of the eight health-related agencies that make up the Public Health Service (PHS) within the Department of Health and Human Services (HHS). NIH consists of the Office of the Director (OD) and 27 Institutes and Centers (ICs) that focus on aspects of health, human development, and biomedical science. The OD sets overall policy for NIH and coordinates the programs and activities of all NIH components, particularly in areas of research that involve multiple institutes. NIH activities cover a wide range of basic, clinical, and translational research, focused on particular diseases, areas of human health and development, or more fundamental aspects of biology and behavior. Its mission also includes research training and health information collection and dissemination. More than 80% of the NIH budget funds extramural research (i.e., external) through grants, contracts, and other awards. This funding supports research performed by more than 300,000 individuals who work at over 2,500 hospitals, medical schools, universities, and other research institutions around the country. About 10% of the agency's budget supports intramural research (i.e., internal) conducted by nearly 6,000 NIH physicians and scientists, most of whom are located on the NIH campus in Bethesda, Maryland. <1.1. Funding Sources> Funding for NIH comes primarily from annual Labor, HHS, and Education (LHHS) Appropriations Acts, with an additional smaller amount for the Superfund Research Program from the Interior/Environment Appropriations Act. Those two bills provide NIH discretionary budget authority. Through LHHS appropriations, some funding is also transferred to NIH pursuant to the PHS Evaluation Set-Aside or the "PHS Evaluation Tap" transfer authority. Authorized by Section 241 of the Public Health Service Act, the evaluation tap allows the Secretary of HHS, with the approval of appropriators, to redistribute a portion of eligible PHS agency appropriations across HHS for program evaluation and implementation purposes. The PHSA section limits the set-aside to not less than 0.2% and not more than 1% of eligible program appropriations. However, LHHS Appropriations Acts have commonly established a higher maximum percentage for the set-aside and have distributed specific amounts of "tap" funding to selected HHS programs. Since FY2010, and including in FY2020, this higher maximum set-aside level has been 2.5% of eligible appropriations. Readers should note that totals in this report and NIH source documents include amounts "transferred in" pursuant to PHS tap but do not include any amounts "transferred out" under this same authority. NIH also receives funding through LHHS appropriations, subject to different budget enforcement rules than the rest of the NIH funding in the act appropriations to the NIH Innovation Account created by The 21 st Century Cures Act ("the Cures Act," P.L. 114-255 ) to fund programs authorized by the act. For appropriated amounts to the account up the limit authorized for each fiscal year the amounts are subtracted from any cost estimate for enforcing discretionary spending limits (i.e., the budget caps). In effect, appropriations to the NIH Innovation Account as authorized by the Cures Act are not subject to discretionary spending limits. The NIH Director may transfer these amounts from the NIH Innovation Account to other NIH accounts, but only for the purposes specified in the Cures Act. If the NIH Director determines that the funds for any of the four Innovation Projects are not necessary, the amounts may be transferred back to the NIH Innovation Account. All amounts authorized by the Cures Act have been fully appropriated to the Innovation Account from FY2017 to FY2020, including $492 million for FY2020. For FY2021, $404 million is authorized to be appropriated. In addition, NIH has received mandatory funding of $150 million annually that is provided in Public Health Service Act (PHSA) Section 330B, for a special program on type 1 diabetes research, most recently extended through FY2020 by the CARES Act ( P.L. 116-136 ), with additional partial-year FY2021 funding of $25,068,493 for October 1, 2020, through November 30, 2020. The total funding available for NIH activities, taking account of add-ons and PHS tap transfers, is referred to as the NIH "program level." <1.2. FY2020-Enacted Funding> The enacted FY2020 NIH program level is made up of the following: $40.228 billion in discretionary LHHS appropriations, including the $492 million authorized for the Cures Act Innovation Account; $1.231 billion pursuant to the PHS program evaluation transfer and a $225 million transfer from the HHS non-recurring expenses fund (NEF); $81 million for the Superfund research program in Interior/Environment appropriations; and $150 million in annual funding for the mandatory type 1 diabetes research program. Accounting for transfers and other adjustments, cited FY2021 budget documents from the Administration show the NIH FY2020 program level as $41.685 billion. <1.3. Coronavirus Supplemental Appropriations> NIH has also received emergency supplemental appropriations to several IC accounts as provided by the first and third, coronavirus supplemental appropriations acts, shown in Table 1 , totaling $1.8 billion. In addition to these appropriations, the fourth coronavirus supplemental required that a total of not less than $1.8 billion of $25 billion appropriated to the Public Health and Social Services Emergency Fund be transferred to two NIH institutes and the Office of the Director. When accounting for these transfers, total funding directed to the NIH would come to not less than $3.6 billion across the three acts an 8.6% funding increase over regular enacted FY2020 appropriations. These acts also include various other transfer authorities that would allow for additional transfers to and from NIH accounts (explained in the table notes). By convention, CRS does not add amounts provided as an emergency requirement to the NIH program levels in the remainder of this report. The FY2020 regular and emergency appropriations amounts are presented separately. <1.4. FY2021 Budget and Appropriations> President Trump's FY2021 initial budget request (February 10, 2020) proposed that NIH be provided with a total program level of $38.694 billion, a decrease of $2.99 billion (-7.2%) from FY2020-enacted levels. The proposed FY2020 program level would have been made up of $37.630 billion in LHHS appropriations, including the $404 million for the Cures Act Innovation Account (the full amount authorized for FY2021); $741 million in transfers to NIH pursuant to the PHS Evaluation Tap authority; $74 million for the Superfund Research Program in Interior/Environment appropriations; and $150 million in proposed annual funding for the mandatory type 1 diabetes program. Under the request, all existing IC accounts would receive a decrease compared to FY2020-enacted levels (see Appendix A ). The Building and Facilities account would receive an increase in LHHS budget authority, from $200 million in FY2020 to $300 million in FY2021. Subsequently, on March 17, 2020, the Office of Management and Budget submitted an amendment to President Trump's original request that would increase funding for the National Institute of Allergy and Infectious Disease (NIAID) by $440 million relative to the original request. The purpose of this additional requested funding was "to ensure [NIAID] has the resources beginning October 1, 2020, to continue critical basic and applied research on coronaviruses and other infectious diseases." This amendment to the original proposal, if enacted, would result in NIAID receiving an increase of $9.3 million above the FY2020 level. Taking into account this amendment, as of the date of this report, the FY2021 budget request would provide NIH with a total program level of $39.133 billion, a decrease of $2.55 billion (-6.1%) from FY2020-enacted levels, with a total of $38.811 billion by provided by LHHS appropriations. In addition, the FY2021 budget request proposes consolidating the Agency for Healthcare Research and Quality (AHRQ) into NIH, forming a 28 th IC the National Institute for Research on Safety and Quality (NIRSQ). The creation of a new NIH institute would require amendments to the PHSA, especially Section 401(d), which specifies that "[i]n the National Institutes of Health, the number of national research institutes and national centers may not exceed a total of 27." Under the FY2021 request, NISRQ would receive a total appropriation of $355.112 million, including $256.66 million in discretionary LHHS budget authority and $98.452 million in mandatory appropriations from the Patient-Centered Outcomes Research Trust Fund (PCORTF) in Social Security Act Section 1181. Congress did not adopt the Administration's similar proposals to consolidate AHRQ into NIH as NIRSQ in FY2018 through FY2020. The budget request proposes select specified FY2021 funding levels for programs and activities within and across the NIH accounts based on the Administration's research priorities, as summarized in Table A-3 . If adopted, these funding levels would likely be specified in report and/or explanatory statement language accompanying LHHS appropriations bills. For the most part, Congress does not specify NIH funding for particular diseases or areas of research, instead allowing the ICs to award funding within their mission areas. Funding awards are generally made on a competitive basis through various funding mechanisms intended to balance scientific opportunity with health priorities. <1.5. Trends> Table 2 outlines NIH program level funding over the previous 25 years; Figure 1 illustrates funding trends in both current (also called nominal dollars) and projected constant (i.e., inflation-adjusted) FY2021 dollars (funding shown is total budget authority). NIH has seen periods of high and low funding growth. Between FY1994 and FY1998, funding for NIH grew from $11.0 billion to $13.7 billion (nominal dollars). Over the next five years, Congress and the President doubled the NIH budget to $27.2 billion in FY2003. In each of FY1999 through FY2003, NIH received annual funding increases of 14% to 16%. From FY2003 to FY2015, NIH funding increased more gradually in nominal dollars. In some years, (FY2006, FY2011, and FY2013) funding for the agency decreased in nominal dollars. From FY2016 through FY2020, NIH has seen funding increases of over 5% each year. The largest increase was from FY2017 to FY2018, where the program level increased by $3.0 billion (+8.7%), making this the largest single-year nominal dollar increase since FY2003. The lower half of Figure 1 shows NIH funding adjusted for inflation (in projected constant FY2021 dollars) using the Biomedical Research and Development Price Index (BRDPI). It shows that the purchasing power of NIH funding peaked in FY2003 (the last year of the five-year doubling period) and then declined fairly steadily for more than a decade until back-to-back funding increases were provided in each of FY2016 through FY2020. The FY2021 budget request would provide a program level that is 13.0% below the peak FY2003 program level. Appendix A. NIH Funding Details Program-Specific Funding In recent years, Congress and the President have increasingly specified funding levels for programs or research areas within NIH accounts throughout the budget and appropriations process. Congress uses language in reports and explanatory statements accompanying appropriations bills to designate funding for specified purposes. The Administration requests NIH program-specific funding, as outlined in the HHS and NIH budget request documents. For the most part, Congress does not specify NIH funding for particular diseases or areas of research, instead allowing the ICs to award funding within their mission areas. Funding is generally awarded on a competitive basis through various funding mechanisms intended to balance scientific opportunity with health priorities. In FY2020, Congress used explanatory statement language to specify a certain amount of IC funding for designated purposes, as summarized in Table A-2 . Sometimes the language specifies that "no less than" a certain amount can be designated for a certain purpose; in other cases, language "provides" or "recommends" that an amount be spent on a certain purpose. For FY2020, while the House report ( H.Rept. 116-62 ) also included funding levels for some of the below programs, the amounts in the explanatory statement supersede those. Both the explanatory statement and the House report include many additional statements directing the agency to prioritize certain programs or areas of research, as well as expressing the opinion or concerns of Congress regarding NIH; these broad statements are not summarized here. Appendix B. Acronyms and Abbreviations

This report details the National Institutes of Health (NIH) budget and appropriations process with a focus on FY2020 and FY2021, and on coronavirus supplemental funding for NIH. The report also provides an overview of funding trends in regular appropriations to the agency from FY1995 to FY2021. Appendix A includes funding tables by account and program-specific funding levels for FY2020 and FY2021. The NIH is the primary federal agency charged with conducting and supporting medical, health, and behavioral research, and it is made up of 27 Institutes and Centers and the Office of the Director (OD). About 80% of the NIH budget funds extramural research through grants, contracts, and other awards. About 10% of NIH funding goes to intramural researchers at NIH-operated facilities. Almost all of NIH's funding is provided in the annual Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act. NIH also receives smaller amounts of funding from Interior/Environmental appropriations and a mandatory budget authority for type 1 diabetes research. NIH has an FY2020 program level of $41.685 billion and has received emergency supplemental appropriations in three coronavirus supplemental appropriations acts, totaling over $3.59 billion—an 8.6% funding increase over regular enacted FY2020 appropriations. The administration's FY2021 budget request, as amended by a March 2020 letter, proposes an FY2021 program level of $39.133 billion—a 6.1% decrease from the FY2020 program level (regular appropriations). NIH has seen periods of high and low funding growth during the period covered by this report, as illustrated in Figure 1 . Between FY1994 and FY1998, funding for NIH grew from $11.0 billion to $13.7 billion (nominal dollars). Over the next five years, Congress and the President doubled the NIH budget to $27.2 billion in FY2003. In each of FY1999 through FY2003, NIH received annual funding increases of 14% to 16%. From FY2003 to FY2015, NIH funding increased more gradually in nominal dollars. In some years (FY2006, FY2011, and FY2013), funding for the agency decreased in nominal dollars. From FY2016 through FY2020, NIH has seen funding increases of over 5% each year. The largest increase was from FY2017 to FY2018, where the program level increased by $3.0 billion (+8.7%), making this the largest single-year nominal dollar increase since FY2003. When looking at NIH funding adjusted for inflation (in projected constant FY2021 dollars using the Biomedical Research and Development Price Index; BRDPI), the purchasing power of NIH funding peaked in FY2003—the last year of the five-year doubling period—and then declined fairly steadily for more than a decade until back-to-back funding increases were provided in each of FY2016 through FY2020. The FY2021 budget request would provide a program level that is 13.0% below the peak FY2003 program level.

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Rapid growth in leveraged lending, a relatively complex form of credit, in the current economic expansion has raised concerns with some policymakers because they have noted similarities between leveraged lending and mortgage lending and mortgage-backed securities (MBS) markets in the lead-up to the 2007-2009 financial crisis. This report explains how leveraged lending works; identifies the borrowers, lenders, and investors who participate in the market; and examines the characteristics of a leveraged loan. It then explains the characteristics of collateralized loan obligations (CLOs) securities backed by cash flow from pools of leveraged loans and their investors. Understanding CLOs is crucial to a discussion of the policy issues surrounding leveraged lending because more than 60% of investment in leveraged lending occurs through CLOs. The report also provides data on trends and investor composition. Once these basics are explained, the report explores the regulation of and some of the potential risks posed by leveraged lending and CLOs. Finally, it discusses how policymakers have addressed leveraged lending issues to date. <1. What Is Leveraged Lending?> Put simply, leveraged lending refers to loans to companies that are highly indebted (in financial jargon, highly leveraged ). Conceptually, a leveraged loan is understood to be a relatively high-risk loan made to a corporate borrower, but there is no consensus definition of leveraged lending for measurement purposes. Instead, different observers or industry groups use various working definitions that may refer to the borrower's corporate credit rating or a ratio of the company's debt to some measure of its ability to repay that debt, such as earnings or net worth. Because they are high risk, leveraged loans typically have relatively high interest rates, and thus offer higher potential returns for lenders. <1.1. Who Are the Borrowers?> Leveraged loans are made to companies from all industries, and the concentration of leveraged lending in each industry varies over time based on industries' economic conditions. In the second quarter of 2018, healthcare and service were the top two industries using leveraged lending. Leveraged loans are often used to complete a buyout or merger, restructure a company's balance sheet (by buying back shares, for example), or refinance existing debt. <1.2. Who Are the Lenders?> Several types of institutions provide funds to borrowers in leveraged lending, including banks, insurance companies, pension funds, mutual funds, hedge funds, and other private investment funds. Put simply, those institutions are the lenders. However, this concise explanation does not capture certain important characteristics and dynamics within the leveraged lending market. The institution that originates a leveraged loan rarely, if ever, subsequently holds the loan entirely on its own balance sheet, because a lender often would be wary of taking on a large exposure to a single highly indebted company. Instead, the originating lender typically will either (1) partner with colenders, (2) sell pieces of a single loan to investors, or (3) bundle part or all of the loan into a pool of other leveraged loans in a process called securitization , then sell pieces of the pool to investors. The first two options referred to as syndicat ion and participation , respectively are described in more detail below. The third option creates securities called collateralized loan obligations (CLOs), which are described in more detail in the " What Are CLOs? " section. When examining statistics or regulations related to leveraged loans, this report will distinguish between institutions that issue (i.e., originate or create) leveraged loans and institutions that hold (i.e., invest in or purchase pieces of) leveraged loans or CLOs. One notable recent trend is the migration of activity from the banking sector to the nonbank sector. Historically, banks played a primary role in both issuing and holding leveraged loans. However, in recent decades, nonbank credit investors, such as private investment funds and finance companies, have increasingly overtaken market share. As shown in Figure 1 , in the primary market , where leveraged loans are first created, bank financing has fallen from about 70% in the mid-1990s to below 10% in 2018, whereas all other nonbank financing combined now comprises more than 90% of leveraged loan investments. As discussed below, this migration of activity from the banking industry to nonbank institutions has implications for systemic risk and how leveraged loans are regulated. <1.3. What Are Loan Syndication and Participation?> In general, a single lender does not want to hold a whole leveraged loan because such loans are large and risky. Instead, lenders typically use economically similar but contractually different arrangements syndication and participation to divide the loan among multiple lenders. Under both arrangements, multiple lenders provide a portion of the loan's funding and share in its risk and returns. The contractual relationship between the parties differs in syndications and participations. In a syndicated loan, the borrower enters into a single loan agreement with multiple lenders. Hence, all lenders have a direct contractual relationship with the borrower. Alternatively, a single lender could enter into the loan agreement with the borrower, and this originating lender could then sell portions of the loan, called participations , to other lenders. In this case, the borrower has a direct contractual relationship with the originating lender, who in turn has contractual relationships with the other participants. In either case, the loan has in effect been split up between multiple lenders, even though the particulars of the various parties' contractual rights and responsibilities differ. Syndication and participation require a relatively high degree of coordination among various institutions and stakeholders, and industry practice is that one company acts as an arranger of the deal. The arranger gathers information about the borrower and the loan's purpose, determines appropriate pricing and loan terms, and brings together lenders to join a loan syndication or buy participations. After the deal is closed, the arranger or another company acts as the loan's agent by collecting the payments and fees and passing the appropriate amounts to the loan's holders. The arranger and agent collect fees for these services. Traditionally, arrangers and agents were banks, who would also hold a large portion of the loan, and the colenders were also banks. Since the mid-1990s, colenders have increasingly been nonbank lenders, such as finance companies and private investment funds, and the portions of loans held by banks have decreased. In some cases, nonbank lenders have taken on the arranger and agent roles. How syndications and participations are regulated is covered in " How Are Leveraged Loans Regulated? " <1.4. What Are Covenants and Covenant-Lite Loans?> Leveraged loan agreements typically include covenants provisions in the loan contract that set conditions the borrower must meet to avoid technical default (as opposed to a payment default, wherein a scheduled payment is missed). Often these conditions relate to indications of the borrower's ability to repay the loan, such as cash flow and financial performance, or restrict certain actions the borrower may take, such as management changes or asset sales. If the borrower violates a covenant, the lender can accelerate or call the loan (possibly forcing the borrower into bankruptcy), but often lenders will instead restructure the loan with stricter terms that may include additional restrictions on the borrower's behavior. Lenders see covenants as an important mechanism to monitor the borrower's ability to repay the loan and avoid repayment defaults. Loan agreements that include fewer or more lax covenants than are found in traditional leveraged lending contracts are often characterized as covenant-lite . A number of industry observers have noted that covenant-lite loans are becoming more common, and some have argued this indicates credit standards are declining and could lead to higher losses in the future. However, the causes of the increase in covenant-lite loans and the level of concern this trend warrants are subject to debate. <1.5. What Is the Size of the Leveraged Lending Market, and How Much Has It Grown Recently?> The Federal Reserve states that there were approximately $1.15 trillion of leveraged loans outstanding at the end of 2018. For comparison, this amount was similar to U.S. auto loans ($1.16 trillion) or credit card debt ($1.06 trillion) outstanding. In recent years, leveraged lending has grown much faster than other categories of credit reported by the Federal Reserve (see Table 1 ). The $1.15 trillion outstanding was a 20.1% increase from a year earlier more than four times the growth of overall business credit and annual growth has averaged 15.8% since 2000. By comparison, student loans outstanding grew 5.3% last year and have averaged 9.7% annual growth since 1997. In part, the rapid growth in leveraged loans reflects growing nonfinancial business indebtedness, but overall nonfinancial business indebtedness grew only about a fifth as quickly as leveraged lending. This suggests that leveraged lending growth may reflect a substitution of one type of debt for another. <2. Who Holds Leveraged Loans?> Investors can hold leveraged loans by either (1) investing directly in individual leveraged loans, typically through syndications and participations or (2) investing in CLOs. Institutions that directly hold large shares of outstanding leveraged loans include mutual funds (19%), banks (8%), and insurance companies (6%), as shown in Figure 2 . According to one study, mutual fund holdings are split fairly evenly between funds offered to institutional investors and funds offered to retail investors. Nearly all of the remainder of leveraged loans (62%) are held by CLOs. Portions, or tranches , of CLOs are then sold, largely to the same types of investors that invest directly in leveraged loans. CLOs will be discussed in more detail in the next section. As discussed above, banks' share of funding in the leveraged loan market has exhibited a long-term decline. <3. What Are CLOs?> Collateralized loan obligations are securities backed by portfolios of corporate loans. Although CLOs can be backed by a pool of any type of business loan, in practice, U.S. CLOs are primarily backed by leveraged loans, according to the Federal Reserve. The outstanding value of U.S. CLOs has grown from around $200 billion at year-end 2006 to $617 billion at year-end 2018. As noted above, about 60% of leveraged loans are held in CLOs. CLOs offer a way for investors to receive cash flows from many loans, instead of being completely exposed to potential payments or defaults on a single loan. To isolate financial risks, CLOs are structured as bankruptcy-remote special purpose vehicles (SPVs) that are separate legal entities. Each CLO has a portfolio manager, who is responsible for constructing the initial portfolio as well as the CLO's ongoing trading activities. CLO managers are primarily banks, investment firms (including hedge funds), and private equity firms. CLOs are sold in separate tranches , which give the holder the right to the payment of cash flow on the underlying loans. The different tranches are assigned different payment priorities, so some will incur losses before others. This tranche structure redistributes the loan portfolios' credit risk. The tranches are often known as senior , mezzanine , and equity tranches, in order from highest to lowest payment priority, credit quality, and credit rating. Through this process, the loan portfolio's risks are redistributed to the lower tranches first, and tranches with higher credit ratings are formed. In general, the financial industry views CLOs' tranched structure as an effective method for providing economic protection against unexpected losses. As Figure 3 illustrates, in the event of default, the lower CLO tranches would incur losses before others. Hence, tranches with higher payment priority have additional protection from losses and receive a higher credit rating. The pricing of the tranches also reflects this difference in asset quality and credit risk, with lower tranches offering potentially higher returns to compensate for greater risks taken. <4. Who Holds CLOs?> CLOs are often sold to institutional investors, including asset managers, banks, insurance companies, and others. The asset management industry, which includes hedge funds and mutual funds, mainly holds the riskier mezzanine and equity tranches, and banks and insurers hold most of the lower-risk senior CLO tranches. The Federal Reserve estimated that U.S. investors held approximately $556 billion in CLOs based on U.S. loans at the end of 2018. Of this, an estimated $147 billion in U.S. CLO holdings were issued domestically. Detailed data on domestic CLOs' holders are not available; certain detailed data, however, can be found in the reporting of cross-border financial holdings, which comprise a large majority of U.S. CLOs. The cross-border financial reporting indicates that $409 billion of U.S. CLO holdings were issued in the Cayman Islands, apparently the only offshore issuer. Figure 4 provides an overview by investor type for domestic holdings of these CLOs. <5. Could Leveraged Loans Exacerbate an Economic Downturn?> The rapid growth of leveraged lending has led to concerns that this source of credit could dry up in the next downturn. A slowdown in leveraged loan issuance could pose challenges for the (primarily) nonfinancial companies relying on leveraged loans for financing. Were these firms to lose access to financing, they could be forced to reduce their capital spending, among other operational constraints, if they were unable to find alternative funding sources. Capital spending (physical investment) by businesses is typically one of the most cyclical components of the economy, meaning it is highly sensitive to expansions and recessions. Overall borrowing by nonfinancial firms is historically high at present. This raises concerns that heavily indebted firms could experience a debt overhang where high levels of existing debt curtail a firm's ability to take on new debt in the next downturn. If a debt overhang at nonfinancial firms leads to a larger-than-normal reduction in capital spending or more corporate failures, this might exacerbate the overall downturn. If a downturn in the leveraged loan market had a negative effect on financial stability, as discussed in the next section, negative effects on the overall economy could be greater. <6. What Are the Risks Associated with Leveraged Loans and CLOs?> Leveraged loans and CLOs pose potential risks to investors and overall financial stability. Some risks, such as potential unexpected losses for investors, are presented by both leveraged loans and CLOs. Some apply to only one, such as risks posed by securitization presented by CLOs. This section considers the risks posed by both, highlighting differences between the two where applicable. Risks to investors. Like any financial instrument, leveraged loans and CLOs pose various types of risk to investors. In particular, they pose credit risk the risk that loans will not be repaid in full (due to default, for example). Credit risk is heightened because the borrowers are typically relatively indebted, have low credit ratings, and, in the case of covenant-lite loans, certain common risk-mitigating protections have been omitted. The ways borrowers often use the funds raised from leveraged loans, such as for leveraged buyouts, can also be high risk. Nevertheless, the overall risk of leveraged loans should not be exaggerated leveraged loans have historically had lower default rates and higher recovery rates in default than high-yield ( junk ) bonds, another form of debt issued by financially weaker firms. Credit risk is mitigated to a certain degree because leveraged loans are typically secured and their holders stand ahead of the firm's equity holders to be repaid in the event of bankruptcy. Furthermore, leveraged loans typically have floating interest rates, so interest rate risk is borne by the borrower, not the investor. As mentioned in the "What Are CLOs?" section, when leveraged loans are securitized and packaged into CLOs, the credit risk of the original leveraged loans is redistributed by the CLOs' tranched structure, with senior tranches (mostly held by banks and insurers) often receiving the highest credit rating (e.g., AAA) and junior tranches (mostly held by hedge funds and other asset managers) receiving lower credit ratings. Subordinated debt and equity positions provide additional protection to the senior tranches. Tranching distributes CLO credit risk differently across investors in different tranches. Up to this point in the credit cycle, the risks associated with leveraged loans and CLOs have largely not materialized leveraged loan default rates have been relatively low because of low interest rates and robust business conditions. But some analysts fear that default rates could spike if economic conditions worsen, interest rates rise, or both and these possibilities may not have been properly priced in. Default rates on leveraged loans rose from below 1% to almost 11% during the last recession. An unanticipated spike in default rates would impose unexpected losses on leveraged loan and CLO holders. Systemic risk. Investment losses associated with changing asset values, by themselves, are routine in financial markets across many types of assets and pose no particular policy concern if investors have the opportunity to make informed decisions. The main policy concern is whether leveraged loans and CLOs pose systemic risk ; that is, whether a deterioration in leveraged loans' performance particularly if it were large and unexpected could lead to broader financial instability. This depends on whether channels exist through which problems with leveraged loans could spill over to cause broader problems in financial markets. Losses on leveraged loans or liquidity problems with leveraged loans could lead to financial instability through various transmission channels discussed below. During the financial crisis, problems with mortgage-backed securities (MBS) demonstrated how a class of securities can pose systemic risk. Similar to CLOs, MBS are complex, opaque securities backed by a pool of underlying assets that are typically tranched, with the senior tranches receiving the highest credit rating. Unexpected declines in housing prices and increases in mortgage default rates revealed that MBS both highly rated and lowly rated tranches had been mispriced, with the previous pricing not accurately reflecting the underlying risks. The subsequent repricing led to a cascade of systemic distress in the financial system: liquidity in the secondary market for MBS rapidly declined and fire sales pushed all MBS prices even lower. MBS losses caused certain leveraged and interconnected financial institutions, including banks, investment firms, and insurance companies, to experience capital shortfalls and lose access to the short-term borrowing markets on which they relied. Ultimately, these problems caused financial panic and a broader decline in credit availability as financial institutions deleveraged reducing new lending activity to restore their capital levels in response to MBS losses. The resulting reduction in credit in turn caused a sharp decline in real economic activity. CLOs today share some similarities with MBS before the crisis, but there are important differences. Similarities include the rapid growth in available credit and erosion of underwriting standards. Both types of securities are relatively complex and opaque, potentially obfuscating the underlying assets' true risks. Outstanding leveraged loans and CLOs are small relative to overall securities markets, which in isolation is prima facie evidence that they pose limited systemic risk, even if they were to become illiquid or subject to fire sales. However, before the financial crisis, policy concerns were mainly focused on potential problems in subprime mortgage markets, which were also relatively small. Nevertheless, problems with subprime mortgages turned out to be the proverbial tip of the iceberg, as the deflating housing bubble caused losses in the much-larger overall mortgage market. Analogously, a disruption in the leveraged lending market could create spillover effects in related asset classes, similar to how problems that started with subprime mortgages eventually spread to the entire mortgage market and nonmortgage asset-backed securities in the financial crisis. Ultimately, the underlying cause of the MBS meltdown was the bursting of the housing bubble. Despite the high share of business debt to gross domestic product (GDP) at present, experts are divided on whether there is any underlying asset bubble in corporate debt markets (analogous to the housing bubble) that could lead to a destabilizing downturn. In addition, it is not clear whether unexpected losses in leveraged lending would lead to broader systemic deleveraging by financial firms or problems for systemically important institutions. Losses on leveraged loans or CLOs might not cause problems for leveraged financial institutions, such as banks, because (1) their leveraged loan and CLO holdings are small relative to total assets and limited mostly to AAA tranches; and (2) banks face higher capital and liquidity requirements to protect against losses or a liquidity freeze, respectively, than they did before the crisis. Furthermore, the largest holders of leveraged loans and CLOs are asset managers. They generally hold these assets as agents on their clients' behalf and thus are normally not vulnerable to insolvency from asset losses because those losses are directly passed on to account holders, who own the assets. Another source of systemic risk relates to a liquidity mismatch for certain holders. There is potentially an incentive for investors in leveraged loan mutual funds and exchange traded funds (ETFs), respectively, to redeem their shares on demand for cash or sell their shares during episodes of market or systemic distress, similar to a bank run. Because the underlying leveraged loans and CLOs are illiquid, investors who are first to exit could limit their losses if they redeem them while the fund still has cash on hand and is not forced to sell the underlying assets at fire sale prices. This incentive could act as a self-fulfilling prophecy, as the incentive to run could cause mass redemptions that then force fire sales that reduce the fund's value. Leveraged loan mutual funds generally allow withdrawal on demand, but other run risk may be limited because "U.S. CLOs are not required to mark-to-market their assets, and early redemption by investors is generally not permissible" and other private investment funds, such as hedge funds, often feature redemption restrictions. Although the financial crisis is a cautionary tale, there are other historical examples where a sudden shift in an asset class's performance did not lead to financial instability. For example, a collapse in the junk bond market following a spike in defaults from 1989 to 1990 did not pose problems for the broader financial system or economy. In addition, while CLO issuance slowed during the last financial crisis, the rating agency and data provider Standard & Poor's reports that CLO default rates remained low and "no tranches originally rated AAA or AA experienced a loss" throughout the crisis. However, the amount of CLOs outstanding was much smaller then compared to now, and product features have changed over time. More recently, in December 2018, relatively large investor withdrawals from bank loan mutual funds did not result in instability in the leveraged loan market. <7. How Are Leveraged Loans Regulated?> The goals of financial regulation, and the tools used to achieve those goals, vary based on the type of financial institution, market, or instrument involved. Thus, to answer this question, it is useful to break down leveraged loan regulation by the type of institution and activity (issuance, investment, and securitization). Leveraged lending falls under the purview of multiple regulators with different regulatory approaches and authorities. This regulatory fragmentation could encourage activities to migrate to less-regulated sectors, limits the official data available, and may complicate the evaluation and mitigation of any potential systemic risk to financial stability associated with leveraged lending. Following the 2007-2009 financial crisis, the Financial Stability Oversight Council (FSOC), an interagency council of regulators headed by the Treasury Secretary, was created to address threats to financial stability and issues where regulatory fragmentation hinders an effective policy response. In its 2018 Annual Report, FSOC recommended that the financial regulators "continue to monitor levels of nonfinancial business leverage, trends in asset valuations, and potential implications for the entities they regulate." Outside of monitoring risk, FSOC has not, to date, recommended any regulatory or legislative changes to address leveraged lending. <7.1. How Are Leveraged Loan Issuance and Syndication Regulated?> The regulations applicable to leveraged loan issuance and syndication differ between banks and nonbank lenders. In both cases, though, leveraged lending falls under the laws and regulations applied to business lending in general, rather than rules that apply specifically to leveraged lending. In general, banks are required to act in a safe and sound manner to mitigate the potential for failure and are subject to supervision to ensure that they are doing so. As such, regulators generally will check banks' leverage loan origination, syndication, and participation practices as part of regular examinations. This supervision could uncover cases in which a bank is originating or syndicating excessively risky leveraged loans. In addition, the bank regulators have issued guidance documents, most recently in 2013, describing certain standards and practices and communicating regulator expectations related to leveraged lending. Whether this guidance qualifies as regulation that must go through the rulemaking process is a matter of debate examined in the " What Is the Status of the Bank Regulators' Leveraged Loan Guidance? " section later in this report. In any case, the guidance covers only the leveraged loan activities of banks, is not meant to cover nonbank activity or bank investment in CLOs, and cannot address potential systemic risk originating outside of the banking system. Nonbank participants, with the exception of insurance companies, generally are not subject to similar oversight. To the extent that banks' role in leveraged lending is decreasing, and particularly in cases where a bank is not involved in a leveraged loan at all, this could result in reduced regulatory oversight of leveraged loan issuance and syndication. <7.2. What Regulations Do Investors Face When They Hold Leveraged Loans or CLOs?> Regulations applicable to holding leveraged loans or CLOs depend on what type of entity is involved. Nonbank investment funds, banks, and insurance companies all face different requirements. As with regulations applying to issuance, these rules generally are not uniquely or specifically applied to leveraged loans and CLOs, but rather to all types of loans and assets held by these institutions. Banks. Banks face a number of prudential (or safety and soundness) regulations related to all bank activities, including leveraged lending. Capital requirements and the Volcker Rule are notable prudential regulations banks must consider when engaged in leveraged lending. Certain payments banks make on capital are flexible, unlike the rigid payment obligations they face on deposits and liabilities. Thus, capital gives banks the ability to absorb some amount of losses without failing. Banks are required to satisfy several requirements to ensure they hold enough capital. In general, these requirements are expressed as minimum ratios between certain balance sheet items that banks must maintain. L everage ratios require banks to hold a certain amount of capital for all loans regardless of riskiness, whereas r isk -weighted ratios require banks to hold an amount of capital based on the riskiness of the loan. When a bank holds leveraged loans or CLO tranches or makes credit available to others to finance leveraged loans or CLOs, it must comply with both types of requirements. Based on the characteristics of individual loans and assets, a bank might be required to hold a relatively large amount of capital for leveraged loans and CLOs to comply with risk-weighted ratios. Banks also face certain permissible activity restrictions , which prohibit them from engaging in certain risky activities. Section 619 of the Dodd-Frank Act (called the Volcker Rule) is one such regulation that prohibits banks from proprietary trading and certain relationships with hedge funds and certain other funds. The latter restriction may be pertinent to banks' involvement in CLOs, depending on how they are structured. Although CLOs may be structured in a manner similar to loan participations (which generally are allowed under the Volcker Rule), they can also be structured such that banks' ownership interests appear similar to those associated with hedge funds (which is generally not allowed under the Volcker Rule). The Volcker Rule establishes criteria for a CLO to qualify for an exemption. Moreover, the final rule provides guidance on how banks may construct CLO structures to avoid retaining impermissible ownership or equity interests that resemble hedge funds. In addition, banks are subject to periodic examination by federal bank regulators. If examiners determine a bank is holding overly risky loans, they can give it a worse rating (which in turn could increase the fees it pays for deposit insurance or restrict it from certain activities) or direct it to take corrective action. Because leveraged loans are considered more risky than other loan types, they may be more likely to draw examiners' attention and elicit a response. Furthermore, the bank regulators established the Shared National Credit Program in 1977 to more closely monitor and assess risk related to large syndicated loans. The program requires banks to report data on syndicated loans larger than $100 million. To inform banks of their regulatory obligations and regulator expectations related to leveraged lending, the federal bank regulatory agencies have issued a guidance document to banks. Whether this document qualifies as an official regulation, as well as, whether it inappropriately discouraged banks from engaging in leveraged lending, is a subject of debate covered in this report's section " What Is the Status of the Bank Regulators' Leveraged Loan Guidance? " below. Asset management . Relative to banking, investment funds in the asset management industry involve different operational frameworks and regulatory requirements. The asset management industry's operating framework is an agent-based model that separates investment management functions from investment ownership. In this model, risk is largely borne by the investors who own the assets, not by the companies managing them. This is different from the model used for banking, in which banks own and retain the assets and risks. Asset managers are generally not subject to safety and soundness regulations that apply to banks. The Securities and Exchange Commission (SEC) is the primary regulator overseeing the asset management industry. The main components of the SEC's asset management regulatory regime include disclosure requirements, investor access restrictions, examinations, and risk mitigation controls. In addition, the SEC's Office of Compliance Inspections and Examinations (OCIE) is responsible for conducting examinations and certain other risk oversight of the asset management industry. Examples of violations involving leveraged loan capital markets participants that could trigger a SEC investigation include market manipulation and violation of fiduciary duties. Industry self-regulatory organizations under SEC oversight, such as the Financial Industry Regulatory Authority (FINRA), could also examine broker-dealers involved with leveraged lending. Restrictions or requirements for investment funds in the leveraged lending and CLO markets depend on whether a fund is public (broadly accessible by investors of all types) or private (accessible only by institutional and individual investors who meet certain size and sophistication criteria). Public funds that invest in leveraged lending and CLOs include mutual funds and exchange-traded funds (ETFs), whereas private fund investors include hedge funds and private equity. Depending on the types of the funds, they could also be subject to other requirements, such as disclosure of portfolio holdings through prospectus, conflict of interest mitigation through fiduciary requirements, liquidity and leverage restrictions, as well as operational compliance requirements to safeguard client assets. Insurance. Insurance firms are regulated for safety and soundness, but at the state level rather than by a federal entity. Insurance firms also face risk-based capital requirements that affect how many leveraged loans and CLOs they hold. Insurance capital requirements focus significantly on the riskiness of insurers' contingent liabilities (i.e., potential claims), in addition to the riskiness of the assets they hold. The National Association of Insurance Commissioners (NAIC) assigns a risk assessment to the assets (including leveraged loans and CLOs) insurance companies purchase to back their claims. Riskier assets get less credit toward fulfilling those capital requirements. Thus, the risk assessment assigned to individual leveraged loans and CLOs largely determines the limits that capital requirements impose on insurers' holdings of those loans and securities. In 2017, 97% of CLOs held by insurers received an investment-grade rating from the NAIC (NAIC-1 or NAIC-2), posing less expected risk and requiring less capital to guard against that risk than lower-rated holdings. A significant difference between the insurance and banking industries, and thus how they are regulated for safety and soundness, is the importance of matching the durations of assets and liabilities in insurance, particularly life insurance. Insurance often entails much longer-term liabilities than does banking, allowing insurers to safely hold longer-term assets to match these longer-term liabilities. This allowance for duration matching may influence the leveraged loans and CLOs an insurer can safely hold. However, insurance regulators have recently increased their focus on the liquidity of insurers' assets, which could discourage insurers from holding many leveraged loans and CLOs because of their relative illiquidity. <7.3. How Is the Securitization Process to Create CLOs Regulated?> Through the securitization process, securities (CLOs) backed by leveraged loans are issued and sold to investors. This section highlights the regulatory requirements applied to CLOs and CLO managers. Notably, it discusses the initial application of risk-retention rules to CLOs, and their subsequent partial removal. The securitization process traditionally allowed managers creating the securities to fully transfer their portfolio assets (and risks) to capital markets investors. This process could result in a misalignment of incentives between managers and investors because the managers did not share much of the securitized products' risks, which has been referred to as a lack of "skin in the game." The 2007-2009 financial crisis revealed this misalignment as a structural flaw that contributed to the crisis. To address the issue, the SEC and other financial regulators adopted credit risk-retention rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act ( P.L. 111-203 ) for securitization structures, including CLOs, in December 2016. The risk retention rule requires CLO managers to retain 5% of the original value of CLO assets, thus aligning their own interests with those of investors (i.e., imposing skin in the game). Subsequently, in 2018, the U.S. Court of Appeals ruled that managers of open-market CLOs, which are reportedly the most common form of CLOs, are no longer subject to risk-retention rules. However, other types of CLOs are still subject to risk-retention requirements. CLOs are securities instruments. The federal securities laws, including the Securities Act of 1933 (P.L. 73-22) and the Securities Exchange Act of 1934 (P.L. 73-291), require all offers and sales of CLO securities to either be registered under its provisions or qualify for an exemption from registration. Registration requires public disclosure of material information, such as the underlying security's financial details. However, most CLOs are created under private exemptions, which require less registration than public offerings but confine offerings to a more limited investor base. As discussed above, a CLO manager oversees the securitization process. CLO managers are generally registered as investment advisers under the Investment Advisers Act of 1940. As a result, they are subject to the SEC's registration and compliance requirements as well as the fiduciary duties that obligate them to place clients' interests above their own. <8. What Is the Status of the Bank Regulators' Leveraged Loan Guidance?> Bank regulators use guidance to provide clarity to banks on supervision, such as how supervisors treat specific activities in their exams. In 2013, the federal bank regulators jointly issued an updated 15-page guidance document that described their "expectations for the sound risk management of leveraged lending activities." Subsequently, banks asserted that following the guidance constrained them from making sound loans and that regulators enforced the guidance as if it were a binding regulation. As opposed to guidance, a regulation can be issued only if the agency follows the Administrative Procedure Act's requirements (5 U.S.C. 551 et seq.), including the notice and comment process and other relevant requirements. Under the Congressional Review Act (CRA; P.L. 104-121 ), regulators must submit new regulations and certain guidance documents to Congress, which can then prevent a regulation or guidance from taking effect by enacting a joint resolution of disapproval. Because the bank regulators appeared to have the view that the document did not meet the CRA's definition of "rule," they did not submit it to Congress. In 2017, Senator Pat Toomey asked the Government Accountability Office (GAO) to analyze the guidance and determine whether it qualified as a rule subject to CRA review. GAO concluded that the guidance is a rule subject to CRA review. Following GAO's determination, the bank regulators reportedly sent letters to Congress indicating they would seek further feedback on the guidance, and Federal Reserve Chairman Jerome Powell indicated at a hearing on February 27, 2018, that the Federal Reserve has emphasized to its bank supervisors that the guidance was nonbinding. The Comptroller of the Currency, Joseph Otting, reportedly stated in 2018 that the guidance provides flexibility for leveraged loans that do not meet its criteria, provided banks operate in a safe and sound manner. To date, no changes have been made to the guidance and no joint resolution of disapproval under the CRA has been introduced. The Congressional Research Service has been unable to locate a submission of the guidance to Congress following the GAO finding that it was required under the CRA. <9. How Has Congress Responded to Leveraged Lending?> The House Financial Services Committee held a hearing on June 4, 2019, entitled Emerging Threats to Stability: Considering the Systemic Risk of Leveraged Lending . Two unnumbered draft bills related to leveraged lending were considered at this hearing. The draft Leveraged Lending Data and Analysis Act would require the Office of Financial Research, a Treasury office that supports FSOC, to gather information, assess risks, and make recommendations in a report to Congress on leveraged lending. The draft Leveraged Lending Examination Enhancement Act would require the Federal Financial Institutions Examination Council (FFIEC), an interagency council of federal bank regulators, to set prudential standards for leveraged lending by depository institutions. It would also require the FFIEC to report quarterly on leveraged lending by depository institutions.

Leveraged lending generally refers to loans made to businesses that are highly indebted or have a low credit rating. Most leveraged loans are syndicated, meaning a group of bank or nonbank lenders collectively funds a leveraged loan made to a single borrower, in contrast to a traditional loan held by a single bank. In some cases, investors hold leveraged loans directly. However, more than 60% of leveraged loans are securitized into collateralized loan obligations (CLOs)—securities backed by cash flow from pools of leveraged loans. These securities are then sold to investors. The largest investors in leveraged loans and CLOs are mutual funds, insurance companies, banks, and pension funds. During the past decade, the U.S. leveraged loan market experienced periods of growth; it grew by 20% in 2018, bringing the amount outstanding to more than $1 trillion. According to some industry observers, deteriorating credit quality and decreasing investor safeguards have accompanied this growth; however, default rates have remained low. The share of leveraged loans originated by and held by banks has declined, whereas the roles of nonbank participants, such as investment management and finance companies, have increased. In addition, some observers have noted similarities between leveraged lending and CLO market characteristics and those of certain mortgage lending and mortgage-backed securities (MBS) markets in the lead-up to the 2007-2009 financial crisis. As a result, leveraged lending has raised a number of interrelated policy issues. Observers express concerns that leveraged lending presents certain financial and economic risks, as both a potential source of systemic risk and a mechanism that could exacerbate a future recession (even if it does not cause financial instability). Leveraged lending could pose systemic risk because it couples high risk with opacity, potentially leading to unexpectedly high losses and financial disruption. Some experts have argued that potential leveraged loan losses or illiquidity could lead to contagion effects, wherein one financial firm's distress affects other firms and activities. However, banks' limited exposure to leveraged loans and stronger postcrisis capital and liquidity positions might mitigate contagion effects. For these reasons, some financial authorities (e.g., the chairman of the Federal Reserve) have indicated that although leveraged loans raise some concerns, they "do not appear to present notable risks to financial stability." Even if leveraged loans do not cause financial instability, some nonfinancial firms that rely on leveraged lending could lose access to financing during the next downturn, which could negatively affect their operations if they were unable to find alternative funding. Overall borrowing by nonfinancial firms is historically high, which could lead to a larger-than-normal cutback in their spending or more corporate failures in the next recession, exacerbating that recession. Some assert that because certain leveraged loans, such as those involved in private nonbank transactions, face different regulation than leveraged lending by banks and comparable bond issuances, the market might be ineffectively regulated. In addition, some analysts have argued that a lack of transparency in the leveraged lending market prevents the industry and regulators from fully monitoring risks that could be addressed through increased data collection and sharing. To date, Congress and the financial regulators have mainly limited the policy response to leveraged lending to monitoring risks. A more active regulatory intervention would be complicated by the fact there are few specific regulations governing leveraged lending. (One exception is a supervisory guidance issued by bank regulators in 2013, which the regulators have stressed is nonbinding but the Government Accountability Office declared to be a regulation for Congressional Review Act purposes in 2017.) Addressing systemic risk is under the purview of federal financial regulators, including the Financial Stability Oversight Council (FSOC), an interagency council headed by the Treasury Secretary. Although FSOC recommended in its 2018 Annual Report that the financial regulators "continue to monitor levels of nonfinancial business leverage, trends in asset valuations, and potential implications for the entities they regulate," it did not recommend regulatory or legislative changes to address leveraged lending.

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<1. Introduction> Virtually all societies attempt to remember and memorialize individuals, groups, and events as part of the preservation of shared rhetoric and history. In the United States, there are hundreds, and possibly thousands, of memorials to various individuals, groups, and events. These commemorative works may "engage the population in maintaining memory on a daily basis" in a way that "no documents or records can." Decisions about which people, groups, or events to memorialize are made by many different entities, including Congress, federal agencies, state and local governments, and private citizens, among others. For example, for memorials on federal land in the District of Columbia, the Commemorative Works Act (CWA) requires that Congress provide authorization for a new memorial. In other areas, various laws, regulations, and policies may provide for different groups and governments to decide what should be commemorated and how. Once a decision to commemorate is made, decisionmakers face issues related to the location and cost of a memorial. The choice of a memorial's location is significant. Memorials are arguably most meaningful when they are located in a place with a relationship to the individual, group, or event being commemorated. In 2002, for example, a representative from the National Park Service (NPS) testified before Congress about the importance of place: No memorial designed for placement in Washington, D.C. could capture the emotion and awe of visitors to the USS Arizona Memorial, lying where it was sunk in Pearl Harbor. The Oklahoma City National Memorial would not have nearly the power it has if it had been constructed anywhere else but at the site of the Murrah Building. The memorial landscapes of Gettysburg or Antietam National Battlefields still haunt visitors who contemplate what occurred there nearly 150 years ago. Indeed, people from all over the world continue to be drawn to these hallowed grounds to reflect on the historical events that took place at the sites or, perhaps, to pay their respects to those who lost their lives there. This report considers the extent of federal involvement in memorials located outside the District of Columbia (Washington, DC). A distinction is drawn between memorials located within and outside of Washington, DC, because of the exclusive role the CWA gives Congress to authorize new memorials on federal land in the District of Columbia, and the role of federal agencies primarily NPS and the General Services Administration (GSA) in maintaining District-based memorials once dedicated. Other CRS reports provide further discussion of memorials within the District of Columbia. <2. Federal Role in Establishing and Maintaining Memorials Outside of Washington, DC> No systematic law or set of regulations governs the establishment of memorials outside Washington, DC. While many such works are established without federal involvement, Congress also has established or recognized numerous memorials nationwide, and some have been designated by the executive branch. For purposes of this report, federal involvement in memorials outside the District of Columbia may be classified as "high," "medium," "low," or "none." ( Figure 1 ). 1. Memorials with "high" federal involvement typically are located on federal land; receive federal funds for design, construction, and maintenance; and are managed by federal agencies. These include memorials established by Congress as units of the National Park System or under the administration of another agency. 2. Memorials with "medium" federal involvement typically either are located on federal land but do not receive federal funding, or are located on nonfederal land but receive assistance from a federal agency. Examples include a number of memorials designated as NPS affiliated areas, which remain under nonfederal management but receive assistance from NPS. 3. Memorials with "low" federal involvement are those for which Congress provides statutory recognition, but which are not located on federal land or affiliated with a federal agency, and do not receive federal funds. 4. Memorials with no federal involvement are those that receive no federal recognition, are located on nonfederal land, and for which nonfederal resources were used to design and build the memorial. <2.1. High Federal Involvement: Federal Agency Management> In some instances, Congress authorizes a memorial to be created on federal land and administered by a federal agency. Such memorials have been established primarily as units of the National Park System, but also may be located within the jurisdiction of other agencies. Some of these memorials include multiple facilities such as a visitor center or kiosk in addition to the primary commemorative work. Congress also regularly enacts legislation to place plaques, markers, and similar works at federal sites, or to name federal sites in memory of individuals, groups, or events. In addition to congressional designations, executive-branch officials also have designated some commemorative works on federal land. Some agencies' regulations and policies allow for agency officials to authorize the placement of plaques, markers, and similar works on agency property, and to name structures or features in memory of a person, group, or event. For example, U.S. Army regulations allow for Army officials to approve memorials to certain distinguished individuals, including deceased Army uniformed and civilian personnel with records of outstanding and honorable service, under specified criteria. <2.1.1. Memorials Within the National Park System> To establish a national memorial as a unit of the National Park System, an act of Congress is required. For example, in the 107 th Congress, P.L. 107-226 established the Flight 93 National Memorial in Pennsylvania to "honor the passengers and crew of United Airlines Flight 93 of September 11, 2001." For a discussion of the process for creating a new NPS unit and associated issues, see CRS Report RS20158, National Park System: Establishing New Units . Table 1 lists national memorials outside the District of Columbia that are National Park System units. The table entries are organized alphabetically by state and the descriptions are adapted from the National Parks Index . Although two of the memorials do not include the word "national" in their names, NPS categorizes them all as national memorials. Although legislation is required to establish a memorial as an NPS unit, agency management policies allow for the NPS director to approve commemorative names and the placement of commemorative works within park units if specified criteria are met, including that there be a "compelling justification" for associating the memorialized person or event with the park in question, and a specified time lapse between the commemoration and the person's death or the event's occurrence. <2.1.2. Other Federal Agency Memorials> Both Congress and executive-branch officials also have established memorials on property administered by agencies other than NPS, such as the Department of Defense and others. These memorials typically are managed by the administering agency as part of its overall management of a larger site. For example, in 2015, Congress designated the Medicine Creek Treaty National Memorial, which is managed by the U.S. Fish and Wildlife Service (FWS), as part of the Billy Frank Jr. Nisqually National Wildlife Refuge in the state of Washington. In 2000, Congress directed the Secretary of the Interior to designate the Battle of Midway National Memorial in the Midway Atoll National Wildlife Refuge, also administered by FWS. <2.2. Medium Federal Involvement: Federal Lands or Federal Funds> In some instances, Congress has established a memorial on federal land but required it to be financed by a nonfederal entity, or alternatively, has provided federal financial and/or technical assistance to a nonfederal entity for management of a memorial that is not on federal land. NPS has played a large role in supporting these "medium-involvement" commemorative works, but other agencies have participated as well, especially branches of the Department of Defense. <2.2.1. Memorials Designated as NPS Affiliated Areas> Congress has designated some sites, including several national memorials, as affiliated areas of the National Park Service. These sites are not units of the National Park System and typically remain in nonfederal ownership and management, but receive technical and/or financial assistance from NPS. For example, P.L. 108-199 , the Consolidated Appropriations Act, 2004, transferred jurisdiction over the Oklahoma City Bombing Memorial from the NPS to the Oklahoma City National Memorial Foundation and provided that the NPS "is authorized to enter into 1 or more cooperative agreements with the Foundation for the National Park Service to provide interpretive services related to the Memorial." The Secretary of the Interior also may designate sites as NPS affiliated areas, but may not provide financial assistance to these sites without an act of Congress. Table 3 lists national memorials that are NPS affiliated areas, including the memorial's name, its location, and a description from the NPS. <2.2.2. Other Memorials with Partial Federal Involvement> Outside of the NPS affiliated area designation, Congress has sometimes provided for a federal agency to fund or otherwise assist a nonfederally administered memorial. For example, P.L. 107-117 appropriated $4.2 million to the Department of Defense to be used by the Secretary of the Navy as a grant to the U.S.S. Alabama Battleship Foundation, "to be available only for the preservation of the former USS Alabama (BB 60) as a museum and memorial." The same law also provided $4.3 million to the Intrepid Sea-Air-Space Foundation to preserve the former USS Intrepid as a museum and memorial. Congress has also sometimes provided a "medium" level of federal support to a memorial by authorizing its establishment on federal land, but without federal funding. For example, P.L. 115-170 authorized a private organization, Pacific Historic Parks, to establish a commemorative display within a national park unit the World War II Valor in the Pacific National Monument in Hawaii to honor soldiers who fought in the Pacific theater. The law specified that federal funds could not be used to design, procure, prepare, install, or maintain the commemorative display, although the NPS director is authorized to accept contributions of nonfederal funds and resources for such purposes. Similarly, P.L. 113-66 ( 2842) authorized the Secretary of the Navy to allow a memorial to military divers to be established at a suitable location under the Secretary's jurisdiction; however, the law prohibited the use of federal funds to design, procure, prepare, install, or maintain the memorial. The law required the Secretary to approve the memorial's final design and to ensure that an "assured" source of nonfederal funding was established for the memorial's construction and ongoing maintenance. Another example is the National Fallen Firefighters Memorial, which is located on federal land (the National Fire Academy in Emmitsburg, MD) but does not receive federal funds for maintenance. It is maintained by the National Fallen Firefighters Foundation, a nonprofit organization. Other variations of federal-nonfederal partnerships have also been established. For example, P.L. 109-163 ( 1017) authorized a nonfederal entity, the USS Oklahoma Memorial Foundation, to construct a memorial to the USS Oklahoma on federal land. Although the foundation was required to fund and execute construction of the memorial, the Secretary of the Interior was given ongoing responsibility for its administration. The Silent Heroes of the Cold War National Memorial was dedicated in 2015 by the U.S. Forest Service (FS) at a site in Nevada's Humboldt-Toiyabe National Forest, administered by FS, but was constructed with private funding. <2.3. Low Federal Involvement: Statutory Designation of Nonfederal National Memorials> On numerous occasions, Congress has designated an existing nonfederal memorial as a "national memorial" without any further federal affiliation. These memorials generally do not receive federal funds or support for maintenance or programming. Legislation designating these national memorials often includes explicit language stating that the memorial is not an NPS unit and that federal funds shall not be provided for the memorial. For example, the statute designating the National Distinguished Flying Cross Memorial in Riverside, CA, stated the following: (c) Effect of Designation. The national memorial designated by this section is not a unit of the National Park System, and the designation of the national memorial shall not be construed to require or permit Federal funds to be expended for any purpose related to the national memorial. Table 5 lists statutorily designated national memorials outside of Washington, DC, that are not National Park System units, NPS affiliated areas, or associated with other federal agencies. Some of these memorials do not have the word "national" in their name, but are listed in the U.S. Code as national memorials. <2.4. No Federal Involvement> In some cases, memorials located outside of the District of Columbia have been called "national" memorials without being so designated by Congress. For example, the George Washington Masonic National Memorial in Alexandria, VA, and the National Memorial for Peace and Justice in Montgomery, AL, are privately established and maintained. In cases where nonfederal sponsoring entities have titled works as national memorials without congressional recognition, these works generally do not receive federal funds or support for maintenance or programming. A comprehensive list of such memorials is not currently available. <3. Conclusions and Selected Options> Federal involvement with memorials outside of Washington, DC, currently takes a wide variety of forms. Congress has established national memorials that are entirely federally funded and managed, often as units of the National Park System. Congress has also provided for more limited types of federal involvement, such as funding assistance to a nonfederally located memorial or hosting of a nonfederally funded memorial on federal land. Also, Congress has provided statutory recognition to numerous nonfederal memorials without any additional federal involvement. Beyond these federally endorsed memorials, a wide variety of other entities have established and maintained memorials throughout the country with no federal connection, including some titled as "national memorials." For certain types of commemorations, Congress has taken a more systematized approach. For example, the CWA governs the establishment of memorials on federal lands in the District of Columbia, with provisions for the creation, design, construction, and maintenance of such works. If Congress wished to consider a more systematized approach to the establishment and/or funding of national memorials outside the District of Columbia, there are a number of potential options. For example, Congress could establish a statutory definition of a "national memorial" to guide decisionmaking as new proposals for commemoration arise. Congress might consider applying criteria similar to those of the CWA, or to those used by individual agencies for non-CWA memorials, that relate to the types of people and events that may be commemorated, and the amount of time that must pass between an event or individual's death and the commemoration. Congress could potentially limit the number of memorial designations that would be appropriate in a given time period, similar to current limits on the number of commemorative coins the U.S. Mint can issue in a year. For commemorative coins, committee rules have also required a minimum number of cosponsors before a bill might be considered. Creating systematic limitations of this nature for national memorials outside of Washington, DC, could potentially make these designations more valuable (if fewer opportunities for recognition were available) and might allow time to elapse for informed historical judgment before memorials are designated. However, such requirements might also serve to limit the number of contemporary national memorial opportunities and could be seen as reducing Congress's flexibility to make case-by-case decisions about memorials. Conversely, Congress might wish to increase the number of memorials that are nationally recognized outside of Washington, DC, such as through the establishment of a program to identify nonfederal memorials deserving of a national designation. Such a program could potentially include provisions similar to those for the U.S. Civil Rights Network established by P.L. 115-104 , which require the Secretary of the Interior to review studies and take other steps to identify federal and nonfederal sites related to the African American civil rights movement for potential inclusion in the network. Congress also could potentially consider a program to provide grants to nonfederal entities for constructing and/or maintaining national memorials outside of Washington, DC. Such a program could be seen as beneficial in promoting opportunities for public learning and memory, and encouraging suitable maintenance and upkeep of valued commemorative works. Alternatively, it could be opposed (for example, some might claim it would divert federal funds from more highly prioritized uses). Congress might determine that current practices surrounding the creation of national memorials outside the District of Columbia are effective or that the potential cost of changes outweigh the potential benefits. Congress could thus continue to evaluate requests to designate national memorials outside Washington, DC, on a case-by-case basis.

Congress frequently faces questions about whether and how to commemorate people and events that have influenced the nation's history. Congress often has chosen to do so by establishing national memorials or by conferring a national designation on existing state, local, or private memorials. The National Park Service (NPS) defines national memorials within the National Park System as "primarily commemorative" works that need not be at sites historically associated with their subjects. The Commemorative Works Act (CWA; 40 U.S.C. §§8901-8910) was enacted to govern the establishment process for memorials located in the District of Columbia (Washington, DC) or its environs that are under the jurisdiction of the NPS or the General Services Administration. The CWA includes provisions related to memorial location, design, construction, and perpetual maintenance. Memorials in Washington, DC, include those with the word national in the name and those that are essentially national memorials but do not bear that title. For memorials outside the District of Columbia, no specific law or set of regulations governs their establishment. Congress has established a number of federally administered national memorials throughout the nation, most often as units of the National Park System but also under management of other federal agencies. Various nonfederal entities undertaking commemorative efforts also have petitioned Congress for assistance or statutory recognition, and some individual memorial organizers have titled their works as national memorials without congressional recognition. To clarify options for Congress when considering commemoration of individuals, groups, and events through memorials, this report discusses several types of congressional involvement in memorials outside the District of Columbia. For purposes of the report, these are characterized as high federal involvement (e.g., congressional establishment of a national memorial under federal agency administration); medium federal involvement (e.g., congressional authorization for a memorial to be located on federal property or to receive federal funds); low federal involvement (e.g., statutory recognition without additional federal support); and no federal involvement (e.g., a self-declared national memorial). The report provides examples of memorials of each type and discusses some options for Congress, with regard to both individual memorial designations and consideration of whether to systematize criteria for memorials outside Washington, DC, similar to the CWA's provisions for District of Columbia memorials. Because this report focuses specifically on memorials outside the District of Columbia, please see CRS Report R41658, Commemorative Works in the District of Columbia: Background and Practice, by Jacob R. Straus, for discussion of memorials governed by the CWA in Washington, DC, and its environs.

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<1. Introduction> This report provides an overview of the FY2020 National Defense Authorization Act ( H.R. 2500 , S. 1790 , P.L. 116-92 ) and serves as a portal to other CRS products providing additional context, detail, and analysis concerning particular aspects of that legislation. Enacted annually to cover every defense budget since FY1962, the NDAA authorizes funding for the Department of Defense (DOD) activities at the same level of detail at which budget authority is provided by the corresponding defense, military construction, and other appropriations bills. While the NDAA does not provide budget authority, historically it has provided a fairly reliable indicator of congressional sentiment on funding for particular programs. The bill also incorporates provisions of law governing military compensation, the DOD acquisition process, and aspects of DOD policy toward other countries, among other subjects. Of the $761.8 billion requested by the Trump Administration for National Defense-related activities in FY2020, $750.0 billion is discretionary spending, of which approximately $741.9 billion falls within the scope of the annual NDAA. This includes $718.4 billion for DOD operations and $23.2 billion for defense-related work by the Energy Department involving nuclear energy, mostly related to nuclear weapons and nuclear power plants for warships. Other funding for defense-related activities, such as counter-intelligence work of the Federal Bureau of Investigation (FBI), falls mostly under the jurisdiction of other congressional committees. (See Figure 1 .) The following overview reviews the strategic and budgetary context within which Congress debated the FY2020 NDAA. Subsequent sections of the report summarize the bill's treatment of major components of the Trump Administration's FY2020 budget request as well as provisions attached to the final bill that deal with other issues. <2. FY2020 NDAA Overview> As enacted, the FY2020 NDAA authorizes a total of $729.9 billion for national defense-related activities, which is $12.0 billion (1.6%) less than the Administration requested. The request included $568.1 billion to be designated as base budget funds to cover the routine, recurring costs to man, train, and operate U.S. forces. The request also included an additional $173.8 billion to be designated as Overseas Contingency Operations (OCO) funds to cover costs associated with the aftermath of the terrorist attacks of September 11, 2001, and other activities. OCO-designated funds are exempt from the binding caps on defense spending set by the Budget Control Act of 2011 ( P.L. 112-25 ) and the Administration's request included $97.7 billion to be designated as OCO funding but intended to pay base budget expenses. ( Table 1 .) The Senate Armed Services Committee reported its version of the FY2020 NDAA ( S. 1790 , S.Rept. 116-48 ) on June 11, 2019 and the Senate passed the bill on June 27, 2019. The House Armed Services Committee (HASC) reported its version ( H.R. 2500 , H.Rept. 116-120 ) on June 19, 2019 and the House passed the bill on July 12, 2019. On September 17, 2019, the House took up the Senate-passed S. 1790 , amended it by eliminating the Senate-passed provisions and replacing them with the provisions of the House-passed H.R. 2500 , and then passed the amended bill by voice vote. House and Senate conferees worked to produce a conference version of S. 1790 . The conference report ( H.Rept. 116-333 ) was agreed to by the House on December 11, 2019 by a vote of 377-48 and agreed to by the Senate on December 17, 2019 by a vote of 86-8. ( Table 2 .) <3. Strategic Context> According to the Administration, the FY2020 budget request for DOD reflects a shift in strategic emphasis based on the 2018 National Defense Strategy (NDS), which called for "increased and sustained investment" to counter evolving threats from China and Russia. This would mark a change from the focus of U.S. national security policy for nearly the past three decades and a renewed emphasis on competition between nuclear-armed superpowers, which had been the cornerstone of U.S. strategy for more than four decades after the end of World War II. During the Cold War, U.S. national security policy and the design of the U.S. military establishment were strategically focused on competing with the Union of Soviet Socialist Republics and containing the global spread of communism. In the years following the collapse of the Soviet Union, U.S. policies were designed and U.S. forces were trained and equipped largely with a focus on dealing with potential regional aggressors such as Iraq, Iran, and North Korea and on recalibrating relations with China and Russia. After the terrorist attacks of September 11, 2001, U.S. national security policy and DOD planning focused largely on countering terrorism and insurgencies in the Middle East while containing, if not reversing, North Korean and Iranian nuclear weapons programs. However, as a legacy of the Cold War, U.S. and allied military forces had overwhelming military superiority over these adversaries and, accordingly, operations were conducted in relatively permissive environments. The 2014 Russian invasion of the Crimean peninsula and subsequent proxy war in eastern Ukraine fostered a renewed concern in the United States and Europe about an aggressive and revanchist regime in Moscow. Meanwhile, China began building and militarizing islands in the South China Sea in order to lay claim to key shipping lanes. Together, these events highlighted anew the salience in the U.S. national security agenda of dealing with other great powers , that is, states able and willing to use military force unilaterally to accomplish their objectives. At the same time, the challenges that had surfaced at the end of the Cold War fragile states, genocide, terrorism, and nuclear proliferation, to name a few remained serious threats to U.S. interests. In some cases, adversaries appear to be collaborating to achieve shared or compatible objectives and to take advantage of social and economic tools to advance their agendas. Some states are also collaborating with non-state proxies (including, but not limited to, militias, criminal networks, corporations, and hackers) and deliberately blurring the lines between conventional and irregular conflict and between civilian and military activities. In this complex security environment, it is arguably more difficult than in past eras to manage these myriad problems. The Trump Administration's December 2017 National Security Strategy (NSS), the 11-page unclassified summary of the January 2018 National Defense Strategy (NDS), and the 2019 National Intelligence Strategy explicitly reorient U.S. national security strategy (including defense strategy) toward a primary focus on great power competition with China and Russia and on countering their military capabilities. In addition to explicitly making the great power competition the primary U.S. national security concern, the NDS also argues for a focus on bolstering the competitive advantage of U.S. forces, which, the document contends, has eroded in recent decades vis- -vis the Chinese and Russian threats. The NDS also maintains that, contrary to what was the case for most of the years since the end of the Cold War, U.S. forces now must assume that their ability to approach military objectives will be vigorously contested. The Trump Administration's strategic orientation as laid out in the NSS and NDA is consistent with the strategy outlined in comparable documents issued by prior Administrations, in identifying five significant external threats to U.S. interests: China, Russia, North Korea, Iran, and terrorist groups with global reach. In a break from previous Administrations, however, the NDS views retaining the U.S. strategic competitive edge relative to China and Russia as a higher priority than countering violent extremist organizations. Accordingly, the new orientation for U.S. strategy is sometimes referred to a " 2+3 " strategy, meaning a strategy for countering two primary challenges (China and Russia) and three additional challenges (North Korea, Iran, and terrorist groups). <4. Budgetary Context> In the four decades since the end of U.S. military involvement in Vietnam, annual outlays by the federal government have increased by a factor of nine. The fastest growing segment of federal spending during that period has been mandatory spending for entitlement programs such as Social Security, Medicare, and Medicaid. (See Figure 2 .) The Budget Control Act (BCA) of 2011 (P.L. 112-25) was intended to reduce spending by $2.1 trillion over the period FY2012-FY2021, compared to projected spending over that period. One element of the act established binding annual limits (or caps) to reduce discretionary federal spending through FY2021 by $1.0 trillion. Separate annual caps on discretionary appropriations for defense-related activities and nondefense activities are enforced by a mechanism called sequestration . Sequestration provides for the automatic cancellation of previous appropriations, to reduce discretionary spending to the BCA cap for the year in question. The caps on defense-related spending apply to discretionary funding for DOD and for defense-related activities of other agencies, comprising the national defense budget function which is designated budget function 050 . Compliance with the BCA defense caps would have required DOD to reduce its planned spending by tens of billions of dollars per year through FY2021. Congress repeatedly has raised the annual spending caps to reduce their impact on projected spending. Nevertheless, the defense cap in effect when the Trump Administration submitted its FY2020 budget request was $576 billion $97.9 billion less than the Administration requested for base budget spending. To avoid breaking that cap, the Administration designated as OCO funding a total of $97.9 billion to fund base budget activities. In marking up their respective versions of the FY2020 NDAA, the Armed Services Committees of the House and Senate each treated those funds as part of the base budget. The issue became moot after the defense spending cap was raised by the Bipartisan Budget Act of 2019 (P.L. 116-37), enacted on August 2, 2019. <4.1. Long-term Trends> The total FY2020 DOD request including both base budget and OCO funding continued an upswing that began with the FY2016 budget, which marked the end of a relatively steady decline in real (that is, inflation-adjusted) DOD purchasing power. Measured in constant dollars, DOD funding peaked in FY2010, after which the drawdown of U.S. troops in OCO operations drove a reduction in DOD spending. ( Figure 3 .) <5. Selected Authorization Issues> <5.1. Military Personnel Issues> The enacted version of the FY2020 NDAA like the House and Senate versions of the bill -- approves the Administration's proposal for a relatively modest net increase in the number of active-duty military personnel. It also authorizes the Administration's proposed reduction in the end-strength of the Selected Reserve those members of the military reserve components and the National Guard who are organized into operational units that routinely drill, usually on a monthly basis. ( Ta b le 3 .) <5.1.1. Basic Pay Increase5> Section 609 of the enacted FY2020 NDAA authorizes a 3.1% increase in military basic pay, as was requested by the Administration. It is the same increase that would have occurred if neither Congress nor the President had taken any action on the subject. By law, military personnel receive an annual increase in basic pay that is indexed to the annual increase in the Labor Department's Employment Cost Index (ECI) unless either (1) Congress passes a law to provide otherwise; or (2) the President specifies an alternative pay adjustment. The initial Senate version of the NDAA was silent regarding the pay raise. The initial House version of the bill would have: Mandated a 3.1% raise (Section 606); and Authorized the same 3.1% raise, even if the President had specified a different increase (Section 607). This provision was not included in the final version of the bill. <5.1.2. "Widows' Tax"7> Following the death of a servicemember, certain beneficiaries may be eligible for survivor benefits from both DOD (under the Survivors Benefit Program or SBP) and the Department of Veterans Affairs (under the Dependency and Indemnity Compensation or DIC). However, by law, surviving spouses who receive both annuities must have their SBP payments reduced by the amount of DIC they receive. Critics refer to this offset as a widows' tax . Section 622 of the enacted version of the FY2020 NDAA phases out the DIC offset requirement over a period of three years. Section 630A of the initial House-passed version would have repealed the offset, outright. The initial Senate-passed version was silent on the issue. <5.1.3. Ban on Transgender Military Personnel> A DOD policy adopted on April 12, 2019, prohibits entry into military service of any person who identifies as transgender. The policy allows transgender individuals to apply for a waiver of that prohibition. The enacted version of the bill does not challenge the Administration's policy. However, Section 596 of the NDAA conference report requires DOD to report on the number of requested waivers to the transgender ban that have been denied. Section 596 of the House-passed version of the bill would have established a similar reporting requirement. Section 530B of the House-passed version of the bill, which was not included in the conference report, would have nullified the transgender ban, extending to gender identity the same legal protection against discrimination that current law provides for race and sex. The Senate version of the NDAA contained no provisions relevant to this issue. <5.1.4. Military Medical Malpractice9> Section 731 of the NDAA conference report authorizes the Secretary of Defense to pay a claim for the death or personal injury of a servicemember resulting from medical malpractice by a DOD health care provider. This addresses a legal doctrine rooted in the Supreme Court's 1950 ruling, in the case of Feres v. United States , that the federal government is immunized from liability "for injuries to servicemen where the injuries arise out of or are in the course of activity incident to service." Many lower federal courts have concluded that this principle, known as the Feres doctrine, generally prohibits military servicemembers from asserting malpractice claims against the United States based on the negligent actions of health care providers employed by the military. Section 729 of the House version of the NDAA bill would have overturned the Feres doctrine by amending the Federal Tort Claims Act to allow servicemembers to pursue tort claims against the United States for medical malpractice committed by health care provider in a Military Treatment Facility (MTF). The Senate bill had no provision covering this subject. <5.2. Strategic Nuclear-armed Systems> In general, the conference report on the FY2020 NDAA supported the Trump Administration's budget request for nuclear and other long-range strike weapons. This program continues an across the board modernization of the nuclear triad: ballistic missile-launching submarines, long-range bombers, and intercontinental ballistic missiles (ICBMs). However, the Trump program also included proposals to diversify the arsenal of nuclear weapons that the triad might deliver. The conference report did not include provisions of the House version of the bill that would have limited some of those efforts. <5.2.1. "Low-Yield" Nuclear Warhead> The NDAA conference report authorizes $29.6 million requested to deploy on some Trident II submarine-launched missiles nuclear warheads with significantly less explosive power than those now in service. According to unclassified sources, each of the several W-76 warheads currently carried by a single Trident II currently has an explosive power (or yield) approximately equal to that of 100 thousand tons of TNT (100 kilotons). The intended yield of the new "low-yield" warhead is reported to be about 10 kilotons. The atomic weapons detonated at Hiroshima and Nagasaki were roughly 15 kilotons and 20 kilotons, respectively. As requested, the enacted NDAA authorizes $10 million in the Energy Department's national security budget to modify existing warheads and $19.6 million to install them in deployed missiles. The Trump Administration contends that a low-yield warhead would discourage potential adversaries from thinking that, if they used relatively small nuclear weapons in a regional conflict, the United States would shrink from retaliating (or threatening to respond) if the only nuclear weapons at its disposal were the considerably more destructive warheads currently in the U.S. arsenal. Critics of the proposal contend that deployment of new, low-yield weapons could increase the risk of nuclear war by making it easier for U.S. officials to consider their use in a limited conflict. The House bill would have denied all funds requested for the program and included a provision (Section 1646) that would have barred the use of any funds for this purpose. A floor amendment to strike this provision was rejected by the House on a near-party-line vote of 201-221. The provision was not included in the enacted bill. <5.2.2. ICBMs and Warheads> As enacted, the FY2020 NDAA authorizes more than 97% of the $682.4 million requested to develop a fleet of new ICBMs to replace the 400 Minuteman missiles currently deployed in silos located in Montana, North Dakota, and Wyoming. This total includes $552.4 million of the $570.4 million requested to continue development of the new missile, designated the Ground Based Strategic Defense (GBSD). It also includes, in the Energy Department's national security budget, $112.0 million the entire amount requested -- to develop a new warhead (designated W87-1) to equip the new missile, in lieu of the W78 warhead carried by the Minuteman. Section 1672 of the enacted bill prohibits any reduction in the number of deployed U.S. ICBMs, currently 400 missiles. The Senate version of the bill would have authorized $22 million more than was requested for GBSD. Section 1664 of the Senate bill would have prohibited any reduction in the number of ICBMs The House bill would have imposed a reduction of $140.0 million on the $682.4 million request for R&D related to a new ICBM a cut of about 20%. This included a net reduction of $81.0 million for GBSD and a reduction of $59.0 million for the warhead. The House rejected by a vote of 164-264 an amendment to the House version of the bill that would have delayed the GBSD program and required an independent study of options to extend the service life of the currently deployed Minuteman missiles. <5.2.3. Nuclear Warhead "Pits"14> The NDAA conference report authorizes $712.4 million as requested to continue expanding the Energy Department's capacity for manufacturing so-called plutonium pits the nuclear triggers that initiate the explosion of a thermonuclear bomb or missile warhead. This includes $241.1 million to begin construction of a new pit production facility at the Energy Department's Savannah River Site, near Aiken, GA. The new facility would put the Energy Department on track to meet a goal of being able to produce 80 pits per year by 2030, a goal set the by Trump Administration in 2018. The House bill would have denied authorization of the $241.1 million requested for the Savanah River facility. Section 3114 of the House bill would have repealed a provision of law that codifies the 80 pit per year goal. <5.3. Long-range, Precision Strike Weapons> In general, the NDAA conference report support's the Administration requests to expand the U.S. arsenal of guided missiles that could accurately strike targets at ranges of 100 miles and more with conventional (that is, nonnuclear) warheads. ( Table 5 .) As U.S. strategy has focused more sharply on Russia and China as potential adversaries, DOD has placed increasing emphasis on developing such weapons, partly because those two countries are developing defenses intended to keep U.S. forces at a distance. <5.4. Space Programs and Organization> The enacted version of the FY2020 NDAA authorizes the bulk of the Administration's $14.1 billion request for National Security Space operations, which includes funds for DOD's satellite acquisition, space launches, and other space-oriented activities. The requested amount is 17% higher than the amount appropriated for these activities in FY2019 a rate of increase more than triple the Administration's proposed 4.9% increase in the overall DOD budget. The final bill authorizes most of the funds requested for DOD's most expensive acquisition programs for space systems, as the House and Senate versions would have done. (See Table 6 .) <5.4.1. Space Force> As proposed by the Administration, the FY2020 NDAA establishes the U.S. Space Force as a separate armed service within the Department of the Air Force (a status analogous to that of the Marine Corps as a separate service within the Department of the Navy). The bill authorizes $72.4 million, as requested, to fund operation of the new organization. The new organization is to be headed by a four-star general (designated Chief of Space Operations) who is to report directly to the Secretary of the Air Force. After one year, that officer is to become a member of the Joint Chiefs of Staff (JCS), in which capacity he or she may provide advice to the President, without going through the Air Force chain of command, after first informing the Secretary of Defense and the Chairman of the Joint Chiefs of Staff. Similarly, as a member of the JCS, the Chief of Space Operations may make recommendations to Congress, after informing the Secretary of Defense. The enacted NDAA authorizes the Secretary of the Air Force to transfer into the new organization all military personnel currently assigned to the Air Force Space Command and other Air Force military personnel. The Administration had proposed transferring into the Space Force personnel currently assigned to all of DOD's space-oriented organizations. The earlier House and Senate versions of the FY2020 NDAA each would have approved some elements of the proposed consolidation, though neither bill would have afforded the new space organization the degree of bureaucratic independence that the Administration proposed. The Senate bill would have authorized the requested $72.4 million for a Space Force within the Air Force to be overseen by a less senior civilian political appointee (an assistant secretary rather than an undersecretary). The House bill would have authorized $15.0 million for the new organization, which would have been designated a Space Corps and which would have had no civilian political overseer. <5.5. Ballistic Missile Defense> The enacted FY2020 NDAA approves the broad thrusts and most of the details of the Administration's FY2020 anti-missile defense budget request. The request reflected the results of the Administration's Missile Defense Review, published in January 2019. That study reaffirmed ongoing DOD efforts to (1) expand and improve a network of interceptor missiles that could protect U.S. territory against a relatively small number of intercontinental ballistic missiles (ICBMs) and (2) deploy systems to defense U.S. allies and U.S. forces stationed abroad against attack by missiles of shorter range. ( Table 7 .) Many of the enacted bill's differences with the budget request were linked to delays in the development of a more reliable warhead, designated the Redesigned Kill Vehicle (RKV), to be carried by the homeland defense system's interceptor missiles. On August 21, 2019, after the House and Senate each had passed their respective versions of the FY2020 NDAA, DOD cancelled the RKV project. <5.5.1. New Interceptor Missile and Additional Radars> The enacted bill authorizes a total of $602.7 million of the $843.8 million requested to develop an improved missile defense for U.S. territory that would include a new interceptor missile carrying the planned new warhead (RKV). The largest component of the net reduction from the request is a transfer of $140.0 million, associated with the RKV project, to develop improvements to the currently deployed homeland defense system. The bill also authorizes $173.4 million ($101.0 less than requested) for development work on a new radar to be located in Hawaii. The House bill would have authorized $150.0 million less than requested for development of the new interceptor. The Senate bill would have authorized the amount requested. <5.5.2. Aegis vs. ICBM18> The enacted bill authorizes a total of $53.8 million, distributed over several funding lines, to test the Navy's Standard missile against an ICBM. The Standard, which is part of the Navy's Aegis anti-missile system, was designed to intercept missiles of shorter range than ICBMs. However, new versions of the Standard theoretically would be capable of ICBM intercepts. Section 1680 of the FY2018 NDAA ( P.L. 115-91 ) directed DOD to conduct a test of Aegis against an ICBM-range target. The House version of the bill would have eliminated the planned ICBM intercept test of Aegis, authorizing $12.1 million of the amount requested. <5.6. Ground Combat Systems> The Army presented its FY2020 budget request for weapons acquisition as "a bold shift" intended to place greater emphasis on shaping the force to deal with potential threats from Russia and China, as called for by the Administration's FY2018 National Defense Strategy. Compared with the five-year defense plan (FYDP) that had accompanied the Army's FY2019 budget request, the FY2020 FYDP would reduce previously planned spending for many systems currently in production to make funds available for accelerated development of successor weapons, better adapted to the newly emphasized "peer competitors." The enacted version of the FY2020 NDAA largely supported the Army's revised spending plans for ground combat vehicles, anti-aircraft defenses, and long-range precision strike weapons. The versions passed initially by the House and Senate would have done likewise. (See Table 8 .) <5.6.1. Anti-Aircraft Defense> The Army's modernization plan would reconstitute the service's short-range anti-aircraft defenses which had atrophied after the Soviet Union collapsed and DOD focused on counter-terrorism and related missions in the aftermath of 9/11. In this period, the Patriot missile designed in the 1970s to intercept aircraft was adapted to intercept long-range ballistic missiles as the shortest-range component of a layered defense. Since the turn of the century, DOD has focused more attention on other types of aerial threats which (because of their relatively short range or for other reasons) would challenge or thwart existing U.S. anti-missile/anti-aircraft defenses. These threats include unguided, short-range rockets and mortar shells used by insurgents; swarms of relatively small, armed drone aircraft; and technologically sophisticated cruise missiles, such as are deployed by Russia and China. The conference report on the bill like the House and Senate versions generally support this renewed focus on anti-aircraft defense, which includes: M-SHORAD (Maneuver-Short Range Air Defense), a variant of the Stryker combat vehicle equipped with and array of guns and guided missiles to protect maneuvering combat units against aerial threats; and IFPC (Indirect Fire Protection Capability), an array of sensors, missile launchers and various types of missiles to protect fixed sites. <5.7. Naval Forces> The Navy's $23.8 billion shipbuilding budget request for FY2020 reflects a 2016 plan to increase the size of the fleet to 355 ships, a target some 15% higher than the force goal set by the previous Navy plan. The enacted version of the FY2020 NDAA like the versions of the bill passed by the House and the Senate generally supports the Navy program. The House-passed bill would have cut a total of $1.6 billion from the shipbuilding request, most of which the House Armed Services Committee justified as reflecting "excess cost growth." (See Table 9 .) <5.7.1. Aircraft Carrier Funding> As enacted, the NDAA authorized the $2.35 billion requested for construction of two nuclear-powered aircraft carriers. The funding will be split between two carriers costing roughly $12 billion apiece for which a contract was signed in January 2019. One of the ships is slated for delivery to the Navy in 2028 and the other in 2032. As a general rule, Congress requires DOD to budget for the entire cost of any weapon in a single year, with limited exceptions. However, in the case of certain high-priced items, such as carriers, Congress allows DOD to use incremental funding spreading the cost of a ship or other item across the budgets of several fiscal years. <5.7.2. Unmanned Surface and Undersea Vessels23> The enacted FY2020 NDAA would rein in spending on the Navy's plan to speed development of several types of relatively large, unmanned surface ships and submarines that could supplement the current force by distributing its firepower and sensor network across a larger number of platforms. The FY2020 budget request includes a total of $628.8 million to develop these items, of which more than half $372.5 million is to jump-start the acquisition of Large Unmanned Surface Vehicles (LUSVs), based on commercial ship designs and able to carry modular payloads including various types of anti-ship and land attack missiles. Reportedly, the Navy envisions LUSVs as being as long as 300 feet in length and displacing 2,000 tons, in which case they would be roughly half the size of the Perry -class missile frigates the Navy used in the 1980s and 1990s. The conference report on the FY2020 NDAA authorizes the full amounts requested to develop a smaller unmanned surface vessel (designated MUSV) and a relatively large robot submarine with a payload volume of up to 2,000 cubic feet. However, it authorizes $196.5 million slightly more than half the request for the LUSV project, funding one of the two vessels requested. The joint explanatory statement accompanying the conference report on the bill did not discuss conferees' rationale for the cut. The Senate Armed Services Committee, in its report on the original, Senate-passed version of the bill had questioned the Navy's plan to develop and procure these ships on an accelerated schedule, given their technological and operational novelty. <5.8. Military Aircraft Procurement> The FY2020 budget request sought to fund the procurement of 385 aircraft across the military services; this is 71 aircraft more than the total included in the projected FY2020 budget request published in early 2018. Generally speaking, the enacted version of the bill, like the versions passed earlier by the House and Senate -- authorizes the Administration's requests, subject to relatively minor additions and reductions reflecting routine congressional oversight. One major departure from the request is an increase in the number of F-35 Joint Strike Fighters authorized. <5.9. Other Issues> <5.9.1. Border Wall Construction> To construct a barrier along the U.S.-Mexican border, which Congress has not explicitly authorized as military construction, the Trump Administration used various budget transfer and reprogramming authorities to make available a total of $6.1 billion comprising DOD program savings and unobligated funds from prior fiscal years. In addition, its FY2020 budget request sought $7.2 billion in barrier-related military construction funding, of which $3.6 billion would replenish prior year funds that were transferred to barrier construction and $3.6 billion that would fund new barrier construction in FY2020. The enacted version of the FY2020 NDAA reduces from $8.0 billion (in FY2019) to $5.5 billion the total amount of DOD funding that could be transferred. It authorizes none of the $7.2 billion request in connection with the border barrier project. The Senate bill would have reduced transfer authority by a smaller amount, the House bill by a larger amount. In addition, Sections 1046 and 2801 of the House bill would have prohibited the use of defense funds appropriated between FY2015 and FY2020 for barrier construction. ( Table 11 .) <5.9.2. PFAS Contaminants> PFAS (per- and polyfluoroalkyl substances) are a large, diverse group of fluorinated compounds that have been used for several decades in numerous commercial, industrial, and U.S. military applications including use as an ingredient in aqueous film forming foam (AFFF) for extinguishing petroleum-based liquid fuel fires. Releases of certain PFAS have been detected in drinking water sources, other environmental media, and dairy milk at various locations, some of which have been associated with the use of AFFF at U.S. military installations. The House and Senate versions of the FY2020 NDAA each contained multiple provisions related to PFAS that would require DOD, the U.S. Environmental Protection Agency, and other agencies to address potential risks of these chemicals under existing laws or new authorities. The conference agreement includes PFAS provisions related to drinking water and agricultural water sources, reporting of releases on the Toxics Release Inventory, data calls and significant new use notices under the Toxic Substances Control Act, environmental remediation at active and decommissioned U.S. military installations and National Guard facilities, DOD use and disposal of AFFF, and other purposes. The conference agreement does not include provisions regarding PFAS standards under the Clean Water Act or Safe Drinking Water Act, or liability for PFAS releases under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA often referred to as "Superfund"). <5.10. Paid Parental Leave for Federal Employees> Sections 1121-1126 of the initial House-passed bill would have provided 12 weeks of paid leave to federal government employees covered by Title V, Chapter 63 of the U.S. Code for reasons covered by the Family and Medical Leave Act of 1993 (FMLA), as amended ( P.L. 103-3 ). That legislation provides entitlement for such leave in the event of the employee's own serious health condition and certain family-related situations including the birth, adoption, or fostering of a child; the serious illness of certain family members; and military family needs. The bill would have permitted the Office of Personnel Management to increase the amount of such paid leave to a total of 16 weeks. The same paid leave entitlement would have been provided to Legislative Branch employees covered by the Congressional Accountability Act (CAA) of 1995. Conforming amendments would have been included to extend benefits to Government Accountability Office (GAO) employees and certain TSA employees. The initial Senate-passed bill included no provision related to this subject. Sections 7601-7606 of the enacted version of the bill entitle federal employees (as described above) to 12 weeks of paid parental leave in connection with the birth, adoption, or fostering of a child. Federal civil service employees must meet the FMLA 12-months-of-service requirements before becoming eligible for the paid parental leave benefit; by contrast the FMLA eligibility requirements for Legislative Branch employees covered by the CAA and for GAO employees do not apply to the paid parental leave benefit. In addition, use of the paid parental leave benefit by federal civil service employees is conditioned upon an agreement from the employee that he or she will return to work for the employing agency for 12 workweeks following the conclusion of that leave. Should an employee fail to do so and if certain conditions enumerated in the bill do not apply, the employing agency may recoup its contributions to the employee's health care premiums made during the period of leave. No such requirement is provided for Legislative Branch employees covered by the CAA nor for GAO employees. <5.10.1. Appendix.> Following, in numerical order, are CRS products cited in this report, including those cited in tables by only their reference number: CRS Reports CRS Report RS20643, Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress , by Ronald O'Rourke CRS Report RL30563, F-35 Joint Strike Fighter (JSF) Program , by Jeremiah Gertler CRS Report RL32109, Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress , by Ronald O'Rourke CRS Report RL32418, Navy Virginia (SSN-774) Class Attack Submarine Procurement: Background and Issues for Congress , by Ronald O'Rourke CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress , by Ronald O'Rourke CRS Report RL33640, U.S. Strategic Nuclear Forces: Background, Developments, and Issues , by Amy F. Woolf CRS Report RL33745, Navy Aegis Ballistic Missile Defense (BMD) Program: Background and Issues for Congress , by Ronald O'Rourke CRS Report R41129, Navy Columbia (SSBN-826) Class Ballistic Missile Submarine Program: Background and Issues for Congress , by Ronald O'Rourke CRS Report R41909, Multiyear Procurement (MYP) and Block Buy Contracting in Defense Acquisition: Background and Issues for Congress , by Ronald O'Rourke CRS Report R42972, Sequestration as a Budget Enforcement Process: Frequently Asked Questions , by Megan S. Lynch CRS Report R43049, U.S. Air Force Bomber Sustainment and Modernization: Background and Issues for Congress , by Jeremiah Gertler CRS Report R43240, The Army's Armored Multi-Purpose Vehicle (AMPV): Background and Issues for Congress , by Andrew Feickert CRS Report R43543, Navy LPD-17 Flight II and LHA Amphibious Ship Programs: Background and Issues for Congress , by Ronald O'Rourke CRS Report R43546, Navy John Lewis (TAO-205) Class Oiler Shipbuilding Program: Background and Issues for Congress , by Ronald O'Rourke CRS Report R43838, Renewed Great Power Competition: Implications for Defense Issues for Congress , by Ronald O'Rourke CRS Report R44039, The Defense Budget and the Budget Control Act: Frequently Asked Questions , by Brendan W. McGarry CRS Report R44274, The Family and Medical Leave Act: An Overview of Title I , by Sarah A. Donovan CRS Report R44442, Energy and Water Development Appropriations: Nuclear Weapons Activities , by Amy F. Woolf CRS Report R44463, Air Force B-21 Raider Long-Range Strike Bomber , by Jeremiah Gertler CRS Report R44835, Paid Family Leave in the United States , by Sarah A. Donovan CRS Report R44891, U.S. Role in the World: Background and Issues for Congress , by Ronald O'Rourke and Michael Moodie CRS Report R44968, Infantry Brigade Combat Team (IBCT) Mobility, Reconnaissance, and Firepower Programs , by Andrew Feickert CRS Report R44972, Navy Frigate (FFG[X]) Program: Background and Issues for Congress , by Ronald O'Rourke CRS Report R45349, The 2018 National Defense Strategy: Fact Sheet , by Kathleen J. McInnis CRS Report R45519, The Army's Optionally Manned Fighting Vehicle (OMFV) Program: Background and Issues for Congress , by Andrew Feickert CRS Report R45757, Navy Large Unmanned Surface and Undersea Vehicles: Background and Issues for Congress , by Ronald O'Rourke CRS Report R45793, PFAS and Drinking Water: Selected EPA and Congressional Actions , by Elena H. Humphreys and Mary Tiemann CRS Report R45937, Military Funding for Southwest Border Barriers , by Christopher T. Mann CRS Report R45986, Federal Role in Responding to Potential Risks of Per- and Polyfluoroalkyl Substances (PFAS) , coordinated by David M. Bearden CRS Report R45996, Precision-Guided Munitions: Background and Issues for Congress , by John R. Hoehn CRS Report R45998, Contaminants of Emerging Concern under the Clean Water Act , by Laura Gatz CRS Report R46107, FY2020 National Defense Authorization Act: Selected Military Personnel Issues , coordinated by Bryce H. P. Mendez CRS In Focus CRS In Focus IF10541, Defense Primer: Ballistic Missile Defense , by Stephen M. McCall CRS In Focus IF10999, Defense's 30-Year Aircraft Plan Reveals New Details , by Jeremiah Gertler CRS In Focus IF11102, Military Medical Malpractice and the Feres Doctrine , by Bryce H. P. Mendez and Kevin M. Lewis CRS In Focus IF11143, A Low-Yield, Submarine-Launched Nuclear Warhead: Overview of the Expert Debate , by Amy F. Woolf CRS In Focus IF11203, Proposed Civilian Personnel System Supporting "Space Force , " by Alan Ott CRS In Focus IF11219, Regulating Drinking Water Contaminants: EPA PFAS Actions , by Mary Tiemann and Elena H. Humphreys CRS In Focus IF11244, FY2020 National Security Space Budget Request: An Overview , by Stephen M. McCall and Brendan W. McGarry CRS In Focus IF11326, Military Space Reform: FY2020 NDAA Legislative Proposals , by Stephen M. McCall CRS In Focus IF11353, Defense Primer: U.S. Precision-Guided Munitions , by John R. Hoehn CRS In Focus IF11367, Army Future Vertical Lift (FVL) Program , by Jeremiah Gertler Congressional Insight CRS Insight IN10931, U.S. Army's Initial Maneuver, Short-Range Air Defense (IM-SHORAD) System , by Andrew Feickert CRS Insight IN11052, The Defense Department and 10 U.S.C. 284: Legislative Origins and Funding Questions , by Liana W. Rosen Legal Side Bar CRS Legal Sidebar LSB10242, Can the Department of Defense Build the Border Wall? , by Jennifer K. Elsea, Edward C. Liu, and Jay B. Sykes CRS Legal Sidebar LSB10305, The Feres Doctrine: Congress, the Courts, and Military Servicemember Lawsuits Against the United States , by Kevin M. Lewis CRS Legal Sidebar LSB10316, Eliminating the SBP-DIC Offset for Surviving Spouses of Military Servicemembers: Current Proposals and Related Issues , by Mainon A. Schwartz

The Administration's FY2020 NDAA request would have authorized $568.1 billion designated as base budget funds to cover the routine, recurring costs to man, train, and operate U.S. forces. The request would have authorized an additional $173.8 billion designated as Overseas Contingency Operations (OCO) funds, of which $97.9 billion was requested for base programs. As enacted, the FY2020 NDAA authorizes a total of $729.9 billion for national defense-related activities, which is $12.0 billion (1.6%) less than the Administration requested.

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<1. Introduction> The rise in popularity of cryptocurrencies and the underlying blockchain technology presents both challenges and opportunities to the energy sector. Cryptocurrencies, such as Bitcoin, are sometimes referred to as virtual currency , a term that can also refer to a broader class of electronic money. A blockchain is a digital ledger that enables parties to agree on the current ownership and distribution of assets in order to conduct new business. When applied to cryptocurrencies, the blockchain allows the validation of transactions to occur by a decentralized network of computers. As cryptocurrencies (such as Bitcoin, the cryptocurrency with the largest market capitalization) have increased in popularity, the energy demand to support cryptocurrency mining activities has also increased. The state of Washington, by some estimates, hosted 15%-30% of all Bitcoin mining operations globally in 2018. When such increases in energy demand for cryptocurrency mining occur at a local level, the resulting peak loads may increase customers' electricity rates depending on pricing structure. However, not all cryptocurrencies require energy-intensive operations. Outside of cryptocurrencies, opportunities arising from blockchain technologies could include facilitating energy and financial transactions on a smart grid. This report explains how cryptocurrency is "mined," where mining activity is concentrated, how some states and utilities are responding to localized increases in energy demand from Bitcoin mining facilities, and potential considerations for Congress. Considerations for Congress include potential policy options to address energy conservation and energy efficiency standards as well as options for blockchain technology in the energy sector. This report is part of a suite of CRS products on cryptocurrencies and the underlying technology, distributed ledger technology, and blockchain (see textbox below). <2. Blockchain and Cryptocurrencies> Blockchain provides a means of transacting among parties who may not otherwise trust one another. Blockchain networks allow for individuals engaging in transactions to also be the ones to validate them. Cryptocurrencies such as Bitcoin, Ether, Alpha Coin, and Papyrus provide a means of validating transactions in a decentralized network that is outside of an intermediary, such as a bank for financial transactions or a title company for a real estate transaction. This validation can be done in bulk and at relatively high speeds, making cryptocurrency an attractive avenue for certain financial transactions. Cryptocurrencies are built to allow the exchange of some digital asset of value (the cryptocurrency) for a good or service. Bitcoin is the most popular cryptocurrency, garnering the largest market share, and Bitcoin arguably initiated the interest in blockchain technology. Blockchain uses a combination of technologies to work. These technologies include encryption and peer-to-peer (P2P) networks. Transactions are added to a blockchain in an addition-only manner. Once added, a transaction cannot be altered, providing a layer of security and transparency. Transactions are grouped together to form a tranche , or "block." Blocks are added to a blockchain in a manner that links it to the previous block, so any change data in a previous block makes that change known to users immediately as they try to add a new block. Encryption is used to ensure that parties trading assets on a blockchain have rights to that asset, and that data held in the blockchain is tamper resistant. P2P networks are used to distribute information across participating users without a central authority acting as an arbiter of that information. <2.1. Cryptocurrency Mining> There are three primary approaches to gaining ownership of Bitcoin: purchase Bitcoin directly by exchanging conventional money and a paying an exchange fee; earn Bitcoin in return for a product or service; or create Bitcoin through mining . Bitcoin and other cryptocurrencies each implement their own blockchain: mining is the creation and publication of a new block in a blockchain. Early cryptocurrency platforms, like Bitcoin, required the use of mining to validate transactions. In blockchain platforms generally, miners those seeking to add a block to a blockchain are incentivized to improve their value in that blockchain through either a monetary, reputational, or stake award, for example. New blocks may be added to a blockchain through a variety of methods. For Bitcoin, new blocks are added to the blockchain through proof-of-work (PoW). Under PoW, miners are presented a difficult computational problem, or puzzle. PoW identifies a numeric value (called a nonce), which is used to generate an authenticator (hash value). Hash values are used to ensure the integrity of data, in this case, that a block of data in the blockchain has not been modified. Hashes are determined by submitting the data through an algorithm that will output a string of characters. By inserting the nonce into the algorithm, miners seek to change the hash value. The problem Bitcoin miners are trying to solve is the creation of a hash value for a given block which begins with a certain number of zeros. They add data to the block through changing the nonce in order to change the hash value and discover the solution. Identifying these valid nonces and hashes is computationally intensive, and the essence of mining. The security properties of hash algorithms are such that a miner tests nonces until a valid hash is found for a block. Generally, by solving the problem or puzzle, miners win the opportunity to post the next block and possibly gain a reward for doing so. In the case of Bitcoin, miners who create and publish new blocks in the blockchain are rewarded with Bitcoin. Once the problem is solved and a valid hash is identified, the miner announces it to the community using P2P networking. Other users can validate the solution immediately without going through the resource-intensive computation process. Once the majority of the community of users validates and confirms the block, it is added to the chain. Miners are held to a strict set of rules that maintain the overall market structure. There are a limited number of Bitcoin to be mined, which creates a value attributed to scarcity. For Bitcoin, new blocks are published every 10 minutes. As the rewards for published blocks halve every 210,000 blocks, the reward of new Bitcoin diminishes roughly every four years (e.g., the reward of 50 Bitcoins per block in 2008 was reduced to 25 in 2012). On October 31, 2018, block 548173 rewarded the miner with 12.5 Bitcoins plus approximately 0.2 Bitcoins in transaction fees. On the date that block was generated, trading for 1 Bitcoin closed at approximately $6,343; as of July 29, 2019, trading for 1 Bitcoin closed at approximately $9,507. Bitcoin is rewarded on a first-come, first-served basis, meaning whoever solves and publishes the solution first is rewarded with Bitcoin. Miners throughout the network compete against each other in a race to be the first to resolve the PoW and earn the reward. The competition often is a criticism of the PoW system, as there are many more miners expending energy for these "useless" calculations than the one miner that wins the race and correctly resolves the PoW. <2.2. Mining Technology> The technology used by miners has advanced over time. Early miners were able to earn Bitcoin relatively easily with affordable equipment. Bitcoin could initially be mined on a central processing unit (CPU) such as a personal laptop or desktop computer. As interest in Bitcoin mining increased, miners discovered that graphic cards could more efficiently run hashing algorithms and aid in mining. Field Programmable Gate Arrays (FPGAs) then replaced graphic cards, as the circuits in an FPGA could be configured and programmed by users after manufacturing. Application-specific integrated circuits (ASICs) have replaced these and graphic cards. ASICs are designed for a particular use such as Bitcoin mining. As more sophisticated equipment has been adopted, miners have also moved away from working individually to working in larger groups. Many miners have determined it is more cost efficient to join "mining pools" that help disperse the energy and equipment costs (and the profits) and increase the speed or likelihood of a successful transaction. ASICs used for Bitcoin mining are usually housed in thermally-regulated data centers with access to low-cost electricity. While these developments have transformed Bitcoin mining into a more consolidated industry, they have not resolved the energy consumption issue or the computational "waste," as different Bitcoin mining pools still must compete against one another using the PoW method. <3. How Much Energy Is Consumed from Bitcoin and Other Cryptocurrency Mining?> Cryptocurrency mining requires energy to (1) operate the devices computing the calculations required to maintain the integrity of the blockchain and (2) thermally regulate the devices for optimal operation. A node, or computing system, on the blockchain may be composed of an individual user or a group of users that have pooled resources; as such, the exact number of connected devices on the network is unknown. Devices have different hashrates the number of calculations (or hash functions) performed on the network per second and have different power requirements. Devices with greater hashrates can perform more calculations in the same amount of time than devices with lesser hashrates. For example, "a hashrate of 14 terahashes [14 trillion attempted mining solutions] per second can either come from a single Antminer S9 running on just 1,372 W [Watts], or more than half a million Sony Playstation-3 devices running on 40 MW [megawatts million Watts]." There are four main factors that contribute to energy consumption of cryptocurrency mining: 1. hardware computing power; 2. network hashrate; 3. the difficulty; and 4. the thermal regulation for the hardware. These factors, some of which also interact with the price of Bitcoin, can alter the energy intensity of mining. For instance, in December 2017, the price of Bitcoin rose creating an influx of mining. As the mining network grew, the difficulty and hashrate increased. Miners sought out more powerful equipment as the competition increased, which consumed more energy. Several studies have examined the energy consumption of cryptocurrencies. While technology advancements in devices used for Bitcoin mining have led to increases in the hashrates of mining devices (i.e., improved device efficiency), the network hashrate has also increased as the popularity of Bitcoin increased. According to one recent estimate, as of "mid-March 2018, about 26 quintillion hashing operations are performed every second and non-stop by the Bitcoin network." Estimating the power consumption of the global Bitcoin network depends upon the efficiency of different hardware, the number of machines in use, and the cooling requirements for large-scale mining facilities. Table 1 presents various estimates for the power required by the Bitcoin network. Generally, these estimates use hashrates and miner hashing efficiencies to determine energy consumption. One study relied upon hardware data derived from initial public offering (IPO) filings to estimate power consumption. Fewer studies have examined power requirements for other cryptocurrencies (Bitcoin is the largest cryptocurrency platform in both currency in circulation and transactions processed), although those studies have found comparatively lower power requirements than for Bitcoin. Global power requirement estimates for Bitcoin have increased within the last five years. For comparison, the largest estimate of 7,670 MW in Table 1 is nearly 1% of U.S. electricity generating capacity (or approximately 0.1% of global electricity generating capacity). Opinions differ on whether future growth in Bitcoin will significantly impact energy consumption and subsequent carbon dioxide (CO 2 ) emissions. Some argue that sustainability concerns due to energy consumption are misplaced, and that the competitiveness of Bitcoin mining means that only miners with the most competitive mining hardware and the lowest electricity costs will persist over time. Further, this could lead to fewer miners using energy inefficient hardware, as they may no longer be able to compete effectively. Some anticipate that energy demands will diminish as the reward incentive shifts from discovering new Bitcoin to earning revenue through transaction fees. As a result, some would argue that the energy consumption from mining Bitcoin is a temporary issue. Others recognize the volatility of cryptocurrency markets but observe that network hashrates of several cryptocurrencies have trended upward suggesting that energy consumption (and subsequent CO 2 emissions) will increase. However, these estimates do not include energy required for cooling systems and other operations and maintenance activities associated with cryptocurrency mining. One study on projections of Bitcoin growth considered the potential effects on global CO 2 emissions should Bitcoin eventually replace other cashless transactions. The study found that the associated energy consumption of Bitcoin usage could potentially produce enough CO 2 emissions to lead to a 2 o C increase in global mean average within 30 years. These projections assume that the global portfolio of fuel types (and subsequent CO 2 emissions) used to generate electricity remains fixed according to portfolio profiles from 2014 and does not consider that, in many cases, Bitcoin is often mined in areas with plentiful and affordable renewable energy. Further, the projections do not consider any potential effects of a collapse of Bitcoin prices on hashrates or energy consumption, and whether the capital invested in Bitcoin mining could be used for other cryptocurrencies or for other purposes. Projections of continued growth in energy consumption led some to call for reform in the cryptocurrency industry. Others argue that continued reliance on fossil-fuel-based electricity is the important issue and not the energy intensity of Bitcoin. <3.1. What Is the Cryptocurrency Industry Doing to Reduce Energy Consumption?> As the Bitcoin network's energy consumption grows, some have questioned whether the PoW algorithm is sustainable. One option to reduce cryptocurrency energy consumption is to shift to alternative protocols for validating transfers. Currently, PoW is the most widely used. However, other protocols, such as Proof-of-Stake (PoS) and Proof-of-Authority (PoA) could potentially accomplish validations more energy efficiently. Many other alternative algorithms exist. Each algorithm presents trade-offs; for example, some algorithmic attributes facilitate scalability and others facilitate speed of transactions. The potential application of blockchain technology to the energy sector (and other sectors) will depend upon the ability for these technologies to provide transparent, secure, scalable, and timely transaction validation. The technical differences and their applicability are discussed in the Appendix . <4. Where Is Bitcoin Mined?> Several factors contribute to ideal mining locations and include energy costs, regulations, and technology. Often the energy costs are affected by geographical characteristics like proximity to hydroelectric power or lower ambient temperature that reduces the need for cooling. Local and national governments around the world have responded differently to the growth of Bitcoin: some are actively developing cryptocurrency industries, some are restricting cryptocurrencies, and some are regulating cryptocurrencies in an effort to balance financial innovation and risk management. According to a study in 2017, nearly three-quarters of all major mining pools are based in either China (58%) or in the United States (16%). Some countries and regions where significant cryptocurrency mining activities have been identified include Australia, Canada, Georgia, Russia, and Sweden, as shown in Figure 1 . China has taken steps to regulate and tax the trading of Bitcoin, and has even proposed implementing a ban on mining. As of April 2019, it was reported that the National Development and Reform Commission, deemed mining as a "wasteful and hazardous" activity. China's share of major mining pools may change substantially in response to regulations and policy actions. In 2013, the Chinese government reportedly restricted Chinese banks from using cryptocurrencies as currency, citing concerns about money laundering and a threat to financial stability. In September 2017, Beijing declared that initial coin offerings (ICO) were illegal and that all mainland cryptocurrency exchanges be shut down. In January 2018, China's Leading Group of Internet Financial Risks Remediation submitted a request to local governments to regulate electricity, taxes, and land use for mining companies, and "guide the orderly exit of such companies from the Bitcoin mining business." Since the implementation of these regulatory measures, Bitcoin trading with the Chinese yuan has reportedly dropped from 90% of global Bitcoin trading to under 1%. However, as illustrated in Figure 1 , China, despite changes in regulation, remained a popular location for mining in 2018, partly due to the comparatively low cost of energy. The generation sources that provide low cost electricity to cryptocurrency miners in China vary regionally. In some regions, the electricity likely is provided from fossil fuel sources; for example, in Inner Mongolia where cryptocurrency miners have been active, thermal power represents 63% of the electric capacity. <5. Cryptocurrency Mining and Utilities: Domestic and International Examples> Cryptocurrency mining includes costs associated with equipment, facilities, labor, and electricity. Mining pool companies around the world therefore seek cheap, reliable electricity. While many mining pools are still in China, some have been able to utilize closed industrial facilities in the United States that can provide abundant electricity at affordable rates. As miners are not typically bound by geographic location, locations with favorable electricity rates and policies may encourage operations. Conversely, locations with restrictive regulations or high electricity prices may discourage mining operations. In the United States, the sale of electricity is governed by a patchwork of federal, state, and local regulations. For the sale of electricity, the states generally have regulatory jurisdiction over retail electricity transactions, though federal and municipal authorities may also play a role. State approaches to regulation vary considerably. States and cities that are dealing with an influx of cryptocurrency mining because of affordable electricity rates are instituting local laws as issues arise. Examples of such approaches both domestic and international along with the more general benefits and challenges associated with developing a cryptocurrency mining industry are delineated through the selected examples below. <5.1. New York State> The state of New York and the city of Plattsburgh (NY) have developed various policies in response to growth in energy demand by cryptocurrency mining activities. In December 2018, New York State approved Assembly Bill A8783B, creating a new digital currency task force. This task force will include a team of technology experts, investors, and academics all appointed by the Governor, the state Senate, and the Assembly. The task force intends to produce a report in 2020 that includes a discussion of "the energy consumption necessary for cryptocurrency mining operations and other policy considerations related thereto." The task force law does not include any specific measures regarding licensing, but New York State already requires a license for cryptocurrency businesses, known as a "Bitlicense." Introduced in 2014, fewer than 20 licenses have been granted as of January 2019. The Bitlicense is intended to subject crypto mining companies to anti-money laundering and counterterrorism standards, as well as require background checks on all employees. <5.1.1. Plattsburgh, NY> Plattsburgh's 20,000 residents reportedly have electricity rates below $0.05 per kilowatt-hour (kWh) year-round (as compared to the U.S. average retail price of about $0.10/kWh). Inexpensive electricity for Plattsburgh is generated from the New York Power Authority's (NYPA's) hydroelectric facility on the St. Lawrence River. Plattsburgh has an agreement with the NYPA to buy 104 MW of power at any time to serve its customers. This has exceeded electricity demand requirements for Plattsburgh, even with several industrial facilities in operation. Plattsburgh has faced a number of challenges balancing the promise and pitfalls of cryptocurrency mining. Bitcoin mining companies were attracted to the abundant and cheap electricity, with two cryptocurrency mining businesses reportedly operating in Plattsburgh in 2017. As Plattsburgh residents primarily rely on electricity for home heating, during a particularly cold winter in early 2018, electricity rates increased as the 104 MW of power from the hydropower facility was reportedly exceeded, and electric power had to be purchased from other sources at higher rates. During January and February of 2018, cryptocurrency mining operations were recorded as responsible for approximately 10% of the local power demand. The cost of purchasing additional power to meet the increased demand were proportionally distributed among all customer classes. The costs of purchasing additional power combined with increased energy use in response to cold weather resulted in residential electricity bills that were reportedly up to $300 higher than usual. According to the New York Public Service Commission, the two cryptocurrency companies operating in Plattsburgh at the time contributed to an increase of nearly $10 to monthly electricity bills in January 2018 for residential customers. In March 2018, the city of Plattsburgh also instituted an 18-month moratorium on any new cryptocurrency mining operations a first in the United States. Also in March 2018, the New York Public Service Commission ruled that municipal power authorities could issue a tariff on high-density-load customers including cryptocurrency companies "that do not qualify for economic development assistance and have a maximum demand exceeding 300 kW and a load density that exceeds 250 kWh per square foot per year." Additionally, Plattsburgh began addressing fire safety concerns, heat management, and overall nuisance associated with cryptocurrency mining by passing local laws. None of the new laws specifically address energy consumption, or noise, which is a concern for some local residents. <5.1.2. Massena, NY> In December 2017, Coinmint, a crypto mining company, looking to expand operations, went to Massena, NY (90 miles west of Plattsburgh) and signed a lease to convert a retired Alcoa aluminum plant into a cryptocurrency mining facility. Coinmint reportedly requested from NYPA 15 MW of subsidized power that would in turn lead to 150 jobs and $700 million in local investment. The proposal required the approval of NYPA's board of trustees and was added to their January 2018 agenda for consideration. However, in March 2018, following consideration of the Coinmint proposal, the NYPA board of trustees approved a moratorium on allocating economic development assistance in the form of subsidized power to high-density-load operations until NYPA could analyze all possible impacts. The New York State Public Service Commission approved, in July 2018, new electricity rates for the Massena Electric Department to allow high-density load customers such as cryptocurrency companies to be eligible for service under an individual service agreement. This is the second ruling by the commission on cryptocurrency rates. <5.2. Washington State> By some estimates, the state of Washington hosted 15%-30% of all Bitcoin mining operations globally in 2018. Like New York, Washington has affordable, reliable hydropower. Along the Columbia River in a region known as the Mid-Columbia Basin, five hydroelectric dams reportedly generate nearly six times as much power as the residents and local businesses can utilize. These hydroelectric facilities typically export the surplus electricity to larger electricity demand markets, such as Seattle or Los Angeles, which helps to keep the costs of electricity relatively low for local consumers at about $0.025/kWh (as compared to the U.S. average retail price of about $0.10/kWh). Since 2012, the Mid-Columbia Basin has reportedly attracted Bitcoin mining companies because of low-priced electricity, and the resulting growth in energy demand has challenged the cost structure of several of the region's public utility districts (PUDs). Several PUDs imposed a moratorium on new applications for mining operations. The moratorium was issued as public utilities are required to hear and rule on applications for future power contracts. If the applications for mining operations continued to be approved, the contracts could have outpaced the public utilities' original projections and planning for demand increases. For example, in Douglas County where the bulk of the new mining projects are occurring a new 84-MW substation that was previously expected to provide enough capacity to serve the area for the next 30 to 50 years under a normal population growth scenario was fully subscribed in less than a year. In response, the PUDs will have to find alternatives for meeting the growing demand, such as purchasing power on the open market. In addition, there are concerns over the cost of upgrading new infrastructure, including substations and transmission lines, and who would bare those costs. PUDs in the region are also challenged by "rogue" miners, those that set up server equipment in homes without any proper licensing, permits, or infrastructure upgrades. These servers have a larger demand for energy than the infrastructure in a residential community is designed to provide. It is relatively easy for the PUDs to locate rogue miners given the abnormal increase in power demand; once identified, the miners are required to obtain the proper equipment and permits but may simply move operations to another unpermitted location. Other PUDs in the region are adapting to increased interest in mining operations. In December 2018, Chelan County PUD approved a new rate for blockchain operations starting April 2019 and lifted a moratorium. While some are concerned that Bitcoin mining operations and related infrastructure could eventually lead to utility stranded assets, others see Bitcoin as a stepping block to a larger possibly more prosperous endeavor researching alternative uses for blockchain technology. The Department of Commerce for Douglas County intends to build a "blockchain innovation campus," which the county states could both assuage concerns over the volatility of the Bitcoin market and be an investment in the future diversification of the local economy. This approach, however, is not entirely without risk. For example, Giga Watt, a Bitcoin mining firm, declared bankruptcy in 2018, owing creditors nearly $7 million, $310,000 of which is owed to Douglas County Public Utility District. <5.3. International Case Studies> Due to the decentralized nature of cryptocurrency mining, miners are not typically bound by geographic location. These characteristics typically impact mining profits and contribute to selecting the ideal location for operations. While some countries may have favorable energy costs, they may have restrictive regulations (e.g., China). Below are a few international locations that have garnered the attention of cryptocurrency miners. <5.3.1. Canada> Canada generates affordable (albeit not the cheapest) hydroelectric power. Further, Canada has the added benefit of being in a cold weather climate, which can reduce overall cooling costs. In 2016, approximately 58% of total electricity generation in Canada was from hydropower resources. Canadian electricity providers generate 13 terawatt hours (TWh) more electricity than their domestic consumers need. Due to this excess in electricity some providers have offered incentives for miners. In January 2018, the public utility Hydro-Quebec offered electricity at a rate of $0.0394/kWh to cryptocurrency miners. Miners responded, and by February 2018, Hydro-Quebec has received around 100 inquiries. Based on these inquiries, 10 TWh of the surplus would have been obligated to mining. Hydro-Quebec did not expect the high degree of new demand (reportedly several thousand megawatts worth of project proposals) for electricity and in March 2018 ceased processing requests until guidelines are developed. In response to concerns with the sharp increase in electricity demand, Hydro-Quebec commissioned a study on the economic benefits of cryptocurrency mining. In May 2018, the study estimated that direct job creation for cryptocurrency mining ranges from 1.2 jobs per MW of a 20 MW operation to 0.4 jobs per MW for a 250 MW operation. Data centers, by comparison, can create between 5 and 25 jobs per MW. By June 2018, Hydro-Quebec announced it would triple the price it originally offered to new applicants for cryptocurrency mining operations (although the utility indicated this is a temporary adjustment until a final determination is made). Meanwhile towns across the Quebec Province have placed moratoriums on new mining operations citing energy demand, size, and noise concerns. <5.3.2. Georgia> Georgia has positioned itself as an attractive location for Bitcoin mining operations. In Georgia, mining company Bitfury's electricity rates reportedly range from around $0.05/kWh to $0.06/kWh. Georgia's low price of electricity can be attributed to large hydropower resources. In 2016, hydropower accounted for 81% of the total electricity generated. The low cost of electricity, plus a favorable regulatory environment, makes Georgia a favorable location for Bitcoin mining operations. In 2015, the government of Georgia offered Bitfury a $10 million dollar loan to mine in Georgia. The government expanded a power plant to provide electricity to Bitfury's cryptocurrency mining facility at no additional cost. Local Bitcoin miners, however, are having a difficult time competing with Bitfury. Smaller local mining pools were not offered similar incentives and have been struggling to mine in a low-price environment. Furthermore, some locals criticize the government for providing Bitfury incentives. The Georgian government has created tax-free zones for mining activities and electricity. Without a tax regime in place for mining, some Georgian lawmakers claim that Georgians are losing possible tax revenue. <5.3.3. Iran> Iran also has relatively cheap electricity making it attractive to mining operations. Iran's electricity mix is dominated by natural gas. According to the U.S. Energy Information Administration, Iran is the third largest producer of dry natural gas in the world at nearly 9.5 trillion cubic feet (Tcf) in 2017 and most of it (6.9 Tcf) was consumed domestically. In addition, Iran subsidizes electricity produced from fossil fuels. According to International Energy Agency data from July 23, 2019, subsidies for electricity were valued at $16.6 billion in 2018. With energy subsidies, average electricity prices in Iran are reportedly around $0.006/kWh, far cheaper than even in China. Despite the low price of electricity in Iran, miners face other challenges, such as U.S. sanctions. The decentralized and pseudonymous nature of Bitcoin transactions may make financial sanctions imposed on governments and individuals difficult to enforce. However, Bitcoin transactions are publicly recorded on its digital ledger. According to the U.S. Department of the Treasury Under Secretary for Terrorism and Financial Intelligence, We are publishing digital currency addresses to identify illicit actors operating in the digital currency space. Treasury will aggressively pursue Iran and other rogue regimes attempting to exploit digital currencies and weaknesses in cyber and [Anti-Money Laundering and Countering the Financing of Terrorism] AML/CFT safeguards to further their nefarious objectives. Since the reintroduction of U.S. sanctions, the Iranian government has recognized a potential role for cryptocurrencies. In January 2019, the Central Bank of Iran presented a draft of new cryptocurrency regulation. Digital currencies, not backed by the Central Bank, will be restricted as a form of payment inside Iran. The draft framework, however, would authorize rial-backed cryptocurrency use, ICOs, mining, and other crypto-related activities. These draft regulations and the possible negative consequences from the United States may keep some miners from relocating to Iran, despite the low cost of electricity. Iranian state media reported that Tadvin Electricity Company saw an increase in energy demand of 7% due to cryptocurrency mining activities in June 2018. In response, Iran's Power Ministry is reportedly considering enforcing special tariffs on cryptocurrency miners. The Iranian Cabinet reportedly ratified a bill in August 2019 that introduces new rules for the cryptocurrency market in Iran. The regulations reportedly stipulate that mining cryptocurrencies would be allowed in Iran if certain conditions are met. Conditions reportedly include receiving approval from Iran's Ministry of Industry and conducting mining activities outside of provincial centers (with exceptions for Tehran and Esfahan where additional restrictions may apply). <6. Blockchain Technology Potential for the Energy Sector> Blockchain is a method of quickly validating transactions and of record keeping for large quantities of data. Some blockchains and cryptocurrencies do not operate through a decentralized, permission-less network like Bitcoin. Within the energy sector, a number of opportunities for blockchain technology have been proposed. These opportunities include smart contracts, distributed energy resource record keeping, and ownership records. One of the more easily transferrable options for blockchain is trading Renewable Energy Credits (RECs). Using blockchain to trade RECs could provide customers the ability to purchase RECs without the need for a centralized entity to verify transactions. In October 2018, a subsidiary of the PJM Interconnection LLC a regional transmission organization that operates an electric transmission system serving part of the Eastern Interconnection electricity grid announced plans for testing blockchain technology to trade RECs. Other more advanced utilizations for blockchain in the energy sector could be highly disruptive. For example, there is increasing interest in net metering and a transactional grid (i.e., where producers of distributed energy resources, such as rooftop solar, can sell the electricity to nearby consumers). Prototype projects have relied upon blockchain technology among other peer-to-peer approaches to facilitate renewable energy transactions at the local level. Other peer-to-peer efforts include managing virtual power plant operations and enabling those who do not own renewable energy systems to pay for a portion of the energy generation of a host's system in exchange for a reduction on their utility bills (e.g., renters paying for a portion of an apartment building's rooftop solar system). If such applications are found to be practical and economical, blockchain technology could alter the manner in which electricity customers and producers interact. Traditionally electric utilities are vertically integrated. Blockchain could disrupt this convention by unbundling energy services along a distributed energy system. For instance, a customer could directly purchase excess electricity produced from their neighbor's solar panels instead of purchasing electricity from the utility. On the one hand, this could result in a more transparent and efficient system. Blockchain could encourage more competition among generators and more flexibility and choice for consumers. On the other hand, unbundling energy services could lead to concerns over distribution control to accommodate the decentralization. Furthermore, storing vast quantities of data about critical infrastructure on distributed ledgers may introduce additional cybersecurity concerns. The sale of electricity via blockchains that are independent of a conventional utility framework may be subject to significant legal interpretation, and potentially represents the intersection of various federal and state statutes and regulations. Jurisdiction over the sale of electricity from a distributed energy resource or electric vehicle charging station hinges upon its definition as either a retail transaction or a sale for resale. Retail transactions are generally defined by the Federal Energy Regulatory Commission (FERC) as "sales made directly to the customer that consumes the energy product," whereas sales for resale are defined as "a type of wholesale sales covering energy supplied to other electric utilities, cooperatives, municipalities, and Federal and state electric agencies for resale to ultimate consumers." States typically regulate retail electricity transactions, while FERC has jurisdiction over the transmission and wholesale sales of electricity in interstate commerce. One survey by the Electric Power Research Institute, collected data on the potential barriers and advantages of blockchain in utilities. Of those surveyed, utilities in the United States were in early pilot stages or in the research phase, while some utilities in Europe had been using blockchain for over a year. Respondents identified opportunities and challenges to investment in blockchain technology with 77% of respondents identifying concerns that the energy industry "lacks appropriate standards." <7. Options for Congress to Address Cryptocurrency's Energy Consumption> In addition to state and local policy efforts that seek to mitigate the regional effects of growth in cryptocurrency mining, there are options that could be adopted by the federal government to improve the energy efficiency of mining operations. Further, as the financial and energy sectors, among others, explore adopting blockchain, Congress may consider options to curb the energy intensity of the technology. <7.1. Minimum Energy Conservation Standards> An approach to reducing the energy consumption of cryptocurrencies could include the establishment of minimum energy conservation standards for the equipment engaged in mining activities or the cooling equipment that maintains efficient mining operations. The Department of Energy (DOE) administers national energy efficiency standards for appliances and other equipment. DOE maintains federal energy efficiency standards as authorized under the Energy Policy and Conservation Act ( P.L. 94-163 , 42 U.S.C. 6201-6422) as amended. DOE's Appliance and Equipment Standards program sets minimum energy efficiency standards for approximately 60 commercial product categories. There are no national standards for computer products. In 2012, DOE issued a request for information regarding miscellaneous residential and commercial electrical equipment, and in 2014 issued a proposed determination of coverage for computers and battery backup systems. Some view voluntary and market-driven approaches as more appropriate for computer technology than minimum energy conservation standards. Others state the importance of public and private sector collaboration in developing energy efficiency standards that are "ambitious and achievable." Congress may consider whether minimum national energy efficiency standards that address cryptocurrency mining should be established. Such standards could focus on the specific technology used by cryptocurrency miners ASICs or could focus on computer and battery backup systems as defined within DOE's proposed determination. DOE published energy conservation standards and test procedures for computer room air conditioners (CRACs) on May 16, 2012. According to the final rule, a CRAC is defined as: A basic model of commercial package air conditioning and heating equipment (packaged or split) that is: (1) Used in computer rooms, data processing rooms, or other information technology cooling applications; (2) rated for sensible coefficient of performance (SCOP) and tested in accordance with 10 CFR 431.96, and (3) not a covered consumer product under 42 U.S.C. 6291(1) (2) and 6292. A computer room air conditioner may be provided with, or have as available options, an integrated humidifier, temperature, and/or humidity control of the supplied air, and reheating function. DOE established 30 different equipment classes for CRAC and set minimum requirements for each class. Initial compliance dates of October 29, 2012, or October 29, 2013, were established, depending upon the equipment class. DOE is required to review test procedures for covered products at least once every seven years. The frequency requirement for reviewing energy efficiency standards of covered products is no later than six years after issuance of a final rule. DOE issued a request for information regarding test procedures for CRACs on July 25, 2017. <7.2. Voluntary Energy Efficiency Standards> In addition to minimum national energy efficiency standards issued by DOE, the U.S. Environmental Protection Agency (EPA) and DOE jointly administer the voluntary ENERGY STAR labeling program for energy-efficient products, homes, buildings, and manufacturing plants. ENERGY STAR has standards for miscellaneous residential and commercial electrical equipment including computers and displays. ENERGY STAR also has specifications for enterprise servers, data storage equipment, small network equipment, large network equipment, and uninterruptible power supplies. Congress may consider whether ENERGY STAR specifications for cryptocurrency mining technology are needed, or whether existing specifications for equipment used in data centers are appropriate. <7.3. Data Center Energy Efficiency Standards> Congress may also choose to consider the creation or adoption of energy efficiency standards for data centers used by mining companies. Verifiable information on cryptocurrency mining power usage is limited and based on what is voluntarily reported. Under these circumstances, it is reported that as cryptocurrency mining centralizes and professionalizes, mining facilities are taking on characteristics (e.g., power and cooling needs) that are similar to other large computing facilities, such as data centers. One option for improving the energy efficiency of Bitcoin mining could be to establish energy efficiency standards for data centers or large computing facilities. According to DOE, data centers are energy-intensive compared to other building types. DOE estimates that data centers account for approximately 2% of total U.S. electricity use. In 2014, data centers in the United States consumed an estimated 70 billion kWh, and are projected to consume approximately 73 billion kWh in 2020. The growth in cloud computing services has led to commitments by some data-centric companies to power data centers with renewable energy. Although there are no national efficiency requirements for data centers, the federal government has taken steps to improve the efficiency of its own data centers. In 2010, the Federal Data Center Consolidation Initiative (DCCI) was established. The Federal Information Technology Acquisition Reform Act (FITARA, P.L. 113-291 ) was enacted on December 19, 2014, to establish a long-term framework through which federal IT investments could be tracked, assessed, and managed, to significantly reduce wasteful spending and improve project outcomes. The DCCI was superseded by the Data Center Optimization Initiative (DCOI) in 2016. The DCCI established and the DCOI maintains requirements for agencies to develop and report on strategies "to consolidate inefficient infrastructure, optimize existing facilities, improve security posture, achieve cost savings, and transition to more efficient infrastructure." The DCOI also included energy efficiency goals for data centers: 1. Existing tiered data centers to achieve and maintain a power usage effectiveness (PUE) of less than 1.5 by September 30, 2018, and 2. New data centers must be designed and maintain a PUE no greater than 1.4, and are encouraged to achieve a PUE no greater than 1.2. For the PUE metric, the DCOI references Executive Order (E.O.) 13693 and the implementation instructions. E.O. 13693 was revoked by and replaced with E.O. 13834, which does not discuss data centers. The implementation instructions for E.O. 13834 state that "data centers are energy intensive operations that contribute to agency energy and water use and costs," and encourage agencies "to implement practices that promote energy efficient management of servers and Federal data centers," and "to install sub-meters, including advanced energy meters, in data centers where cost effective and beneficial for tracking energy performance and improving energy management." The authorization of the DCOI was extended until October 1, 2020, by the FITARA Enhancement Act of 2017 ( P.L. 115-88 ). Congress may choose to consider whether federal data center PUE requirements should be extended to certain types of data centers outside the federal government. For Bitcoin mining facilities, reportedly little is known about their operations, including power usage effectiveness. <8. Options for Federal Regulation of Blockchain Technology for Distributed Energy> Rules and regulations governing the retail sale of electricity generally originate with a state public utility commission. An electric utility is defined in federal law as any person, state, or federal agency "which sells electric energy." Definitions may be found in Public Utility Regulatory Policies, 16 U.S.C. Section 2602. This definition could potentially be interpreted that generators of electricity that make energy trades using blockchain technology are electric utilities by virtue of the fact that they sell electricity, and are therefore subject to all laws, requirements, and regulations pertaining to electric utilities. Congress may choose to consider extending or clarifying FERC's role regulating blockchain technology use in the energy sector. While blockchain could be implemented as a means to validate peer-to-peer distributed electricity trading, these transactions could potentially still be subject to FERC oversight as engaging in a sale for resale. Applications of blockchain technology in the energy sector have been limited in scope to date; wide-scale adoption of blockchain technologies could pose additional vulnerabilities to grid operations. FERC may also have a role in considering whether the existing grid infrastructure is capable of handling more power movement at high speeds in response to blockchain users' transactions. Other potential issues could include data privacy, interoperability of technology solutions, and market structure. FERC has not issued guidance or announced standards associated with blockchain technologies. Within this context, utilities and industry groups may interpret the lack of guidance as a signal to continue business as usual. <8.1. Appendix. Select Algorithmic Approaches to Crypto-Mining> As the Bitcoin network's energy consumption grows, some have questioned whether the proof-of-work (PoW) algorithm that is used by Bitcoin is sustainable. Many alternative algorithms exist. PoW and two approaches that are conceptually less energy intensive proof-of-stake and proof-of-authority are discussed below and illustrated in Figure A-1 . Proof-of-Work Under proof-of-work (PoW), miners are presented a difficult computational problem, or puzzle. PoW identifies a numeric value (called a nonce), which is used to generate an authenticator (hash value). The hash value ensures a user that the block of data sent has not changed. Hashes are determined by submitting the data through an algorithm that will output a string of characters. By inserting the nonce into the algorithm, miners seek to change the hash value. Identifying these valid nonces and hashes is computationally intensive, and the essence of mining. The security properties of hash algorithms are such that a miner tests nonces until a valid hash is found for a block. Generally, by solving the problem or puzzle, miners win the opportunity to post the next block and possibly receive a reward for doing so. In the case of Bitcoin, miners who create and publish new blocks in the blockchain are rewarded with Bitcoin. Once the problem is solved and a valid hash is identified, the miner announces it to the community. Other users can validate the solution immediately without going through the resource-intensive computation process by having transparent access to the entire history of the blockchain's transaction ledger. Once the majority of the community validates and confirms the block, the next block can be added to the chain. Proof-of-Stake Proof-of-stake (PoS) depends on the community's actual stake in the currency instead of consuming energy in a race to be the first to solve computations. The more currency a "forger" (i.e., the PoS term in lieu of the PoW term "miner") holds, the more transactions can be validated. This method skips the energy-intense hashing race. All of the currency is already created, and the amount is stagnant. Forgers earn currency through transaction fees for building a new block (and thereby validating a transaction). A new block is determined by the level of stake (e.g., wealth) a forger has invested in the cryptocurrency. Thus, forgers put their own cryptocurrency investment at risk and therefore would likely only build a block for valid transactions. If a forger added a block to the blockchain based on an invalid transaction, it would risk losing its stake. Potential energy reductions from use of PoS are leading to changes in some major cryptocurrencies. Ethereum a platform that uses a cryptocurrency called Ether plans to move to a PoS system and is currently working on the remaining challenges, such as scaling a PoS system and maintaining a decentralized system. The Ethereum network expects to go through several upgrade phases in order to fully transition to PoS. The timeline for this transition has not yet been revealed, but this new solution upgrade, known as Serenity, was announced at DevCon 4. The Serenity upgrade would utilize a new PoS algorithm called "Casper" that is intended to overcome some of the drawbacks (e.g., centralizing a traditionally decentralized currency) of a PoS community. Proof-of-Authority Proof-of-authority (PoA) is another method of validating transactions in a blockchain. Like much of the terminology associated with blockchain, there is not a formal definition of PoA, and the definition may differ from one group to another, depending on the purpose of the blockchain platform. One understanding of PoA as it relates to cryptocurrency has validators curating their own reputation in order to achieve payout. Validators earn their reputation by running software to put transactions into blocks that require a link to properly identify that validator. This method places every person in the network on equal footing everyone only has one identity. An alternative understanding of PoA, among the supply chain industry, uses a blockchain network to track logistics transparently. PoA provides a level of scalability and security within private networks that PoS or PoW cannot. Limitations of PoS, PoA, and PoW PoS, PoA, and PoW algorithms have limitations. While PoS and PoA both reduce energy consumption levels and require far less sophisticated equipment, they both create a more controlling and limited environment. PoW requires community decisionmaking. PoS and PoA are more individualistic. This could undermine the concept of the decentralized nature of the distributed ledger system design, which is one of the fundamental principles in cryptocurrency. Cryptocurrency was developed to move away from the centralized power of the banking system and move toward a decentralized network. The Ethereum upgrade is intended to integrate several new aspects and is expected to achieve a more decentralized system even when compared with PoS. Ethereum's "Phase Zero" of the PoS specification was frozen on June 30, 2019, with the formal launch targeted for January 3, 2020. PoW is also vulnerable to attacks. PoW blockchains publish new blocks to the longest available chain. Although difficult to accomplish, a malicious actor could devote overwhelming computational resources to rewriting a blockchain developing different transactions with different nonce and hash values. This is known as the "51% attack." At a point where their chain is the longest, the malicious actor could publish the blockchain, and the system would accept it as the valid one. By rewriting the chain, the malicious actor would reestablish the distribution of resources (i.e., which accounts have Bitcoin and how much the account holds). This would require substantial energy consumption, space, equipment, and money, and would all have to be done covertly to avoid being caught. While this may appear to be difficult to execute, PoW algorithms are not invulnerable.

The popularity of cryptocurrencies such as Bitcoin and the underlying blockchain technology presents both challenges and opportunities to the energy sector. As interest in Bitcoin and other cryptocurrencies has increased, the energy demand to support cryptocurrency "mining" activities has also increased. The increased energy demand—when localized—can exceed the available power capacity and increase customers' electricity rates. On the other hand, not all cryptocurrencies require energy-intensive mining operations. Some cryptocurrencies can operate under algorithms that require less energy. In addition, blockchain technologies could present opportunities for the energy sector by facilitating energy and financial transactions on a smart grid. Bitcoin and other cryptocurrencies can be used to make payments without banks or other third-party intermediaries, and are sometimes considered virtual currency. The technology underlying these cryptocurrencies is blockchain. A blockchain is a digital distributed ledger that enables parties who may not otherwise trust one another to agree on the current ownership and distribution of assets in order to conduct new business. New blocks may be added to a blockchain through a variety of methods. In mining blocks, users seek to add the next block to the chain. For Bitcoin, new blocks are added to the blockchain through a proof-of-work (PoW) algorithm. Under PoW, miners—those seeking to add a block to a blockchain—are presented a difficult computational problem. Once the problem is solved, other users can validate the solution and confirm the block, adding the next block to the chain. In the case of Bitcoin, miners who create and publish new blocks are rewarded with Bitcoin. Less energy intensive, alternative algorithms exist, such as proof of stake and proof of authority. Cryptocurrency mining through PoW requires substantial energy to (1) operate the devices computing the calculations required to maintain the integrity of the blockchain and (2) thermally regulate the devices for optimal operation. Devices have different performance capabilities and have different power requirements. Generally, the device, or a cluster of devices, that can perform more calculations per second will require more energy for powering and cooling the device or devices. Global power requirement estimates for Bitcoin have increased within the last five years. Network power estimates for 2018 range between 2,500 megawatts (MW) and 7,670 MW, which, for comparison, is nearly 1% of U.S. electricity generating capacity. Opinions differ on whether future growth in Bitcoin will significantly impact energy consumption and subsequent carbon dioxide (CO 2 ) emissions. Cryptocurrency mining includes costs associated with equipment, facilities, labor, and electricity. Some users pool computational resources to solve PoW problems faster, and are on a worldwide hunt for cheap, reliable electricity in abundance. While many mining pools are in China, some have been able to utilize closed industrial facilities in the United States that can provide abundant electricity at affordable rates. According to a study in 2017, nearly three-quarters of all major mining pools are based in either China (58%) or in the United States (16%). By some estimates, the state of Washington hosted 15%-30% of all Bitcoin mining operations globally in 2018. Governments are developing various policies in response to growth in energy demand by cryptocurrency mining activities. In some areas, applications from potential mining companies have exceeded the available capacity. Other areas have offered reduced electricity rates to attract miners. In the United States, in addition to efforts at the state and local level, there are potential options that could be adopted by the federal government to improve the energy efficiency of mining operations. Potential federal policy options include minimum energy conservation standards, voluntary energy efficiency standards, and data center energy efficiency standards. In addition to the challenges that cryptocurrency mining presents to the energy sector, there are also opportunities, particularly for blockchain. These may include electric vehicle charging infrastructure and distributed energy resources, among others. The U.S. electricity grid is critical infrastructure and subject to certain regulations to maintain safe and reliable operations. Opinions differ as to a potential role for blockchain technology in the energy sector. The popularity of cryptocurrencies such as Bitcoin and the underlying blockchain technology presents both challenges and opportunities to the energy sector. As interest in Bitcoin and other cryptocurrencies has increased, the energy demand to support cryptocurrency "mining" activities has also increased. The increased energy demand—when localized—can exceed the available power capacity and increase customers' electricity rates. On the other hand, not all cryptocurrencies require energy-intensive mining operations. Some cryptocurrencies can operate under algorithms that require less energy. In addition, blockchain technologies could present opportunities for the energy sector by facilitating energy and financial transactions on a smart grid. Bitcoin and other cryptocurrencies can be used to make payments without banks or other third-party intermediaries, and are sometimes considered virtual currency. The technology underlying these cryptocurrencies is blockchain. A blockchain is a digital distributed ledger that enables parties who may not otherwise trust one another to agree on the current ownership and distribution of assets in order to conduct new business. New blocks may be added to a blockchain through a variety of methods. In mining blocks, users seek to add the next block to the chain. For Bitcoin, new blocks are added to the blockchain through a proof-of-work (PoW) algorithm. Under PoW, miners—those seeking to add a block to a blockchain—are presented a difficult computational problem. Once the problem is solved, other users can validate the solution and confirm the block, adding the next block to the chain. In the case of Bitcoin, miners who create and publish new blocks are rewarded with Bitcoin. Less energy intensive, alternative algorithms exist, such as proof of stake and proof of authority. Cryptocurrency mining through PoW requires substantial energy to (1) operate the devices computing the calculations required to maintain the integrity of the blockchain and (2) thermally regulate the devices for optimal operation. Devices have different performance capabilities and have different power requirements. Generally, the device, or a cluster of devices, that can perform more calculations per second will require more energy for powering and cooling the device or devices. Global power requirement estimates for Bitcoin have increased within the last five years. Network power estimates for 2018 range between 2,500 megawatts (MW) and 7,670 MW, which, for comparison, is nearly 1% of U.S. electricity generating capacity. Opinions differ on whether future growth in Bitcoin will significantly impact energy consumption and subsequent carbon dioxide (CO 2 ) emissions. Cryptocurrency mining includes costs associated with equipment, facilities, labor, and electricity. Some users pool computational resources to solve PoW problems faster, and are on a worldwide hunt for cheap, reliable electricity in abundance. While many mining pools are in China, some have been able to utilize closed industrial facilities in the United States that can provide abundant electricity at affordable rates. According to a study in 2017, nearly three-quarters of all major mining pools are based in either China (58%) or in the United States (16%). By some estimates, the state of Washington hosted 15%-30% of all Bitcoin mining operations globally in 2018. Governments are developing various policies in response to growth in energy demand by cryptocurrency mining activities. In some areas, applications from potential mining companies have exceeded the available capacity. Other areas have offered reduced electricity rates to attract miners. In the United States, in addition to efforts at the state and local level, there are potential options that could be adopted by the federal government to improve the energy efficiency of mining operations. Potential federal policy options include minimum energy conservation standards, voluntary energy efficiency standards, and data center energy efficiency standards. In addition to the challenges that cryptocurrency mining presents to the energy sector, there are also opportunities, particularly for blockchain. These may include electric vehicle charging infrastructure and distributed energy resources, among others. The U.S. electricity grid is critical infrastructure and subject to certain regulations to maintain safe and reliable operations. Opinions differ as to a potential role for blockchain technology in the energy sector.

crs_R44972

crs_R44972_0

<1. Introduction> This report provides background information and discusses potential issues for Congress regarding the Navy's FFG(X) program, a program to procure a new class of 20 guided-missile frigates (FFGs). The Navy's proposed FY2020 budget requests $1,281.2 million for the procurement of the first FFG(X). The FFG(X) program presents several potential oversight issues for Congress. Congress's decisions on the program could affect Navy capabilities and funding requirements and the shipbuilding industrial base. This report focuses on the FFG(X) program. A related Navy shipbuilding program, the Littoral Combat Ship (LCS) program, is covered in detail in CRS Report RL33741, Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress , by Ronald O'Rourke. Other CRS reports discuss the strategic context within which the FFG(X) program and other Navy acquisition programs may be considered. <2. Background> <2.1. Navy's Force of Small Surface Combatants (SSCs)> In discussing its force-level goals and 30-year shipbuilding plans, the Navy organizes its surface combatants into large surface combatants (LSCs), meaning the Navy's cruisers and destroyers, and small surface combatants (SSCs), meaning the Navy's frigates, LCSs, mine warfare ships, and patrol craft. SSCs are smaller, less capable in some respects, and individually less expensive to procure, operate, and support than LSCs. SSCs can operate in conjunction with LSCs and other Navy ships, particularly in higher-threat operating environments, or independently, particularly in lower-threat operating environments. In December 2016, the Navy released a goal to achieve and maintain a Navy of 355 ships, including 52 SSCs, of which 32 are to be LCSs and 20 are to be FFG(X)s. Although patrol craft are SSCs, they do not count toward the 52-ship SSC force-level goal, because patrol craft are not considered battle force ships, which are the kind of ships that count toward the quoted size of the Navy and the Navy's force-level goal. At the end of FY2018, the Navy's force of SSCs totaled 27 battle force ships, including 0 frigates, 16 LCSs, and 11 mine warfare ships. Under the Navy's FY2020 30-year (FY2020-FY2049) shipbuilding plan, the SSC force is to grow to 52 ships (34 LCSs and 18 FFG[X]s) in FY2034, reach a peak of 62 ships (30 LCSs, 20 FFG[X]s, and 12 SSCs of a future design) in FY2040, and then decline to 50 ships (20 FFG[X]s and 30 SSCs of a future design) in FY2049. <2.2. U.S. Navy Frigates in General> In contrast to cruisers and destroyers, which are designed to operate in higher-threat areas, frigates are generally intended to operate more in lower-threat areas. U.S. Navy frigates perform many of the same peacetime and wartime missions as U.S. Navy cruisers and destroyers, but since frigates are intended to do so in lower-threat areas, they are equipped with fewer weapons, less-capable radars and other systems, and less engineering redundancy and survivability than cruisers and destroyers. The most recent class of frigates operated by the Navy was the Oliver Hazard Perry (FFG-7) class ( Figure 1 ). A total of 51 FFG-7 class ships were procured between FY1973 and FY1984. The ships entered service between 1977 and 1989, and were decommissioned between 1994 and 2015. In their final configuration, FFG-7s were about 455 feet long and had full load displacements of roughly 3,900 tons to 4,100 tons. (By comparison, the Navy's Arleigh Burke [DDG-51] class destroyers are about 510 feet long and have full load displacements of roughly 9,300 tons.) Following their decommissioning, a number of FFG-7 class ships, like certain other decommissioned U.S. Navy ships, have been transferred to the navies of U.S. allied and partner countries. <2.3. FFG(X) Program> <2.3.1. Meaning of Designation FFG(X)> In the program designation FFG(X), FF means frigate, G means guided-missile ship (indicating a ship equipped with an area-defense AAW system), and (X) indicates that the specific design of the ship has not yet been determined. FFG(X) thus means a guided-missile frigate whose specific design has not yet been determined. <2.3.2. Procurement Quantity and Schedule> <2.3.2.1. Procurement Quantity> The Navy wants to procure 20 FFG(X)s, which in combination with the Navy's planned total of 32 LCSs would meet the Navy's 52-ship SSC force-level goal. A total of 35 (rather than 32) LCSs have been procured through FY2019, but Navy officials have stated that the Navy nevertheless wants to procure 20 FFG(X)s. The Navy's 355-ship force-level goal is the result of a Force Structure Analysis (FSA) that the Navy conducted in 2016. The Navy conducts a new or updated FSA every few years, and it is currently conducting a new FSA that is scheduled to be completed by the end of 2019. Navy officials have stated that this new FSA will likely not reduce the required number of small surface combatants, and might increase it. Navy officials have also suggested that the Navy in coming years may shift to a new surface force architecture that will include, among other things, a larger proportion of small surface combatants. Figure 2 shows a Navy briefing slide depicting the potential new surface force architecture, with each sphere representing a manned ship or an unmanned surface vehicle (USV). Consistent with Figure 2 , the Navy's 355-ship goal, reflecting the current force architecture, calls for a Navy with twice as many large surface combatants as small surface combatants. Figure 2 suggests that the potential new surface force architecture could lead to the obverse a planned force mix that calls for twice as many small surface combatants than large surface combatants along with a new third tier of numerous USVs. <2.3.2.2. Procurement Schedule> The Navy wants to procure the first FFG(X) in FY2020, the next 18 at a rate of two per year in FY2021-FY2029, and the 20th in FY2030. Under the Navy's FY2020 budget submission, the first FFG(X) is scheduled to be delivered in July 2026, 72 months after the contract award date of July 2020. <2.3.3. Ship Capabilities, Design, and Crewing> <2.3.3.1. Ship Capabilities and Design> As mentioned above, the (X) in the program designation FFG(X) means that the design of the ship has not yet been determined. In general, the Navy envisages the FFG(X) as follows: The ship is to be a multimission small surface combatant capable of conducting anti-air warfare (AAW), anti-surface warfare (ASuW), antisubmarine warfare (ASW), and electromagnetic warfare (EMW) operations. Compared to an FF concept that emerged under a February 2014 restructuring of the LCS program, the FFG(X) is to have increased AAW and EMW capability, and enhanced survivability. The ship's area-defense AAW system is to be capable of local area AAW, meaning a form of area-defense AAW that extends to a lesser range than the area-defense AAW that can be provided by the Navy's cruisers and destroyers. The ship is to be capable of operating in both blue water (i.e., mid-ocean) and littoral (i.e., near-shore) areas. The ship is to be capable of operating either independently (when that is appropriate for its assigned mission) or as part of larger Navy formations. Given the above, the FFG(X) design will likely be larger in terms of displacement, more heavily armed, and more expensive to procure than either the LCS or an FF concept that emerged from the February 2014 LCS program restructuring. Figure 3 shows a January 2019 Navy briefing slide summarizing the FFG(X)'s planned capabilities. For additional information on the FFG(X)'s planned capabilities, see the Appendix A . <2.3.3.2. Dual Crewing> To help maximize the time that each ship spends at sea, the Navy reportedly is considering operating FFG(X)s with dual crews an approach, commonly called blue-gold crewing, that the Navy uses for operating its ballistic missile submarines and LCSs. <2.3.4. Procurement Cost> The Navy wants the follow-on ships in the FFG(X) program (i.e., ships 2 through 20) to have an average unit procurement cost of $800 million to $950 million each in constant 2018 dollars. The Navy reportedly believes that the ship's cost can be held closer to the $800 million figure. By way of comparison, the Navy estimates the average unit procurement cost of the three LCSs procured in FY2019 at $523.7 million (not including the cost of each ship's embarked mission package), and the average unit procurement cost of the three DDG-51 class destroyers that the Navy has requested for procurement in FY2020 at $1,821.0 million. As shown in Table 2 , the Navy's proposed FY2020 budget requests $1,281.2 million for the procurement of the first FFG(X). The lead ship in the program will be considerably more expensive than the follow-on ships in the program, because the lead ship's procurement cost incorporates most or all of the detailed design/nonrecurring engineering (DD/NRE) costs for the class. (It is a traditional Navy budgeting practice to attach most or all of the DD/NRE costs for a new ship class to the procurement cost of the lead ship in the class.) As shown in Table 2 , the Navy's FY2020 budget submission shows that subsequent ships in the class are estimated by the Navy to cost roughly $900 million each in then-year dollars over the next few years. The Navy's FY2020 budget submission estimates the total procurement cost of 20 FFG(X)s at $20,470.1 million (i.e., about $20.5 billion) in then-year dollars, or an average of about $1,023.5 million each. Since the figure of $20,470.1 million is a then-year dollar figure, it incorporates estimated annual inflation for FFG(X)s to be procured out to FY2030. <2.3.5. Acquisition Strategy> <2.3.5.1. Parent-Design Approach> The Navy's desire to procure the first FFG(X) in FY2020 does not allow enough time to develop a completely new design (i.e., a clean-sheet design) for the FFG(X). (Using a clean-sheet design might defer the procurement of the first ship to about FY2024.) Consequently, the Navy intends to build the FFG(X) to a modified version of an existing ship design an approach called the parent-design approach. The parent design could be a U.S. ship design or a foreign ship design. Using the parent-design approach can reduce design time, design cost, and cost, schedule, and technical risk in building the ship. The Coast Guard and the Navy are currently using the parent-design approach for the Coast Guard's polar security cutter (i.e., polar icebreaker) program. The parent-design approach has also been used in the past for other Navy and Coast Guard ships, including Navy mine warfare ships and the Coast Guard's new Fast Response Cutters (FRCs). <2.3.5.2. No New Technologies or Systems> As an additional measure for reducing cost, schedule, and technical risk in the FFG(X) program, the Navy envisages developing no new technologies or systems for the FFG(X) the ship is to use systems and technologies that already exist or are already being developed for use in other programs. <2.3.5.3. Number of Builders> Given the currently envisaged procurement rate of two ships per year, the Navy's baseline plan for the FFG(X) program envisages using a single builder to build the ships. Consistent with U.S. law, the ship is to be built in a U.S. shipyard, even if it is based on a foreign design. Using a foreign design might thus involve cooperation or a teaming arrangement between a U.S. builder and a foreign developer of the parent design. The Navy has not, however, ruled out the option of building the ships at two or three shipyards. At a December 12, 2018, hearing on Navy readiness before two subcommittees (the Seapower subcommittee and the Readiness and Management Support subcommittee, meeting jointly) of the Senate Armed Services Committee, the following exchange occurred: SENATOR ANGUS KING (continuing): Talking about industrial base and acquisition, the frigate, which we're talking about, there are 5 yards competing, there are going to be 20 ships. As I understand it, the intention now is to award all 20 ships to the winner, it's a winner take all among the five. In terms of industrial base and also just spreading the work, getting the getting the work done faster, talk to me about the possibility of splitting that award between at least two yards if not three. SECRETARY OF THE NAVY RICHARD SPENCER: You bring up an interesting concept. There's two things going on here that need to be weighed out. One, yes, we do have to be attentive to our industrial base and the ability to keep hands busy and trained. Two, one thing we also have to look at, though, is the balancing of the flow of new ships into the fleet because what we want to avoid is a spike because that spike will come down and bite us again when they all go through regular maintenance cycles and every one comes due within two or three years or four years. It gets very crowded. It's not off the table because we've not awarded anything yet, but we will we will look at how best we can balance with how we get resourced and, if we have the resources to bring expedition, granted, we will do that. <2.3.5.4. Block Buy Contracting> As a means of reducing their procurement cost, the Navy envisages using one or more fixed-price block buy contracts to procure the ships. <2.3.6. Competing Industry Teams> As shown in Table 1 , at least four industry teams are reportedly competing for the FFG(X) program. Two of the teams are reportedly proposing to build their FFG(X) designs at the two shipyards that have been building Littoral Combat Ships (LCSs) for the Navy Austal USA of Mobile, AL, and Fincantieri/Marinette Marine (F/MM) of Marinette, WI. The other two teams are reportedly proposing to build their FFG(X) designs at General Dynamics/Bath Iron Works (GD/BIW), of Bath, ME, and Huntington Ingalls Industries/Ingalls Shipbuilding (HII/Ingalls) of Pascagoula, MS. As also shown in Table 1 , a fifth industry team that had been interested in the FFG(X) program reportedly informed the Navy on May 23, 2019, that it had decided to not submit a bid for the program. As shown in the table, this fifth industry team, like one of the other four, reportedly had proposed building its FFG(X) design at F/MM. On February 16, 2018, the Navy awarded five FFG(X) conceptual design contracts with a value of $15.0 million each to the leaders of the five industry teams shown in Table 1 . Being a recipient of a conceptual design contract was not a requirement for competing for the subsequent Detailed Design and Construction (DD&C) contract for the program. The Navy plans to announce the outcome of the FFG(X) competition the winner of the DD&C contract in July 2020. <2.3.7. Program Funding> Table 2 shows funding for the FFG(X) program under the Navy's FY2020 budget submission. <3. Issues for Congress> <3.1. FY2020 Funding Request> One issue for Congress is whether to approve, reject, or modify the Navy's FY2020 funding request for the program. In assessing this question, Congress may consider, among other things, whether the work the Navy is proposing to do in the program in FY2020 is appropriate, and whether the Navy has accurately priced that work. <3.2. Cost, Capabilities, and Growth Margin> Another issue for Congress is whether the Navy has appropriately defined the cost, capabilities, and growth margin of the FFG(X). <3.2.1. Analytical Basis for Desired Ship Capabilities> One aspect of this issue is whether the Navy has an adequately rigorous analytical basis for its identification of the capability gaps or mission needs to be met by the FFG(X), and for its decision to meet those capability gaps or mission needs through the procurement of a FFG with the capabilities outlined earlier in this CRS report. The question of whether the Navy has an adequately rigorous analytical basis for these things was discussed in greater detail in earlier editions of this CRS report. <3.2.2. Balance Between Cost and Capabilities> Another potential aspect of this issue is whether the Navy has arrived at a realistic balance between its desired capabilities for the FFG(X) and the its estimated procurement cost for the ship. An imbalance between these two could lead to an increased risk of cost growth in the program. The Navy could argue that a key aim of the five FFG(X) conceptual design contracts and other preliminary Navy interactions with industry was to help the Navy arrive at a realistic balance by informing the Navy's understanding of potential capability-cost tradeoffs in the FFG(X) design. <3.2.3. Number of VLS Tubes> Another potential aspect of this issue concerns the planned number of Vertical Launch System (VLS) missile tubes on the FFG(X). The VLS is the FFG(X)'s principal (though not only) means of storing and launching missiles. As shown in Figure 3 (see the box in the upper-left corner labeled "AW," meaning air warfare), the FFG(X) is to be equipped with 32 Mark 41 VLS tubes. (The Mark 41 is the Navy's standard VLS design.) Supporters of requiring the FFG(X) to be equipped with a larger number of VLS tubes, such as 48, might argue that the FFG(X) is to be roughly half as expensive to procure as the DDG-51 destroyer, and might therefore be more appropriately equipped with 48 VLS tubes, which is one-half the number on recent DDG-51s. They might also argue that in a context of renewed great power competition with potential adversaries such as China, which is steadily improving its naval capabilities, it might be prudent to equip the FFG(X)s with 48 rather than 32 VLS tubes, and that doing so might only marginally increase the unit procurement cost of the FFG(X). Supporters of requiring the FFG(X) to have no more than 32 VLS tubes might argue that the analyses indicating a need for 32 already took improving adversary capabilities (as well as other U.S. Navy capabilities) into account. They might also argue that the FFG(X), in addition to having 32 VLS tubes, is also to have a separate, 21-cell Rolling Airframe Missile (RAM) missile launcher (see again the "AW" box in the upper-left corner of Figure 3 ), and that increasing the number of VLS tubes from 32 to 48 would increase the procurement cost of a ship that is intended to be an affordable supplement to the Navy's cruisers and destroyers. Potential oversight questions for Congress might be: What would be the estimated increase in unit procurement cost of the FFG(X) of increasing the number of VLS tubes from 32 to 48? What would be the estimated increase in unit procurement cost of equipping the FFG(X) with 32 VLS tubes but designing the ship so that the number could easily be increased to 48 at some point later in the ship's life? <3.2.4. Growth Margin> Another potential aspect of this issue is whether, beyond the specific question of the number of VLS tubes, the Navy more generally has chosen the appropriate amount of growth margin to incorporate into the FFG(X) design. As shown in the Appendix A , the Navy wants the FFG(X) design to have a growth margin (also called service life allowance) of 5%, meaning an ability to accommodate upgrades and other changes that might be made to the ship's design over the course of its service life that could require up to 5% more space, weight, electrical power, or equipment cooling capacity. As shown in the Appendix A , the Navy also wants the FFG(X) design to have an additional growth margin (above the 5% factor) for accommodating a future directed energy system (i.e., a laser or high-power microwave device) or an active electronic attack system (i.e., electronic warfare system). Supporters could argue that a 5% growth margin is traditional for a ship like a frigate, that the FFG(X)'s 5% growth margin is supplemented by the additional growth margin for a directed energy system or active electronic attack system, and that requiring a larger growth margin could make the FFG(X) design larger and more expensive to procure. Skeptics might argue that a larger growth margin (such as 10% a figure used in designing cruisers and destroyers) would provide more of a hedge against the possibility of greater-than-anticipated improvements in the capabilities of potential adversaries such as China, that a limited growth margin was a concern in the FFG-7 design, and that increasing the FFG(X) growth margin from 5% to 10% would have only a limited impact on the FFG(X)'s procurement cost. A potential oversight question for Congress might be: What would be the estimated increase in unit procurement cost of the FFG(X) of increasing the ship's growth margin from 5% to 10%? <3.3. Parent-Design Approach> Another potential oversight issue for Congress concerns the parent-design approach for the program. One alternative would be to use a clean-sheet design approach, under which procurement of the FFG(X) would begin about FY2024 and procurement of LCSs might be extended through about 2023. As mentioned earlier, using the parent-design approach can reduce design time, design cost, and technical, schedule, and cost risk in building the ship. A clean-sheet design approach, on the other hand, might result in a design that more closely matches the Navy's desired capabilities for the FFG(X), which might make the design more cost-effective for the Navy over the long run. It might also provide more work for the U.S. ship design and engineering industrial base. Another possible alternative would be to consider frigate designs that have been developed, but for which there are not yet any completed ships. This approach might make possible consideration of designs, such as (to cite just one possible example) the UK's new Type 26 frigate design, production of which was in its early stages in 2018. Compared to a clean-sheet design approach, using a developed-but-not-yet-built design would offer a reduction in design time and cost, but might not offer as much reduction in technical, schedule, and cost risk in building the ship as would be offered by use of an already-built design. <3.4. Cost, Schedule, and Technical Risk> Another potential oversight issue for Congress concerns cost, schedule, and technical risk in the FFG(X) program. The Navy can argue that the program's cost, schedule, and technical risk has been reduced by use of the parent-design approach and the decision to use only systems and technologies that already exist or are already being developed for use in other programs, rather than new technologies that need to be developed. Skeptics, while acknowledging that point, might argue that lead ships in Navy shipbuilding programs inherently pose cost, schedule, and technical risk, because they serve as the prototypes for their programs, and that, as detailed by CBO and GAO, lead ships in Navy shipbuilding programs in many cases have turned out to be more expensive to build than the Navy had estimated. A May 2019 report from the Government Accountability Office (GAO) on the status of various Department of Defense (DOD) acquisition programs states the following about the FFG(X) program: Current Status The FFG(X) program continues conceptual design work ahead of planned award of a lead ship detail design and construction contract in September 2020. In May 2017, the Navy revised its plans for a new frigate derived from minor modifications of an LCS design. The current plan is to select a design and shipbuilder through full and open competition to provide a more lethal and survivable small surface combatant. As stated in the FFG(X) acquisition strategy, the Navy awarded conceptual design contracts in February 2018 for development of five designs based on ships already demonstrated at sea. The tailoring plan indicates the program will minimize technology development by relying on government-furnished equipment from other programs or known-contractor-furnished equipment. In November 2018, the program received approval to tailor its acquisition documentation to support development start in February 2020. This included waivers for several requirements, such as an analysis of alternatives and an affordability analysis for the total program life cycle. FFG(X) also received approval to tailor reviews to validate system specifications and the release of the request for proposals for the detail design and construction contract . Program Office Comments We provided a draft of this assessment to the program office for review and comment. The program office did not have any comments. <3.5. Procurement of LCSs in FY2020 as Hedge against FFG(X) Delay> Another potential issue for Congress is whether any additional LCSs should be procured in FY2020 as a hedge against potential delays in the FFG(X) program. Supporters might argue that, as detailed by GAO, lead ships in Navy shipbuilding programs in many cases encounter schedule delays, some quite lengthy, and that procuring additional LCSs in FY2020 could hedge against that risk at reasonable cost by taking advantage of hot LCS production lines. Skeptics might argue that the Navy does not have a requirement for any additional LCSs, and that funding the procurement of additional LCSs in FY2020 could reduce FY2020 funding available for other Navy or DOD programs, with an uncertain impact on net Navy or DOD capabilities. <3.6. Potential Industrial-Base Impacts of FFG(X) Program> Another issue for Congress concerns the potential industrial-base impacts of the FFG(X) for shipyards and supplier firms. <3.6.1. Shipyards> One aspect of this issue concerns the potential impact on shipyards of the Navy's plan to shift procurement of small surface combatants from LCSs to FFG(X)s starting in FY2020, particularly in terms of future workloads and employment levels at the two LCS shipyards, if one or both of these yards are not involved in building FFG(X)s. If a design proposed for construction at one of the LCS shipyards is chosen as the winner of the FFG(X) competition, then other things held equal (e.g., without the addition of new work other than building LCSs), workloads and employment levels at the other LCS shipyard (the one not chosen for the FFG(X) program), as well as supplier firms associated with that other LCS shipyard, would decline over time as the other LCS shipyard's backlog of prior-year-funded LCSs is completed and not replaced with new FFG(X) work. If no design proposed for construction at an LCS shipyard is chosen as the FFG(X) that is, if the winner of the FFG(X) competition is a design to be built at a shipyard other than the two LCS shipyards then other things held equal, employment levels at both LCS shipyards and their supplier firms would decline over time as their backlogs of prior-year-funded LCSs are completed and not replaced with FFG(X) work. As mentioned earlier, the Navy's current baseline plan for the FFG(X) program is to build FFG(X)s at a single shipyard. One possible alternative to this baseline plan would be to build FFG(X)s at two or three shipyards, including one or both of the LCS shipyards. This alternative is discussed further in the section below entitled " Number of FFG(X) Builders ." Another possible alternative would be would be to shift Navy shipbuilding work at one of the LCS yards (if the other wins the FFG(X) competition) or at both of the LCS yards (if neither wins the FFG(X) competition) to the production of sections of larger Navy ships (such as DDG-51 destroyers or amphibious ships) that undergo final assembly at other shipyards. Under this option, in other words, one or both of the LCS yards would function as shipyards participating in the production of larger Navy ships that undergo final assembly at other shipyards. This option might help maintain workloads and employment levels at one or both of the LCS yards, and might alleviate capacity constraints at other shipyards, permitting certain parts of the Navy's 355-ship force-level objective to be achieved sooner. The concept of shipyards producing sections of larger naval ships that undergo final assembly in other shipyards was examined at length in a 2011 RAND report. <3.6.2. Supplier Firms> Another aspect of the industrial-base issue concerns the FFG(X) program's potential impact on supplier firms (i.e., firms that provide materials and components that are incorporated into ships). Some supporters of U.S. supplier firms argue that the FFG(X) program as currently structured does not include strong enough provisions for requiring certain FFG(X) components to be U.S.-made, particularly since two of the five industry teams reported to be competing for the FFG(X) program (see the earlier section entitled " Competing Industry Teams ") are reportedly using European frigate designs as their proposed parent design. For example, the American Shipbuilding Suppliers Association (ASSA) a trade association for U.S. ship supplier firms states: The US Navy has historically selected US manufactured components for its major surface combatants and designated them as class standard equipment to be procured either as government-furnished equipment (GFE) or contractor-furnished equipment (CFE). In a major departure from that policy, the Navy has imposed no such requirement for the FFG(X), the Navy's premier small surface combatant. The acquisition plan for FFG(X) requires proposed offerings to be based on an in-service parent craft design. Foreign designs and/or foreign-manufactured components are being considered, with foreign companies performing a key role in selecting these components. Without congressional direction, there is a high likelihood that critical HM&E components on the FFG(X) will not be manufactured within the US shipbuilding industrial supplier base. . The Navy's requirements are very clear regarding the combat system, radar, C4I suite, EW [electronic warfare], weapons, and numerous other war-fighting elements. However, unlike all major surface combatants currently in the fleet (CGs [cruisers], DDGs [destroyers]), the [Navy's] draft RFP [Request for Proposals] for the FFG(X) does not identify specific major HM&E components such as propulsion systems, machinery controls, power generation and other systems that are critical to the ship's operations and mission execution. Instead, the draft RFP relegates these decisions to shipyard primes or their foreign-owned partners, and there is no requirement for sourcing these components within the US shipbuilding supplier industrial base. The draft RFP also does not clearly identify life-cycle cost as a critical evaluation factor, separate from initial acquisition cost. This ignores the cost to the government of initial introduction [of the FFG(X)] into the [Navy's] logistics system, the training necessary for new systems, the location of repair services (e.g., does the equipment need to leave the US?), and the cost and availability of parts and services for the lifetime of the ship. Therefore, lowest acquisition cost is likely to drive the award certainly for component suppliers. Further, the US Navy's acquisition approach not only encourages, but advantages, the use of foreign designs, most of which have a component supplier base that is foreign. Many of these component suppliers (and in some cases the shipyards they work with) are wholly or partially owned by their respective governments and enjoy direct subsidies as well as other benefits from being state owned (e.g., requirements relaxation, tax incentives, etc.). This uneven playing field, and the high-volume commercial shipbuilding market enjoyed by the foreign suppliers, make it unlikely for an American manufacturer to compete on cost. As incumbent component manufacturers, these foreign companies have a substantial advantage over US component manufacturers seeking to provide equipment even if costs could be matched, given the level of non-recurring engineering (NRE) required to facilitate new equipment into a parent craft's design and the subsequent performance risk. The potential outcome of such a scenario would have severe consequences across the US shipbuilding supplier base . the loss of the FFG(X) opportunity to US suppliers would increase the cost on other Navy platforms [by reducing production economies of scale at U.S. suppliers that make components for other U.S. military ships]. Most importantly, maintaining a robust domestic [supplier] manufacturing capability allows for a surge capability by ensuring rapidly scalable capacity when called upon to support major military operations a theme frequently emphasized by DOD and Navy leaders. These capabilities are a critical national asset and once lost, it is unlikely or extremely costly to replicate them. This would be a difficult lesson that is not in the government's best interests to re-learn. One such lesson exists on the DDG-51 [destroyer production] restart, where the difficulty of reconstituting a closed production line of a critical component manufacturer its main reduction gear required the government to fund the manufacturer directly as GFE, since the US manufacturer for the reduction gear had ceased operations. Other observers, while perhaps acknowledging some of the points made above, might argue one or more of the following: foreign-made components have long been incorporated into U.S. Navy ships (and other U.S. military equipment); U.S-made components have long been incorporated into foreign warships (and other foreign military equipment); and requiring a foreign parent design for the FFG(X) to be modified to incorporate substitute U.S.-made components could increase the unit procurement cost of the FFG(X) or the FFG(X) program's acquisition risk (i.e., cost, schedule, and technical risk), or both. Current U.S. law requires certain components of U.S. Navy ships to be made by a manufacturer in the national technology and industrial base. The primary statute in question 10 U.S.C. 2534 states in part: 2534. Miscellaneous limitations on the procurement of goods other than United States goods (a) Limitation on Certain Procurements.-The Secretary of Defense may procure any of the following items only if the manufacturer of the item satisfies the requirements of subsection (b): (3) Components for naval vessels.-(A) The following components: (i) Air circuit breakers. (ii) Welded shipboard anchor and mooring chain with a diameter of four inches or less. (iii) Vessel propellers with a diameter of six feet or more. (B) The following components of vessels, to the extent they are unique to marine applications: gyrocompasses, electronic navigation chart systems, steering controls, pumps, propulsion and machinery control systems, and totally enclosed lifeboats. (b) Manufacturer in the National Technology and Industrial Base.- (1) General requirement.-A manufacturer meets the requirements of this subsection if the manufacturer is part of the national technology and industrial base . (3) Manufacturer of vessel propellers.-In the case of a procurement of vessel propellers referred to in subsection (a)(3)(A)(iii), the manufacturer of the propellers meets the requirements of this subsection only if- (A) the manufacturer meets the requirements set forth in paragraph (1); and (B) all castings incorporated into such propellers are poured and finished in the United States. (c) Applicability to Certain Items.- (1) Components for naval vessels.-Subsection (a) does not apply to a procurement of spare or repair parts needed to support components for naval vessels produced or manufactured outside the United States . (4) Vessel propellers.-Subsection (a)(3)(A)(iii) and this paragraph shall cease to be effective on February 10, 1998 . (d) Waiver Authority.-The Secretary of Defense may waive the limitation in subsection (a) with respect to the procurement of an item listed in that subsection if the Secretary determines that any of the following apply: (1) Application of the limitation would cause unreasonable costs or delays to be incurred. (2) United States producers of the item would not be jeopardized by competition from a foreign country, and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country. (3) Application of the limitation would impede cooperative programs entered into between the Department of Defense and a foreign country, or would impede the reciprocal procurement of defense items under a memorandum of understanding providing for reciprocal procurement of defense items that is entered into under section 2531 of this title, and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country. (4) Satisfactory quality items manufactured by an entity that is part of the national technology and industrial base (as defined in section 2500(1) of this title) are not available. (5) Application of the limitation would result in the existence of only one source for the item that is an entity that is part of the national technology and industrial base (as defined in section 2500(1) of this title). (6) The procurement is for an amount less than the simplified acquisition threshold and simplified purchase procedures are being used. (7) Application of the limitation is not in the national security interests of the United States. (8) Application of the limitation would adversely affect a United States company . (h) Implementation of Naval Vessel Component Limitation.-In implementing subsection (a)(3)(B), the Secretary of Defense- (1) may not use contract clauses or certifications; and (2) shall use management and oversight techniques that achieve the objective of the subsection without imposing a significant management burden on the Government or the contractor involved. (i) Implementation of Certain Waiver Authority.-(1) The Secretary of Defense may exercise the waiver authority described in paragraph (2) only if the waiver is made for a particular item listed in subsection (a) and for a particular foreign country. (2) This subsection applies to the waiver authority provided by subsection (d) on the basis of the applicability of paragraph (2) or (3) of that subsection. (3) The waiver authority described in paragraph (2) may not be delegated below the Under Secretary of Defense for Acquisition, Technology, and Logistics. (4) At least 15 days before the effective date of any waiver made under the waiver authority described in paragraph (2), the Secretary shall publish in the Federal Register and submit to the congressional defense committees a notice of the determination to exercise the waiver authority. (5) Any waiver made by the Secretary under the waiver authority described in paragraph (2) shall be in effect for a period not greater than one year, as determined by the Secretary.... In addition to 10 U.S.C. 2534, the paragraph in the annual DOD appropriations act that makes appropriations for the Navy's shipbuilding account (i.e., the Shipbuilding and Conversion, Navy, or SCN, appropriation account) has in recent years included this proviso: Provided further , That none of the funds provided under this heading for the construction or conversion of any naval vessel to be constructed in shipyards in the United States shall be expended in foreign facilities for the construction of major components of such vessel . 10 U.S.C. 2534 explicitly applies to certain ship components, but not others. The meaning of "major components" in the above proviso from the annual DOD appropriations act might be subject to interpretation. The issue of U.S.-made components for Navy ships is also, for somewhat different reasons, an issue for Congress in connection with the Navy's John Lewis (TAO-205) class oiler shipbuilding program. <3.7. Number of FFG(X) Builders> Another issue for Congress whether to build FFG(X)s at a single shipyard, as the Navy's baseline plan calls for, or at two or three shipyards. As mentioned earlier, one possible alternative to the Navy's current baseline plan for building FFG(X)s at a single shipyard would be to build them at two or three yards, including potentially one or both of the LCS shipyards. The Navy's FFG-7 class frigates, which were procured at annual rates of as high as eight ships per year, were built at three shipyards. Supporters of building FFG(X)s at two or three yards might argue that it could boost FFG(X) production from the currently planned two ships per year to four or more ships per year, substantially accelerating the date for attaining the Navy's small surface combatant force-level goal; permit the Navy to use competition (either competition for quantity at the margin, or competition for profit [i.e., Profit Related to Offers, or PRO, bidding]) to help restrain FFG(X) prices and ensure production quality and on-time deliveries; and perhaps complicate adversary defense planning by presenting potential adversaries with multiple FFG(X) designs, each with its own specific operating characteristics. Opponents of this plan might argue that it could weaken the current FFG(X) competition by offering the winner a smaller prospective number of FFG(X)s and perhaps also essentially guaranteeing the LCSs yard that they will build some number of FFG(X)s; substantially increase annual FFG(X) procurement funding requirements so as to procure four or more FFG(X)s per year rather than two per year, which in a situation of finite DOD funding could require offsetting reductions in other Navy or DOD programs; and reduce production economies of scale in the FFG(X) program by dividing FFG(X) among two or three designs, and increase downstream Navy FFG(X) operation and support (O&S) costs by requiring the Navy to maintain two or three FFG(X) logistics support systems. <3.8. Potential Change in Navy Surface Force Architecture> Another potential oversight issue for Congress concerns the potential impact on required numbers of FFG(X)s of a possible change in the Navy's surface force architecture. As mentioned earlier, Navy officials have stated that the new Force Structure Assessment (FSA) being conducted by the Navy may shift the Navy to a new fleet architecture that will include, among other thing, a larger proportion of small surface combatants and, by implication, a smaller proportion of large surface combatants (i.e., cruisers and destroyers). A change in the required number of FFG(X)s could influence perspectives on the annual procurement rate for the program and the number of shipyards used to build the ships. A January 15, 2019, press report states: The Navy plans to spend this year taking the first few steps into a markedly different future, which, if it comes to pass, will upend how the fleet has fought since the Cold War. And it all starts with something that might seem counterintuitive: It's looking to get smaller. "Today, I have a requirement for 104 large surface combatants in the force structure assessment; [and] I have [a requirement for] 52 small surface combatants," said Surface Warfare Director Rear Adm. Ronald Boxall. "That's a little upside down. Should I push out here and have more small platforms? I think the future fleet architecture study has intimated 'yes,' and our war gaming shows there is value in that." An April 8, 2019, press report states that Navy discussions about the future surface fleet include the upcoming construction and fielding of the [FFG(X)] frigate, which [Vice Admiral Bill Merz, the deputy chief of naval operations for warfare systems] said is surpassing expectations already in terms of the lethality that industry can put into a small combatant. "The FSA may actually help us on, how many (destroyers) do we really need to modernize, because I think the FSA is going to give a lot of credit to the frigate if I had a crystal ball and had to predict what the FSA was going to do, it's going to probably recommend more small surface combatants, meaning the frigate and then how much fewer large surface combatants can we mix?" Merz said. An issue the Navy has to work through is balancing a need to have enough ships and be capable enough today, while also making decisions that will help the Navy get out of the top-heavy surface fleet and into a better balance as soon as is feasible. "You may see the evolution over time where frigates start replacing destroyers, the Large Surface Combatant [a future cruiser/destroyer-type ship] starts replacing destroyers, and in the end, as the destroyers blend away you're going to get this healthier mix of small and large surface combatants," he said though the new FSA may shed more light on what that balance will look like and when it could be achieved. <4. Legislative Activity for FY2020> <4.1. Summary of Congressional Action on FY2020 Funding Request> Table 3 summarizes congressional action on the Navy's FY2020 funding request for the LCS program. Appendix A. Navy Briefing Slides from July 25, 2017, FFG(X) Industry Day Event This appendix reprints some of the briefing slides that the Navy presented at its July 25, 2017, industry day event on the FFG(X) program, which was held in association with the Request for Information (RFI) that the Navy issued on July 25, 2017, to solicit information for better understanding potential trade-offs between cost and capability in the FFG(X) design. The reprinted slides begin on the next page. Appendix B. Competing Industry Teams This appendix presents additional background information on the industry teams competing for the FFG(X) program. February 16, 2018, Press Report About Five Competing Industry Teams A February 16, 2018, press report about the five competing industry teams reportedly competing for the FFG(X) program (i.e., the five industry teams shown in Table 1 ) stated the following: The Navy would not confirm how many groups bid for the [FFG(X)] work. At least one U.S.-German team that was not selected for a [conceptual] design contract, Atlas USA and ThyssenKrupp Marine Systems, told USNI News they had submitted for the [DD&C] competition.... During last month's Surface Navy Association [annual symposium], several shipbuilders outlined their designs for the FFG(X) competition. Austal USA Shipyard: Austal USA in Mobile, Ala. Parent Design: Independence-class [i.e., LCS-2 class] Littoral Combat Ship One of the two Littoral Combat Ship builders, Austal USA has pitched an upgunned variant of the Independence-class LCS as both a foreign military sales offering and as the answer to the Navy's upgunned small surface combatant and then frigate programs. Based on the 3,000-ton aluminum trimaran design, the hull boasts a large flight deck and space for up to 16 Mk-41 Vertical Launching System (VLS) cells. Fincantieri Marine Group Shipyard: Fincantieri Marinette Marine in Marinette, Wisc. Parent Design: Fincantieri Italian FREMM As part of the stipulations of the FFG(X) programs, a contractor can offer just one design in the competition as a prime contractor but may also support a second bid as a subcontractor. Fincantieri elected to offer its 6,700-ton Italian Fregata europea multi-missione (FREMM) design for construction in its Wisconsin Marinette Marine shipyard, as well as partner with Lockheed Martin on its Freedom-class pitch as a subcontractor. The Italian FREMM design features a 16-cell VLS as well as space for deck-launched anti-ship missiles. General Dynamics Bath Iron Works Shipyard: Bath Iron Works in Bath, Maine Parent Design: Navantia lvaro de Baz n-class F100 Frigate The 6,000-ton air defense guided-missile frigates fitted with the Aegis Combat System have been in service for the Spanish Armada since 2002 and are the basis of the Australian Hobart-class air defense destroyers and the Norwegian Fridtjof Nansen-class frigates. The Navantia partnership with Bath is built on a previous partnership from the turn of the century. The F100 frigates were a product of a teaming agreement between BIW, Lockheed Martin and Navantia predecessor Izar as part of the Advanced Frigate Consortium from 2000. Huntington Ingalls Industries Shipyard: Ingalls Shipbuilding in Pascagoula, Miss. Parent Design: Unknown Out of the competitors involved in the competition, HII was the only company that did not present a model or a rendering of its FFG(X) at the Surface Navy Association symposium in January. A spokeswoman for the company declined to elaborate on the offering when contacted by USNI News on Friday. In the past, HII has presented a naval version of its Legend-class National Security Cutter design as a model at trade shows labeled as a "Patrol Frigate." Lockheed Martin Shipyard: Fincantieri Marinette Marine in Marinette, Wisc. Parent Design: Freedom-class [i.e., LCS-1 class] Littoral Combat Ship Of the two LCS builders, Lockheed Martin is the first to have secured a foreign military sale with its design. The company's FFG(X) bid will have much in common with its offering for the Royal Saudi Navy's 4,000-ton multi-mission surface combatant. The new Saudi ships will be built around an eight-cell Mk-41 vertical launch system and a 4D air search radar. Lockheed has pitched several other variants of the hull that include more VLS cells. "We are proud of our 15-year partnership with the U.S. Navy on the Freedom-variant Littoral Combat Ship and look forward to extending it to FFG(X)," said Joe DePietro, Lockheed Martin vice president of small combatants and ship systems in a Friday evening statement. "Our frigate design offers an affordable, low-risk answer to meeting the Navy's goals of a larger and more capable fleet." May 28, 2019, Press Report About One Industry Team Deciding to Not Submit a Bid On May 28, 2019, it was reported that one of the five industry teams that had been interested in the FFG(X) program had informed the Navy on May 23 that it had decided to not submit a bid for the program. The May 28, 2019, press report about this industry team's decision stated: Lockheed Martin won't submit a bid to compete in the design of the Navy's next-generation guided-missile (FFG(X)) frigate competition, company officials told USNI News on Tuesday [May 28]. The company elected to focus on its involvement developing the frigate combat system and other systems rather than forward its Freedom-class LCS design for the detailed design and construction contract Naval Sea Systems Command plans to issue this summer, Joe DePietro, Lockheed Martin vice president of small combatants and ship systems, told USNI News. "We reviewed the entire program and obviously, given some of the stuff that has already happened that is outside of the contract for the program that includes the designation of our combat management system, COMBATSS 21, derived off of Aegis; we have the Mk-41 vertical launch system; the processing for our anti-submarine warfare area; advanced [electronic warfare] and platform integration," he said. "As we evaluated all of those different areas, we determined not to pursue, as a prime contractor, the FFG(X) detailed design and construction." The company informed the Navy on May 23 it would not join the other bidders for the hull design, two sources familiar with the notification told USNI News. While the design passed two Navy reviews, the company told the service it felt the Freedom design would be stretched too far to accommodate all the capabilities required, one source told USNI News . While Lockheed is moving away from leading a frigate team, the company will be heavily involved with whoever wins. The FFG(X)'s COMBATSS-21 Combat Management System will be derived from the company's Aegis Combat System, and Lockheed Martin makes the ship's vertical launch system.

The FFG(X) program is a Navy program to build a class of 20 guided-missile frigates (FFGs). The Navy wants to procure the first FFG(X) in FY2020, the next 18 at a rate of two per year in FY2021-FY2029, and the 20th in FY2030. The Navy's proposed FY2020 budget requests $1,281.2 million for the procurement of the first FFG(X). The Navy's FY2020 budget submission shows that subsequent ships in the class are estimated by the Navy to cost roughly $900 million each in then-year dollars. The Navy intends to build the FFG(X) to a modified version of an existing ship design—an approach called the parent-design approach. The parent design could be a U.S. ship design or a foreign ship design. At least four industry teams are reportedly competing for the FFG(X) program. Two of the teams are reportedly proposing to build their FFG(X) designs at the two shipyards that have been building Littoral Combat Ships (LCSs) for the Navy—Austal USA of Mobile, AL, and Fincantieri/Marinette Marine (F/MM) of Marinette, WI. The other two teams are reportedly proposing to build their FFG(X) designs at General Dynamics/Bath Iron Works, of Bath, ME, and Huntington Ingalls Industries/Ingalls Shipbuilding of Pascagoula, MS. On May 28, 2019, it was reported that a fifth industry team that had been interested in the FFG(X) program had informed the Navy on May 23, 2019, that it had decided to not submit a bid for the program. This fifth industry team, like one of the other four, reportedly had proposed building its FFG(X) design at F/MM. The Navy plans to announce the outcome of the FFG(X) competition in July 2020. The FFG(X) program presents several potential oversight issues for Congress, including the following: whether to approve, reject, or modify the Navy's FY2020 funding request for the program; whether the Navy has appropriately defined the cost, capabilities, and growth margin of the FFG(X); the Navy's intent to use a parent-design approach for the FFG(X) program rather than develop an entirely new (i.e., clean-sheet) design for the ship; cost, schedule, and technical risk in the FFG(X) program; whether any additional LCSs should be procured in FY2020 as a hedge against potential delays in the FFG(X) program; the potential industrial-base impacts of the FFG(X) for shipyards and supplier firms; whether to build FFG(X)s at a single shipyard, as the Navy's baseline plan calls for, or at two or three shipyards; and the potential impact on required numbers of FFG(X)s of a possible change in the Navy's surface force architecture.

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<1. Human Rights Developments in China1> <1.1. Overview> Thirty years after the June 1989 Tiananmen Square crackdown, the Chinese Communist Party (CCP) remains firmly in power. People's Republic of China (PRC) leaders have maintained political control through a mix of repression and responsiveness to some public preferences, delivering economic prosperity to many citizens, co-opting the middle and educated classes, and stoking nationalism to bolster CCP legitimacy. The party has rejected reforms that it perceives might undermine its monopoly on power, and continues to respond forcefully to signs of autonomous social organization, independent political activity, or social instability. The party is particularly wary of unsanctioned collective activity among sensitive groups, such as religious congregations, ethnic minorities, industrial workers, political dissidents, and human rights defenders and activists. Technological advances have enhanced the government's ability to monitor the activities of these groups, particularly Tibetan Buddhists and Uyghur Muslims. Some experts refer to the PRC model of governance as "responsive authoritarianism" or, in some aspects, "consultative authoritarianism." Despite the government's many repressive policies, some reports indicate that many PRC citizens may appreciate the government's focus on stability, are generally satisfied with the government's performance, and are optimistic about the future, although the depth of their support for the government is unclear. CCP General Secretary and State President Xi Jinping's anti-corruption campaign, in which over 1.5 million party members have been punished and which is viewed by many experts as partly a political purge, appears to have gained widespread popular support. For part of the leadership term of Hu Jintao, who served as CCP General Secretary and State President from 2002 to 2012, the party tolerated limited public criticism of state policies, relatively unfettered dissemination of news and exchange of opinion on social media on many social topics, and some investigative journalism and human rights advocacy around issues not seen as threatening to CCP control. After consolidating power in 2013, Xi Jinping intensified and expanded the reassertion of party control over society that began during the final years of Hu's term, and strengthened his own control over the party. In high-profile speeches, Xi has repeated the maxim, "The party exercises overall leadership over all areas of endeavor in every part of the country." In 2018, Xi backed a constitutional amendment removing the previous limit of two five-year-terms for the presidency, clearing the way for him potentially to stay in power indefinitely. Xi also has cultivated what some observers view as a cult of personality, launching far-reaching campaigns for Chinese citizens, beginning with pre-school, to study his political philosophy. Some analysts argue that Xi's efforts to bolster the party and his leadership reflect a heightened sense of insecurity rather than confidence in the CCP's ability to address internal and external threats, and that he and his supporters among the party elite have responded by choosing to "clamp down and not loosen up." <1.2. New Laws and Policies> Since Xi's rise to power, the PRC government has introduced laws and policies that enhance the legal authority of the party and state to counteract potential ideological, political, and human rights challenges. In 2013, the CCP issued a directive (Document No. 9) that identified seven "false ideological trends, positions, and activities," largely aimed at reining in the media and liberal academics. In 2015, the government launched a crackdown on over 250 human rights lawyers and activists, detaining many of them and convicting over a dozen of them of "disturbing social order," subversion, and other crimes. PRC authorities targeted, in particular, legal staff of the Fengrui Law Firm in Beijing, which had taken on high profile human rights cases, and revoked the firm's business license in 2018. The government has also placed greater constraints upon environmental activism, which has been a relatively vibrant area of civil society, viewing it as a threat to social stability. Since 2015, the government has enacted new laws that place further restrictions on civil society in the name of national security, authorize greater control over minority and religious groups, particularly Uyghur Muslims, and reduce the autonomy of citizens. A law regulating foreign non-governmental organizations (NGOs), which took effect in 2017, places such NGOs under the jurisdiction of the Ministry of Public Security, tightens their registration requirements, and imposes greater controls on their activities, funding, and staffing. Some international NGOs that specialize in rule of law, rights advocacy, and labor rights have suspended their work in China. A new Cybersecurity Law, which went into effect in 2017, codifies broad governmental powers to control and restrict online traffic, including for the purposes of protecting social order and national security. The law also places a greater legal burden upon private internet service providers to monitor content and assist public security organs. A new National Intelligence Law, also enacted in 2017, obliges individuals, organizations, and institutions to assist and cooperate with state intelligence efforts. In 2016, President Xi launched a policy known as "Sinicization," through which the government has taken measures to further compel China's religious practitioners and ethnic minorities to conform to Chinese culture, the socialist system, and Communist Party policies. Many analysts view this strategy as the CCP's response to what it perceives as excessive feelings of separateness and divided loyalties among some religious and ethnic groups. In April 2016, Xi presided over a conference on national religious affairs, the first Chinese president in over ten years to do so. He emphasized that the "legitimate rights of religious peoples must be protected," but also stated, "We must resolutely guard against overseas infiltrations via religious means.... " At the 19 th Party Congress in October 2017, Xi emphasized, "We will fully implement the Party's basic policy on religious affairs, uphold the principle that religions in China must be Chinese in orientation, and provide active guidance to religions so that they can adapt themselves to socialist society." The Revised Regulations on Religious Affairs, which took effect in February 2018, place an emphasis on religious and social harmony and the prevention of religious extremism and terrorism. <1.3. Freedom of Speech> The PRC Constitution provides for many civil and political rights, including, in Article 35, the freedoms of speech, press, assembly, association, and demonstration, and in Article 36, "freedom of religious belief." Other provisions in China's constitution and laws, however, circumscribe or condition these freedoms, and the state routinely restricts these freedoms in practice. Under Xi's leadership, the government has further closed the space for free speech and silenced independent journalists. Authorities have used criminal prosecution, civil lawsuits, and other forms of harassment and punishment to intimidate and silence journalists and authors. Since 2013, China has dropped three places, from 173 to 177 (out of 180 countries), on Reporters Without Borders' World Press Freedom Index . The recent clampdown includes not only political speech but also "vulgar, immoral, and unhealthy" content. More than 60 journalists and bloggers currently are detained in China. In July 2019, a court in Sichuan province sentenced dissident Huang Qi to 12 years in prison for "providing state secrets to foreign entities." In 1998, Huang had created "64 Tianwang," a website that reported on sensitive topics, including government corruption and human rights violations. The PRC government, which operates one of the most extensive and sophisticated internet censorship systems in the world, blocks access to over 20% of the world's most trafficked websites, according to one source. Xi also has attempted to place greater controls on the use of censorship circumvention tools, such as virtual private networks (VPNs). Although the government often tolerates the use of VPNs for some purposes, such as academic research and international business, it sometimes punishes people for providing VPN services without authorization or for using VPNs to disseminate sensitive information. The use of VPNs is not widespread, either due to a lack of interest or to inconveniences such as slower browsing speeds. <1.4. New Surveillance Technologies> PRC methods of social and political control are evolving to include the widespread use of sophisticated surveillance and big data technologies. Human rights groups and the U.S. Department of State argue that these methods, which have not yet been fully deployed nationally, violate rights to privacy, "mental autonomy," and the presumption of innocence, and are used to restrict freedoms of movement, association, and religion. Chinese authorities and companies have installed ubiquitous surveillance cameras, as well as facial, voice, iris, and gait recognition equipment, ostensibly to reduce crime, but likely also to track the movements of ethnic Tibetans and Uyghurs (also spelled "Uighurs") and critics of the regime. In Xinjiang, police and officials reportedly are collecting massive amounts of data and entering it into an "Integrated Joint Operations Platform" (IJOP). The IJOP reportedly flags individuals who exhibit behaviors that authorities view as deviating from the norm or potentially threatening to social stability. Many forms of lawful, peaceful, daily activities may be viewed suspiciously by authorities through the use of this law enforcement tool. The government is developing a "social credit system" that would not only rate individuals' credit worthiness but also how well they abide by rules and regulations. It involves aggregating data on individuals and "creating measures to incentivize 'trustworthy' conduct, and penalize untrustworthy' conduct." Citizens deemed untrustworthy may be banned from making purchases for travel, prevented from applying for certain types of jobs, or denied educational opportunities for their children. Examples of untrustworthy behavior include traffic violations, smoking in prohibited areas, making repeated purchases that indicate poor character, and posting untruthful news online. <1.5. Labor Rights and Student Activism> The PRC government, which generally restricts the operations of independent labor groups, has been carrying out a year-long suppression campaign against labor activism in Guangdong province, a center for export-oriented manufacturing, and elsewhere. Authorities have harassed, detained, and arrested labor organizers and activists, labor NGOs, social workers, and journalists who attempted to provide support to workers, and students and recent graduates from around the country who advocated for their rights. Workers have protested low pay, unsafe or unhealthy working conditions, and other violations of the China's Labor Law. Over 50 labor activists are in custody or their whereabouts are unknown. In July 2018, workers at Jasic Technology Corporation in Shenzhen attempted to form their own union and went on strike to protest the dismissal of labor organizers. Other labor unrest during this time related to fair wages and the safety and health of working conditions. Since August 2018, authorities in Beijing have attempted to silence student labor activists at Peking University in Beijing, one of the country's most prestigious institutions of higher learning. At least 21 members of the university's Marxist Society have been placed under house arrest or have disappeared, and many others have been interrogated or surveilled. Although the students are not agitating for Western-style democracy, the CCP appears to fear that the movement could help workers to independently organize and stage protests at a time when labor demonstrations are rising across the country, or ignite other forms of social activism. The government appears particularly sensitive to student movements originating in China's most elite university, a traditional incubator of political activism. <1.6. China, Global Human Rights, and the United Nations> In part to defend and promote acceptance of its own principles of human rights, on the global stage, China has rejected notions of universal human rights, supported principles of non-intervention, and emphasized economic development over the protection of individual civil and political rights. A member of the United Nations Human Rights Council (UNHRC) most recently in 2017-2019, China sponsored its first ever UNHRC resolutions in 2017 and 2018, both of which passed, emphasizing national sovereignty, calling for "quiet dialogue" and cooperation rather than investigations and international calls for action, and advocating for the Chinese model of state-led development. In July 2019, China sponsored a UNHRC resolution, which was adopted by a vote of 33 to 13, reaffirming the "contribution of development to the enjoyment of human all rights." In a speech given on global Human Rights Day in 2018, President Xi provided his perspective on "people-centered human rights," including a "path of human rights development with Chinese characteristics in line with its own conditions" and emphasizing the "right to subsistence and development as primary basic human rights." <2. Religious and Ethnic Minority Policies> According to Freedom House, the extent of allowed religious freedom and activity among China's estimated 350 million religious practitioners varies widely by religion, region, and ethnic group, depending on "the level of perceived threat or benefit to [Communist] party interests, as well as the discretion of local officials." The party's Sinicization policy and the 2018 amendments to the government's Regulations on Religious Affairs have affected all religions to varying degrees. New policies further restrict religious travel to foreign countries and contacts with foreign religious organizations and tighten bans on religious practice among party members and state employees and the religious education of minors. Religious venues are required to raise the national flag and teach traditional Chinese culture and "core socialist values," and online religious activities now need approval by the provincial Religious Affairs Bureau. <2.1. Christians> Christianity is the second-largest religion in China after Buddhism, and is growing steadily. Between an estimated 70 million and 90 million Chinese Christians worship in both officially-registered and unregistered churches. China's Siniciz ation campaign has intensified government efforts to pressure churches that are not formally approved by the government, and hundreds reportedly have been shut down in recent years. Since 2014, authorities have ordered crosses removed from nearly 4,000 churches, particularly in Z hejiang and Henan provinces, where there are large and growing Christian populations. The U.S. Commission on International Religious Freedom reported that roughly 1,000 church leaders were detained for brief periods in 2018. In Nanjing, municipal authorities launched a five-year Sinicization campaign that the U.S. Department of State characterized as aiming to incorporate "Chinese elements into church worship services, hymns and songs, clergy attire, and the architectural style of church buildings." (See Figure 1 ) In September 2018 , the PRC government and the Vatican , which have disagreed over the appointment of bishops, religious freedom, and the Vatican's diplomatic ties with Taiwan, reached a breakthrough in negotiations on diplomatic relations. According to a 2018 provisional agreement, Beijing is to recognize the Pope as the head of the Catholic Church in China, the Vatican is to recognize seven excommunicated Chinese bisho ps appointed by PRC authorities, and China is to appoint future bishops, while the Pope has veto power over their nomination. Some observers have criticized the possible arrangement, which they believe would strengthen state control over Catholics in China. In June 2019, the Vatican asked the PRC government to refrain from harassing Catholic clergy who want to remain loyal to the Pope rather than pledge allegiance to the Chinese Patriotic Catholic Association, the official organization that governs Catholics in China. <2.2. Falun Gong> Falun Gong combines traditional Chinese exercise movements with Buddhist and Daoist concepts and precepts formulated by its founder, Li Hongzhi. In the mid-1990s, the spiritual exercise gained tens of millions of adherents across China, including members of the Communist Party. Authorities have harshly suppressed Falun Gong beginning in 1999 after thousands of adherents gathered in Beijing to protest growing restrictions on their activities. Hundreds of thousands of practitioners who refused to renounce Falun Gong were sent to Re-education through Labor (RTL) centers until they were deemed "transformed." Since the formal dismantling of the RTL penal system in 2014, many Falun Gong detainees reportedly have been sent to "Legal Education Centers" to undergo indoctrination, or to mental health facilities. Overseas Falun Gong groups reported that in 2018, authorities arrested or harassed approximately 9,000 Falun Gong practitioners for refusing to renounce the spiritual exercise. In November 2018, judiciary officials in Changsha, Hunan province suspended the licenses of two lawyers for six months for arguing that Falun Gong was not an illegal cult and for engaging in speech that "disrupted courtroom order." Falun Gong overseas organizations claim that over 4,300 adherents have died in government custody since 1999. Some reports allege that Falun Gong practitioners held in detention facilities in China were victims of illegal organ harvesting the unlawful, large-scale, systematic, and nonconsensual removal of body organs for transplantation while they were still alive, resulting in their deaths. The claims of organ harvesting from Falun Gong detainees are based largely upon circumstantial evidence and interviews. China reportedly has made efforts to reform its organ-transplant system, to outlaw organ trafficking and the use of organs from executed prisoners, create a national organ registry, and encourage voluntary donations. Overseas Falun Gong organizations claim that the practice of organ harvesting continues. <2.3. Tibetans> The Tibetan Autonomous Region (TAR) is home to about 2.7 million Tibetans out of China's total ethnic Tibetan population of 6 million. Most of China's remaining ethnic Tibetan population lives in Tibetan autonomous prefectures and counties in bordering provinces. Although some Tibetans advocate independence, the Dalai Lama, the Tibetan Buddhist spiritual leader who has lived with other Tibetan exiles in Dharamsala, India since a failed Tibetan uprising against Chinese rule in 1959, has proposed a "middle way approach," or "genuine autonomy" without independence in Tibet. China's leaders have referred to the middle way as "half independence" or "independence in disguise" and to the Dalai Lama as a "separatist" and a "wolf in monk's robes." Talks between PRC officials and representatives of the Dalai Lama on issues related to Tibetan autonomy and the return of the Dalai Lama have been stalled since 2010. Following anti-government protests in 2008, TAR authorities imposed increasingly expansive controls on Tibetan religious life and culture. These include a heightened police presence within monasteries; the ideological re-education of Tibetan Buddhist monks and nuns; the arbitrary detention and imprisonment of Tibetans; strengthened media controls; and greater restrictions on the use of the Tibetan language in schools. Authorities in some Tibetan areas, in an effort to prevent "separatist" thoughts and activities, have inspected private homes for pictures of the Dalai Lama, examined cell phones for Tibetan religious and cultural content, and monitored online posts for political speech. Since 2016, authorities have destroyed religious structures and homes at the Larung Gar and Yanchen Gar monasteries in Sichuan Province, and evicted roughly 11,500 monks and nuns. The PRC government insists that Chinese laws, and not Tibetan Buddhist religious traditions, govern the process by which lineages of Tibetan lamas are reincarnated, and that the state has the right to choose the successor to the current Dalai Lama. U.S. officials and some Members of Congress have expressed support for the right of Tibetans to choose their own religious leaders without government interference. Since 2009, 155 Tibetans within China are known to have self-immolated, many apparently to protest PRC policies or to call for the return of the Dalai Lama, and 123 are reported to have died. <2.4. Uyghurs> The Uyghurs are a Turkic ethnic group who practice a moderate form of Sunni Islam and live primarily in the Xinjiang Uyghur Autonomous Region (XUAR). In the past decade, PRC authorities have imposed severe restrictions on the religious and cultural activities of Uyghurs. Ethnic unrest in Xinjiang erupted in 2009, featuring Uyghur violence against Han Chinese and government reprisals. Subsequent periodic clashes between Uyghurs and Xinjiang security personnel spiked between 2013 and 2015, and PRC leaders responded with more intensive security measures, including thousands of arrests. Following the 2016 appointment of a new Communist Party Secretary to the XUAR, Chen Quanguo, and the implementation of new national security and counterterrorism laws and regulations on religious practice, Xinjiang officials stepped up security measures aimed at the Uyghur population. They included tighter restrictions on movement, the installation of thousands of neighborhood police kiosks, and ubiquitous surveillance cameras. Authorities reportedly have collected biometric data, including DNA samples, blood types, and fingerprints of Uyghur residents, for identification purposes. XUAR authorities also have implemented systems and installed phone apps to register and monitor Uyghurs' electronic devices and online activity for "extremist" content. The PRC government has instituted policies intended to assimilate Uyghurs into Han Chinese society and reduce the influences of Uyghur, Islamic, and Arabic cultures and languages. The XUAR enacted a regulation in 2017 that prohibits "expressions of extremification," including wearing face veils, growing "irregular" beards, and expanding halal practices beyond food. Authorities reportedly have banned traditional Uyghur wedding and funeral customs and Islamic names for children. Thousands of mosques in Xinjiang reportedly have been demolished as part of a "mosque rectification" or safety campaign. PRC authorities reportedly have conscripted as many as a million citizens to live temporarily in the homes of Uyghurs and other Muslim minorities to assess their hosts' loyalty to the Communist Party. <2.4.1. Mass Internment of Uyghurs> Since 2017, Xinjiang authorities have undertaken the mass internment of Turkic Muslims, some of whom may have engaged in religious and ethnic cultural practices that the government now perceives as extremist or terrorist, or as manifesting "strongly religious" views or thoughts that could lead to the spread of religious extremism or terrorism. The government has detained, without formal charges, up to an estimated 1.5 million Uyghurs out of a population of about 10.5 million, and a smaller number of ethnic Kazakhs, in ideological re-education centers. Over 400 prominent Uyghur intellectuals reportedly have been detained or their whereabouts are unknown. Many detainees reportedly are forced to express their love of the Communist Party and Xi Jinping, sing patriotic songs, and renounce or reject many of their religious beliefs and customs. According to former detainees, conditions in the centers are often crowded and unsanitary, and treatment often includes psychological pressure, forced labor, beatings, and food deprivation. PRC officials describe the Xinjiang camps as "vocational education and training centers" in which "trainees" study Chinese, take courses on PRC law, learn job skills, and undergo "de-extremization" or are "cured of ideological infection." The government states that the centers "have never made any attempts to have the trainees change their religious beliefs." In July 2019, some Chinese officials claimed that most detainees had "returned to society" and to their families, while in August 2019, other officials stated that the "only 500,000 Uyghurs" were held in 68 camps. Some Uyghurs living abroad, however, claim that they still have not heard from missing relatives in Xinjiang. Some reports indicate that many of those released from re-education centers have been placed under house arrest or in state-run factories, and continue to be held under close political supervision. <2.5. Hui Muslims> The Hui, another Muslim minority group in China who number around 11 million, largely have practiced their faith with less government interference. The Hui are more geographically dispersed and culturally assimilated than the Uyghurs, are generally physically indistinguishable from Hans, and do not speak a non-Chinese language. China's new religious policies have affected the Hui and other Muslims outside of Xinjiang, but less severely than the Uyghurs. Nonetheless, authorities in the Ningxia Hui Autonomous Region have ordered mosques to be "Sinicized" minarets have been taken down, onion domes have been replaced by traditional Chinese roofs, and Islamic motifs and Arabic writings have been removed. Officials have cancelled Arabic classes in some mosques and private schools, and calls to prayer have been banned in Yinchuan, the capital of Ningxia. In Beijing, authorities have mandated that Arabic signage over Halal food shops be removed. In August 2018, thousands of Hui Muslims gathered in front of a newly-built mosque in Weizhou, Ningxia, in an attempt to block the government's announced demolition of the building due in part to its Middle Eastern architectural style. While the government backed down on its threat to destroy the mosque, PRC anticorruption investigators have begun investigating local Hui officials who they say have "strayed from the party's leadership and political discipline in religious matters." <3. U.S. Efforts to Advance Human Rights in China> <3.1. Human Rights and U.S.-China Relations> Human rights conditions in the PRC have been a recurring point of friction and source of mutual mistrust in U.S.-China relations, particularly since the Tiananmen Square crackdown in 1989 and the end of the Cold War in 1991. China's persistent human rights violations, as well as its authoritarian political system, often have caused U.S. policymakers and/or the American public to view the PRC government with greater suspicion. Chinese officials may in turn view expressed human rights concerns by U.S. policymakers, and the broader U.S. democracy promotion agenda, as tools meant to undermine CCP rule and slow China's rise. Frictions over human rights may affect other issues in the relationship, including those related to economics and security. In engaging China on human rights issues, the United States has often focused on China's inability or unwillingness to respect universal civil and political rights, while China prefers to tout its progress in delivering economic development and well-being, and advancing social rights for its people, including ethnic minorities. <3.1.1. U.S. Policy Evolution> In the period following the 1989 Tiananmen Square crackdown, the United States sought to leverage China's desire for "most favored nation" (MFN) trade status by linking its annual renewal to improvements in human rights conditions in China. The Clinton Administration ultimately abandoned this direct linkage, however, in favor of a general policy of engagement with China that it hoped would contribute to improved respect for human rights and greater political freedoms for the Chinese people. President Bill Clinton, in his 1999 State of the Union Address, summed up the long-term aspirations of this approach, stating, "It's important not to isolate China. The more we bring China into the world, the more the world will bring change and freedom to China." In the following more than two decades, U.S. Administrations and Congresses employed broadly similar strategies for promoting human rights in China, combining efforts to deepen trade and other forms of engagement to help create conditions for positive change, on the one hand, with specific human rights promotion efforts, on the other. Presidents Bill Clinton, George W. Bush, and Barack Obama held that U.S. engagement with China and encouraging China to respect international norms, including on human rights, would result in mutual benefits, including China's own success and stability. Policy tools for promoting human rights have included open censure of China; quiet diplomacy, such as closed-door discussions; congressional investigations, hearings, legislation, statements, letters, and visits; funding for human rights and democracy foreign assistance programs in the PRC; congressionally-mandated reports on human rights in China; support for human rights defenders and pro-democracy groups in China, Hong Kong, and the United States; economic sanctions; efforts to promote Internet freedom; support for international broadcasting; and coordination of international pressure, including through multilateral organizations. In addition, some U.S. officials and Members of Congress have regularly met with Chinese dissidents and with the Dalai Lama and exiled Tibetan officials, in both Washington, D.C. and Dharamsala, India, where the headquarters of the Central Tibetan Administration (sometimes referred to as the Tibetan government-in-exile) is located. Beijing opposes such meetings as encouraging Tibetan independence and contravening the U.S. policy that Tibet is part of China. <3.1.1.1. Trump Administration Policy> In recent years, policy analysts have increasingly debated the effectiveness of aspects of the U.S. engagement strategy with China, including, in light of China's deepening domestic political repression, its results in securing improvements in Beijing's respect for human rights and political freedoms. Under President Trump, U.S. policy documents have declared that China's international integration has not liberalized its political or economic system, and the United States has begun to place less emphasis on engagement. The Trump Administration has referred to China as a "revisionist power," a strategic competitor, or even an adversary, and curtailed some government-to-government cooperation. Some critics of the Administration's China policy argue that U.S. effectiveness and credibility on human rights is strengthened when the United States works with allies and within international organizations to promote human rights and democracy globally and in China, while maintaining openness to engaging China's government and society, where appropriate. A U.S. policy approach that is less concerned with maintaining broad engagement with China may afford greater space and opportunity to push the PRC on human rights concerns. Trump Administration efforts in this area arguably have been uneven to date, with some commentators criticizing the Administration for inconsistency in its commitment to human rights issues as it pursues other priorities with China, particularly on trade. More broadly, the Administration has placed less emphasis on existing multilateral institutions and on multilateral diplomacy in its foreign policy, including with regard to human rights. The forcefulness of the Administration's public rhetoric on PRC human rights issues has differed between the President and some senior Administration officials. Since 2018, some Administration officials have used increasingly sharp language on China's human rights abuses. Vice President Mike Pence's October 2018 speech on the Administration's China policy, which was critical of China across a broad set of policy areas, cited concern over China's "control and repression of its own people" and referenced "an unparalleled surveillance state." At the announcement of the Department of State's 2019 release of its annual report on human rights practices around the world, Secretary of State Michael Pompeo stated that China was in a "league of its own" in the area of human rights violations. In July 2019, Pompeo described the situation in Xinjiang in particular as "one of the worst human rights crises of our time," and "the stain of the century." President Trump generally has not publicly raised the issue of human rights in China and reportedly remains focused largely on trade issues. In July 2019, President Trump met with survivors of religious persecution around the world, including four individuals from China: a Uyghur Muslim, a Tibetan Buddhist, a Christian, and a Falun Gong practitioner. In September 2019 at a United Nations event on religious freedom, the President issued a broad statement calling for an end to religious persecution, but did not mention religious freedom issues in China specifically; his later remarks to the U.N. General Assembly, as they related to China, emphasized trade issues. The Trump Administration has not attempted to restart the U.S.-China Human Rights Dialogue, which Beijing suspended in 2016. Many other operative elements of U.S. human rights policy toward China, however, reflect continuity with prior administrations; many are statutorily mandated and/or continue to be funded by Congress (as described below). The State Department's most recent "integrated country strategy" for China, released in August 2018, includes an objective to "advocate for and urge China to adhere to the rule of law, respect the individual rights and dignity of all its citizens, and ease restrictions on the free flow of information and ideas to advance civil society." <3.2. Policy Options and Tools> <3.2.1. Human Rights and Democracy Foreign Assistance Programs> Since 2001, U.S. foreign assistance programs have sought to promote human rights, civil society, democracy, rule of law, and Internet freedom in China. In addition, some programs also have addressed environmental and rule of law issues and focused upon sustainable development, environmental conservation, and preservation of indigenous culture in Tibetan areas of China. U.S.-funded programs do not provide assistance to PRC government entities or directly to Chinese non-governmental organizations (NGOs), and are predominantly awarded in the form of grants to U.S.-based NGOs and academic institutions. The State Department's Bureau of Democracy, Human Rights, and Labor (DRL) has generally administered programs to promote human rights and democracy in China, while the U.S. Agency for International Development (USAID) has administered the aforementioned programs in Tibet and some additional programs in the areas of the environment and rule of law. DRL programs across China have generally supported rule of law development, civil society, labor rights, religious freedom, government transparency, public participation in government, and Internet freedom. Between 2001 and 2018, the U.S. government provided approximately $241 million for DRL programs in China, $99 million for Tibetan programs, and $72 million for environmental and rule of law efforts in the PRC (see Figure 2 above). Since 2015, Congress has appropriated additional funds for Tibetan communities in India and Nepal ($6 million in FY2019). Since 2018, Congress also has provided $3 million annually to strengthen institutions and governance in the Tibetan exile communities. <3.2.2. National Endowment for Democracy Grants> Established in 1983, the National Endowment for Democracy (NED) is a private, nonprofit foundation "dedicated to the growth and strengthening of democratic institutions around the world." Funded primarily by an annual congressional appropriation, NED has played an active role in promoting human rights and democracy in China since the mid-1980s. A grant-making institution, NED has supported projects in China carried out by grantees that include its four affiliated organizations; Chinese, Tibetan, and Uyghur human rights and democracy groups and media platforms based in the United States and Hong Kong; and a small number of NGOs based in mainland China. Program areas have included efforts related to prisoners of conscience; rights defenders; freedom of expression; civil society; the rule of law; public interest law; Internet freedom; religious freedom; promoting understanding of Tibetan, Uyghur, and other ethnic concerns in China; government accountability and transparency; political participation; labor rights; public policy analysis and debate; and rural land rights, among others. NED currently describes China as a priority country in Asia in light of the "significant and systemic challenges to democratization" there. NED grants for China (including Tibet and Hong Kong) totaled approximately $7 million in 2017 and $6.5 million in 2018. This support is provided using NED's regular congressional appropriations. <3.2.3. International Broadcasting> The U.S. Agency for Global Media (USAGM; formerly the Broadcasting Board of Governors) utilizes international broadcasting and media activities to "advance the broad foreign policy priorities of the United States, including the universal values of freedom and democracy." It targets resources to areas "most impacted by state-sponsored disinformation" (as well as by violent extremism), and identifies people in China as a key audience. USAGM-supported 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 U.S.-style broadcasting, journalism, and public debate in China. VOA, which offers mainly U.S. and international news, and RFA, which serves as an uncensored source of domestic Chinese news, often report on important world and local events, including human rights issues. The PRC government regularly jams and blocks VOA and RFA Mandarin, Cantonese, Tibetan, and Uyghur language radio and television broadcasts and Internet sites, while VOA English services generally receive less interference. VOA and RFA have made efforts to enhance their Internet services, develop circumvention or counter-censorship technologies, and provide access to their programs on social media platforms. USAGM increasingly emphasizes digital and social media content in China, arguing that these are "effective channels for information-seeking people to evade government firewalls." The agency describes RFA Uyghur as the "only Uyghur language news outlet for the Xinjiang Uyghur Autonomous Region," and states that the outlet's social media content is popular among the Uyghur exile community, which shares the content with Uyghurs in Xinjiang. <3.2.4. Sanctions> China is subject to some U.S. economic sanctions in response to its human rights conditions. The sanctions' effects have been limited, however, and arguably largely symbolic. Many sanctions imposed on China as a response to the 1989 Tiananmen crackdown (including restrictions on foreign aid, military and government exchanges, and export licenses) are no longer in effect. Remaining Tiananmen-related sanctions suspend Overseas Private Investment Corporation programs and restrict export licenses for U.S. Munitions List (USML) items and crime control equipment. The United States also limits its support for international financial institution (IFI) lending to China for human rights reasons. For example, U.S. representatives to IFIs may by law 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, due in part to the potential for such activities to erode Tibetan culture and identity. Relatedly, China also has been subject to potential nonhumanitarian and nontrade-related foreign assistance restrictions as a result of its State Department designation as a "Tier 3" (worst) country for combating human trafficking in recent years. <3.2.4.1. Sanctions on Individuals> The Global Magnitsky Human Rights Accountability Act, enacted as part of the National Defense Authorization Act for FY2017 ( P.L. 114-328 , Subtitle F, Title XII), authorizes the President to impose both economic sanctions and visa denials or revocations against foreign individuals responsible for "gross violations of internationally recognized human rights." The Trump Administration has thus far sanctioned one Chinese security official, Gao Yan, pursuant to the Global Magnitsky Act. According to the Treasury Department, Gao headed the Public Security Bureau branch in Beijing at which human rights activist Cao Shunli was held and denied medical treatment; Cao died in March 2014. The executive branch may also utilize Section 7031(c) of the Department of State, Foreign Operations, and Related Appropriations Act, 2019 (Division F of P.L. 116-6 ) or the broad authorities under Section 212 of the Immigration and Nationality Act (INA) to impose visa sanctions on individuals responsible for human rights abuses. Numerous human rights advocates and Members of Congress have called on the Trump Administration to sanction Chinese government officials responsible for the human rights abuses occurring in Xinjiang; many have argued for Global Magnitsky sanctions against XUAR Party Secretary Chen Quanguo, in particular. Press reports suggest the Trump Administration has been considering sanctions under the Global Magnitsky Act against Xinjiang officials, but has delayed actions in the midst of the U.S.-China bilateral trade negotiations. In October 2019, the State Department announced visa restrictions against an unspecified number of "Chinese government and Communist Party officials who are believed to be responsible for, or complicit in, the detention or abuse of Uighurs, Kazakhs, or other members of Muslim minority groups" in Xinjiang, and stated that the officials' family members may also be subject to visa restrictions. <3.2.4.2. Designations and Actions Pursuant to the International Religious Freedom Act> The International Religious Freedom Act of 1998 (IRFA, P.L. 105-292 ) mandates that the President produce an annual report on the status of religious freedom in countries around the world and identify "countries of particular concern" (CPCs) for "particularly severe violations of religious freedom," and prescribes punitive actions in response to such violations. The law provides a menu of potential sanctions against CPCs, such as foreign assistance restrictions or loan prohibitions, but provides the executive branch with significant discretion in determining which, if any, actions to take. U.S. reports under IRFA have been consistently critical of China's religious freedom conditions, and the U.S. government has designated China as a CPC in each of its annual designation announcements since IRFA's enactment. Consistent with prior administrations, the Trump Administration has to date chosen not to take new actions against the Chinese government pursuant to IRFA and instead referred to existing, ongoing sanctions to satisfy the law's requirements. These existing sanctions relate to the above-mentioned restrictions on exports of crime control and detection equipment adopted following the Tiananmen crackdown. <3.2.4.3. Visa Sanctions Pursuant to the Reciprocal Access to Tibet Act> The Reciprocal Access to Tibet Act (RATA, P.L. 115-330 ), enacted in December 2018, requires that, absent a waiver by the Secretary of State, no individual determined to be "substantially involved in the formulation or execution of policies related to access for foreigners to Tibetan areas" may receive a visa or be admitted to the United States while PRC policies restricting foreigners' access to Tibetan areas of China remain in place. The State Department is to report to Congress annually for five years following RATA's enactment, identifying the individuals who had visas denied or revoked pursuant to the law, and, "to the extent practicable," provide a broader list of the "substantially involved" individuals. <3.2.4.4. Export Controls> On October 7, 2019, the U.S. Department of Commerce announced that it would add 28 PRC entities to the Bureau of Industry and Security (BIS) "entity list" under the Export Administration Regulations (EAR), asserting that the entities "have been implicated in human rights violations and abuses in the implementation of China's campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups in the XUAR." The entities to be added include eight technology companies, the XUAR Public Security Bureau (PSB) and eighteen subordinate PSBs, and the PSB-affiliated Xinjiang Police College. The action imposes licensing requirements prior to the sale or transfer of U.S. items to these entities. For each entity, the Commerce Department indicated that there would be a presumption of license denial for all items subject to the EAR, with the exception of certain categories to be subject to a case-by-case review. Secretary of Commerce Wilbur Ross stated that adding the entities would "ensure that our technologies, fostered in an environment of individual liberty and free enterprise, are not used to repress defenseless minority populations." Previously, Members of Congress had written to Secretary Ross and other senior Administration officials urging them to expand the entity list "to ensure that U.S. companies are not assisting, directly or indirectly, in creating the vast civilian surveillance or big-data predictive policing systems being used in [Xinjiang]." Some observers believe the decision could result in significant adverse business impacts for some of the Chinese technology companies. <3.2.5. Multilateral Diplomacy> The United States also has engaged in multilateral diplomacy to advocate for improved human rights conditions in China. For example, in March 2016, the United States joined 11 other countries to deliver a joint statement at the United Nations Human Rights Council criticizing China's human rights record and calling on China to uphold its human rights commitments. The Trump Administration has curtailed U.S. participation in some multilateral human rights organizations, most prominently by announcing the U.S. withdrawal from the UNHRC in June 2018, and arguably has placed less emphasis on multilateral diplomacy. The United States reportedly did not sign a 2018 joint letter by 15 foreign ambassadors in Beijing requesting a meeting with XUAR Party Secretary Chen Quanguo to raise concerns over human rights abuses in Xinjiang. On July 8, 2019, 22 nations issued a joint statement to the UNHRC president and the U.N. High Commissioner on Human Rights calling on China to "refrain from the arbitrary detention and restrictions on freedom of movement of Uighurs, and other Muslim and minority communities in Xinjiang," and to "allow meaningful access to Xinjiang for independent international observers." The statement, which was signed by numerous countries that are not current members of the UNHRC, was not signed by the United States. The Trump Administration has sought some new venues through which to issue multilateral statements on certain PRC human rights issues, particularly on religious freedom. The State Department convened a Ministerial to Advance Religious Freedom in July 2018 and July 2019, with participation from foreign delegations and civil society leaders, and each time released a joint statement expressing concern over religious freedom conditions in China. The United States was joined in the 2019 statement by Canada, Kosovo, the Marshall Islands, and the United Kingdom. More broadly, the Administration is also working to establish an "International Religious Freedom Alliance" comprised of governments "dedicated to confronting religious persecution around the world," presumably including in China. Despite its withdrawal from the UNHRC, the United States has also continued to participate in some Council activities in its capacity as a U.N. member state, such as the Universal Periodic Review (UPR) process, including China's most recent UPR. During China's review in November 2018, over one dozen countries, including the United States, raised questions and concerns about China's treatment of Tibetans, Uyghurs, and other minorities, as well as over freedom of religion in China. The United States made four recommendations, including for China to "abolish all forms of arbitrary detention, including internment camps in Xinjiang, and immediately release the hundreds of thousands, possibly millions, of individuals detained in these camps."

This report examines selected human rights issues in the People's Republic of China (PRC) and policy options for Congress. U.S. concern over human rights in China has been a central issue in U.S.-China relations, particularly since the Tiananmen crackdown in 1989. In recent years, human rights conditions in China have deteriorated, while bilateral tensions related to trade and security have increased, possibly creating both constraints and opportunities for U.S. policy on human rights. After consolidating power in 2013, Chinese Communist Party (CCP) General Secretary and State President Xi Jinping intensified and expanded the reassertion of party control over society that began during the final years of his predecessor, Hu Jintao. Since 2015, the government has enacted new laws that place further restrictions on civil society in the name of national security, authorize greater control over minority and religious groups, and reduce the autonomy of citizens. PRC methods of social and political control are evolving to include the widespread use of sophisticated surveillance and big data technologies. Government arrests of human rights advocates and lawyers, which intensified in 2015, were followed by party efforts to instill ideological conformity across various spheres of society. In 2016, President Xi launched a policy known as "Sinicization," through which the government has taken additional measures to compel China's religious practitioners and ethnic minorities to conform to Chinese culture, the socialist system, and Communist Party policies and to eliminate foreign influences. In the past decade, the PRC government has imposed severe restrictions on the religious and cultural activities, and increasingly on all aspects of the daily lives, of Uyghurs, a Turkic ethnic group who practice a moderate form of Sunni Islam and live primarily in the far western Xinjiang Uyghur Autonomous Region. Since 2017, government authorities in Xinjiang have detained, without formal charges, up to an estimated 1.5 million Uyghurs out of a population of about 10.5 million, and a smaller number of ethnic Kazakhs, in ideological re-education centers. Some may have engaged in religious and ethnic cultural practices that the government now perceives as extremist or terrorist, or as manifesting "strongly religious" views or thoughts that could lead to the spread of religious extremism or terrorism. Members of the 116 th Congress have introduced several bills and resolutions related to human rights issues in China, particularly regarding Tibetans, Uyghurs, and religious freedom. Successive U.S. Administrations and Congresses have deployed an array of means for promoting human rights and democracy in China, often exercised simultaneously. Policy tools include open censure of China; quiet diplomacy; congressional hearings, legislation, investigations, statements, letters, and visits; funding for rule of law and civil society programs in the PRC; support for human rights defenders and prodemocracy groups; sanctions; bilateral dialogue; internet freedom efforts; international broadcasting; and coordinated international pressure, including through multilateral organizations. Another high-profile practice is the State Department's issuance of congressionally mandated country reports and/or rankings, including on human rights, religious freedom, and trafficking in persons. Broadly, possible approaches for promoting human rights in China may range from those emphasizing bilateral and international engagement to those conditioning the further development of bilateral ties on improvements in human rights conditions in China; in practice, approaches may combine elements of both engagement and conditionality. Some approaches may reflect a perceived need to balance U.S. values and human rights concerns with other U.S. interests in the bilateral relationship. Others may challenge the assumption that promoting human rights values involves trade-offs with other interests, reflecting instead a view that fostering greater respect for human rights is fundamental to other U.S. objectives. (This report does not discuss the distinct human rights and democracy issues in the PRC's Hong Kong Special Administrative Region. For information on developments in Hong Kong, see CRS In Focus IF11295, Hong Kong's Protests of 2019 , by Michael F. Martin.)

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<1. Introduction> The annual National Defense Authorization Act (NDAA) authorizes appropriations for the Department of Defense (DOD) and defense-related atomic energy programs of the Department of Energy. In addition to authorizing appropriations, the NDAA establishes defense policies and restrictions, and addresses organizational administrative matters related to DOD. The bill incorporates provisions governing military compensation, the department's acquisition process, and aspects of DOD policy toward other countries, among other subjects. Enacted to authorize annual defense appropriations since FY1962, the bill also sometimes serves as a vehicle for legislation that originates in congressional committees other than the armed services committees. Unlike an appropriations bill, the NDAA does not provide budget authority for government activities. While the NDAA does not provide budget authority, historically it has provided a fairly reliable indicator of congressional sentiment on funding for particular programs. The bill authorizes funding for DOD activities at the same level of detail at which budget authority is provided by the corresponding defense and military construction appropriations bills. As defense authorization and appropriations bills can differ on a line-item level, some observers view defense authorizations as funding targets rather than amounts. According to the Government Accountability Office (GAO), "An authorization act is basically a directive to Congress itself, which Congress is free to follow or alter (up or down) in the subsequent appropriation act." In addition, committee reports accompanying the NDAA often contain language directing an individual, such as a senior DOD official, to take a specified action by a date certain. Although such directive report language is not legally binding, agency officials generally regard it as a congressional mandate and respond accordingly. <2. Legislative Activity> Table 1 and Table 2 below provide an overview of legislative actions taken on the FY2019 NDAA, along with relevant funding authorization figures for budget functions in different versions of the bill considered by the 115 th Congress. <2.1. Selected Actions> For FY2019, the Trump Administration requested $708.1 billion to fund programs falling under the jurisdiction of the House and Senate Armed Services Committees and subject to authorization by the annual National Defense Authorization Act (NDAA). On May 24, 2018, the House voted 351-66 to pass H.R. 5515 (Roll no. 230), an amended version of the FY2019 NDAA reported by the House Armed Services Committee. That bill would have authorized approximately the same amount as the President's request, including $639.1 billion ($1.1 million less than the request) for the so-called base budget that is, funds intended to pay for defense-related activities that DOD and other agencies would pursue even if U.S. armed forces were not engaged in contingency operations in Afghanistan, Iraq, Syria, and elsewhere. The remaining $69 billion ($158,000 less than the request), designated as funding for Overseas Contingency Operations (OCO), would have funded the incremental costs of those ongoing contingency operations, as well as any other costs that Congress and the President agreed to so designate. On June 18, 2018, the Senate voted 85-10 to pass its version of H.R. 5515 (Record Vote Number 128), after replacing the House-passed text of H.R. 5515 with an amended version of the FY2019 proposal reported by the Senate Armed Services Committee ( S. 2987 ). That bill would have authorized $707.9 billion, including $639.4 billion ($492.4 million more than the request) for the base budget and $68.5 billion ($515.4 million less than the request) for OCO. On July 23, 2018, a conference committee reported a compromise version of the bill ( H.Rept. 115-863 ). However, the initial conference report required revision due in part to technical issues. On July 25, 2018, the conference committee reported a revised conference report ( H.Rept. 115-874 ). That bill authorized approximately the same amount as the President's request, though with several billions of dollars of adjustments to amounts within the appropriation titles. On July 26, 2018, the House voted 359-54 to approve the conference report (Roll no. 379). On August 1, the Senate voted 87-10 to approve the conference report (Record Vote Number 181). On August 13, 2018, President Donald J. Trump signed the bill into law ( P.L. 115-232 ). The legislation marked the first NDAA since the FY1997 act enacted prior to the start of the fiscal year. <2.2. Bill Overview> House and Senate conferees authorized $708.1 billion in discretionary budget authority for national defense programs in the final version of the conference report for H.R. 5515 ( H.Rept. 115-874 ), an increase of $16 billion (2.3%) from the FY2018 enacted amount. While that figure was approximately the same amount as the President's request for FY2019, it included billions of dollars in adjustments to amounts for individual DOD appropriation titles, as well as for atomic energy defense programs and other defense-related activities. See Table 2 . For example, of the $616.9 billion authorized for DOD base budget activities, the conference report included $132.3 billion for procurement, an increase of $1.8 billion (1.3%) from the President's request; $91.7 billion for research, development, test, and evaluation (RDT&E), an increase of $670 million (less than 1%) from the request; $198.5 billion for operation and maintenance, a decrease of $960 million (less than 1%) from the request; $147.1 billion for military personnel, a decrease of $1.2 billion (approximately 1%) from the request; and $10.3 billion for military construction and family housing, a decrease of $123 million (1.2%). The conference report also included $21.9 billion for atomic energy defense programs, an increase of $108.6 million (less than 1%) from the President's request; and $300 million for other defense-related activities, an increase of $86 million (40%) from the request. <3. Background> Congressional authorization of FY2019 defense authorizations reflects a running debate about the size of the defense budget given the strategic and budgetary issues facing the United States. The President's FY2019 budget request for DOD was shaped in part by the department's efforts to align its priorities with its 2018 National Defense Strategy and conform to discretionary spending limits set by the Budget Control Act of 2011 (BCA; P.L. 112-25 ) as amended by the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-23 ). <3.1. Strategic Context8> On December 18, 2017, the Trump Administration released its first National Security Strategy (NSS). The NSS maintains that, in addition to the threats posed to the United States by rogue regimes and violent extremist organizations that have been a central focus of national security policy since the end of the Cold War, great power rivalry and competition have once again become a central feature of the international security landscape. To advance U.S. interests effectively within this strategic context, the Administration argues, the United States must improve domestic American security and bolster economic competitiveness while rebuilding its military. The NSS further argues that that since the 1990s, the United States has "displayed a great degree of strategic complacency," largely as a result of overwhelming and unchallenged U.S. military and economic superiority. Operations in the Balkans, Africa, Afghanistan, and Iraq, while challenging and complex undertakings, did not require fundamental revision of the capabilities of the United States. Yet both China and Russia appear to be developing capabilities and concepts that potentially "overmatch," or demonstrate technological superiority, to U.S. military capabilities. Released in January 2018, DOD's 11-page unclassified summary of the 2018 National Defense Strategy (NDS) articulates how the department plans to advance U.S. objectives outlined in the White House's National Security Strategy (NSS). Consistent with comparable documents issued by prior Administrations, the NDS maintains that there are five central external threats to U.S. interests: China, Russia, North Korea, Iran, and terrorist groups with global reach. In a break from previous Administrations, however, the NDS views retaining the U.S. strategic competitive edge relative to China and Russia as a higher priority than countering violent extremist organizations. It also contends that, unlike most of the period since the end of the Cold War, the Joint Force must now operate in contested domains where freedom of access and maneuver is no longer assured. Accordingly, the NDS summary called for "increased and sustained investment" to counter evolving threats from China and Russia: "Long-term strategic competitions with China and Russia are the principal priorities for the Department, and require both increased and sustained investment, because of the magnitude of the threats they pose to U.S. security and prosperity today, and the potential for those threats to increase in the future." The NDS organizes DOD activities along three central interconnected "lines of effort": rebuilding military readiness and improving the joint force's lethality, strengthening alliances and attracting new partners, and reforming the department's business practices. In June 2017, several months before the release of the NDS, Chairman of the Joint Chiefs of Staff Marine General Joseph Dunford recommended that Congress increase the regular, or base, defense budget between 3% and 5% a year above inflation ("real growth") to maintain the U.S. competitive advantage against strategic competitors such as China and Russia. "We know now that continued growth in the base budget of at least 3% above inflation is the floor necessary to preserve just the competitive advantage we have today and we can't assume that our adversaries will stand still," he said. <3.2. Budgetary Context> Congressional action on the FY2019 NDAA was shaped in part by a focus on controlling federal spending amid rising federal debt. The Budget Control Act emphasized limiting discretionary spending, including defense spending. However, mandatory spending makes up the largest share of federal spending and is projected to increase at a faster rate than discretionary spending. See Figure 1 . <3.2.1. Historical Perspectives14> As the 115 th Congress considered the President's FY2019 request for defense spending, OMB had estimated that since 9/11, outlays for defense discretionary programs in nominal dollars (not adjusted for inflation) would increase 122% from $306.1 billion in FY2001 to $678 billion in FY2019, while outlays for non-defense discretionary programs would increase 83% from $343 billion in FY2001 to $626 billion in FY2019. OMB had also estimated that outlays for mandatory programs would increase 172% from $1 trillion in FY2001 to $2.7 trillion in FY2019, while outlays for net interest payments on the national debt would increase 76% from $206.2 billion in FY2001 to $363.4 billion in FY2019. The Congressional Budget Office had projected mandatory spending and net interest payments would increase at faster rates than defense and nondefense discretionary spending over the next decade. CBO had also projected net interest payments on the national debt would surpass defense discretionary outlays in FY2023. <3.2.2. FY2019 Budget Request> President Donald J. Trump's FY2019 budget request, released on February 12, 2018, included $726.8 billion for national defense, a major federal budget function that encompasses defense-related activities of the federal government. National defense is one of 20 major functions used by the Office of Management and Budget (OMB) to organize budget data and is the largest in terms of discretionary spending. The national defense budget function (identified by the numerical notation 050) comprises three subfunctions: DOD Military (051); atomic energy defense activities primarily of the Department of Energy (053); and other defense-related activities (054), such as FBI counterintelligence activities. The $726.8 billion national defense budget request included $716 billion in discretionary budget authority and $10.8 billion in mand atory budget authority. <3.2.3. Portion of Defense Budget Subject to NDAA> Of the $726.8 billion requested for national defense, approximately $708.1 billion was subject to authorization by the annual National Defense Authorization Act (NDAA). The remainder of the request was either for mandatory funds not requiring annual authorization or for discretionary funds under the jurisdiction of other congressional committees. Of the $708.1 billion, the Trump Administration's revised request included $639.1 billion in discretionary funding for the so-called base budget that is, funds intended to pay for defense-related activities that the Department of Defense (DOD) and other agencies would pursue even if U.S. armed forces were not engaged in contingency operations, designated Overseas Contingency Operations (OCO), in Afghanistan, Iraq, Syria, and elsewhere. The remaining $69 billion of the request would fund the incremental costs of OCO, as well as any other costs that Congress and the President agreed to so designate. The request was consistent with discretionary spending limits (or caps) on defense activities originally established by the Budget Control Act of 2011 (BCA; P.L. 112-25 ) and amended by the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ). The FY2019 defense spending cap was $647 billion and applied to discretionary defense programs (excluding OCO). The cap included programs outside the scope of the NDAA and for which the Administration requested approximately $8 billion. Thus, the portion of the cap applicable to spending authorized by the NDAA was approximately $639 billion. <3.2.4. Budget Control Act> As part of an agreement to increase the statutory limit on public debt, the BCA aimed to reduce annual federal budget deficits by a total of at least $2.1 trillion from FY2012 through FY2021 compared to projected levels, with approximately half of the savings to come from defense. The spending limits (or caps) apply separately to defense and nondefense discretionary budget authority. The caps are enforced by a mechanism called sequestration that automatically cancels previously enacted appropriations by an amount necessary to reach pre-specified levels. The BCA effectively exempted certain types of discretionary spending from the statutory limits, including funding designated for Overseas Contingency Operations (OCO)/Global War on Terrorism (GWOT). In the past, Congress has amended the legislation to raise the spending limits (thus lowering its deficit-reduction effect by corresponding amounts), but, as of July 2019, it had not changed the limits for FY2020 and FY2021. OCO Funding Shift Of the $686.1 billion for DOD, the Trump Administration's initial request included $597.1 billion for the base budget. The remaining $89 billion was designated as funding for OCO. However, in an amendment to the budget after Congress raised spending caps as part of the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ), the Administration removed the OCO designation from $20 billion of funding, in effect, shifting that amount into the base budget request. In a statement on the budget amendment, White House Office of Management and Budget Director Mick Mulvaney said the amended request fixed "long-time budget gimmicks" in which OCO funding had been used for base budget requirements. Beginning in FY2020, "the Administration proposes returning to OCO's original purpose by shifting certain costs funded in OCO to the base budget where they belong," he wrote. <4. Selected Policy Issues> <4.1. Military Personnel36> The Administration requested authorization for an active-duty end-strength of 1.3 million personnel, an increase of 15,600 personnel from the enacted FY2018 level; and for a reserve component end-strength of 824,700 personnel, an increase of 800 personnel from the enacted FY2018 level. The House version of the bill would have supported the Administration's request, while the Senate amendment would have authorized an end-strength of 9,439 fewer personnel than requested, including 8,639 fewer active-duty personnel and 800 fewer reserve component personnel. The act authorizes the Administration's requested end-strength. See Table 3 . <4.1.1. Military Pay Raise38> Title 37, Section 1009, of the United States Code (37 U.S.C. 1009) provides a permanent formula for an automatic annual increase in basic pay that is indexed to the annual increase in the Employment Cost Index (ECI), a survey prepared by the Department of Labor's Bureau of Labor Statistics, for "wages and salaries" of private industry workers. The FY2019 budget request proposed a 2.6% increase in basic pay for military personnel in line with the formula in current law. The Senate amendment included a provision that would have waived the automatic increase in basic pay under 37 U.S.C. 1009 and specified a pay raise of 2.6%. The enacted bill contains no provision relating to a general increase in basic pay, thereby leaving in place the automatic adjustment of 37 U.S.C. 1009 amounting to 2.6% in 2019. <4.1.2. Officer Management Overhaul> Title V of the act contains provisions that modified key parts of the Defense Officer Personnel Management Act (DOPMA; P.L. 96-513 ) governing the appointment, promotion, and separation of military officers. Changes include allowing civilians with operationally relevant training or experience to enter the military up to the rank of O-6 a colonel in the Army, Air Force, or Marine Corps; or captain in the Navy and creating an "alternative promotion" process for officers in specialized fields. <4.2. Military Construction39> The Administration requested $11.4 billion in new budget authority for DOD military construction and family housing projects, including $10.5 billion in base budget funding and $921 million in Overseas Contingency Operations (OCO) funding. See Table 4 . <4.2.1. Selected Military Construction Projects> The act authorizes less funding than requested for some of the most valuable military construction projects. For example, the act authorizes $105 million for the MIT-Lincoln Laboratory, West Lab Compound Semiconductor Laboratory and Microsystem Integration Facility (CSL/MIF), at Hanscom Air Force Base, MA ($120 million less than requested); $181 million for Phase 1, Increment 2 of the National Geospatial-Intelligence Agency complex known as Next NGA West (N2W) in St. Louis, MO ($33 million less than requested); and $140 million for Phase 2 of the long-range discriminating radar system complex at Clear Air Force Station, AK ($44 million less than requested). <4.2.2. OCO Projects> Most of the $921 million requested for military construction using OCO funds was for projects related to the European Deterrence Initiative (see the " European Deterrence Initiative (EDI) " section). The act authorizes an additional $30.4 million for flight line support facilities and an additional $40 million for a personnel deployment processing facility, both at Al Udeid Air Base, Qatar. The act does not authorize the $69 million requested for a high-value detention facility at Guantanamo Bay, Cuba. <4.3. Acquisition Policy40> Congress generally exercises its legislative powers to affect defense acquisitions through Title VIII of the NDAA, typically entitled Acquisition Policy, Acquisition Management, and Related Matters . In some years, the NDAA also contains titles specifically dedicated to aspects of acquisition, such as Title XVII of the FY2018 NDAA, entitled Small Business Procurement and Industrial Base Matters . Congress has been particularly active in legislating acquisition reform over the last four years. For FY2016-FY2019, NDAA titles specifically related to acquisition reform contained an average of 80 provisions (318 in total), compared to an average of 47 such provisions (466 in total) in the NDAAs for the preceding 10 fiscal years. Examples of recent acquisition reform-related provisions include the following: Changes to the role of the Chiefs of the Military Services and the Commandant of the Marine Corps (collectively referred to as the Service Chiefs) in the acquisition process (Section 802 of P.L. 114-92 , the FY2016 NDAA); Splitting the office of the Under Secretary of Defense for Acquisition, Technology, and Logistics (USD [AT&L]) into two separate offices: the office of the Under Secretary of Defense for Acquisition and Sustainment (USD A&S) and the office of the Under Secretary of Defense for Research and Engineering (USD R&E) (Section 901 of P.L. 114-328 , the FY2017 NDAA); Strengthening the role of the military departments in acquisitions (see, for example, Section 897 of P.L. 114-328 , the FY2017 NDAA); Increasing the government-wide simplified acquisition threshold from $150,000 to $250,000 (Section 805 of P.L. 115-91 ); and, Creating or expanding numerous rapid acquisition authorities, such as establishing middle tier acquisition pathways for rapid production and fielding (Section 804 of the FY2016 NDAA), and expanding and making permanent authorities relating to prototyping and follow-on production conducted using procurement authorities known as other transactions (Section 815 of P.L. 114-92 , the FY2016 NDAA) . While the FY2019 NDAA generally does not include sweeping defense acquisition system reform-related provisions similar to those included in the FY2016-FY2018 NDAAs, it does include numerous provisions making other changes relating to defense acquisitions, such as the following: Creating a framework to consolidate defense acquisition-related statutes in a new Part V of Subtitle A of Title 10, U.S. Code (Sections 801-809); Increasing the DOD micro-purchase threshold from $5,000 to $10,000 (Section 821); Requiring DOD to conduct a study of the frequency and effects of so-called "second bite at the apple" bid protests involving the same contract award or proposed award filed through both the Government Accountability Office (GAO) and the U.S. Court of Federal Claims (Section 822); Splitting the Title 41 definition of commercial item into separate definitions for commercial product and commercial service (Section 836); and Limiting the government-wide use of lowest price technically acceptable (LPTA) source selection criteria (Section 880). <4.4. European Deterrence Initiative (EDI)45> The act authorizes $6.3 billion in OCO funding for the European Deterrence Initiative (EDI), an effort DOD began in 2014 to reassure NATO allies in Central and Eastern Europe of a continued U.S. commitment to their national security after the Russian military intervention in Ukraine, in addition to $250 million for Ukraine security assistance. Of the latter amount, $50 million was authorized for "lethal assistance," including anti-armor weapon systems, mortars, crew-served weapons and ammunition, grenade launchers and ammunition, small arms and ammunition; as well as counter-artillery radars, including medium-range and long-range counter-artillery radars that can detect and locate long-range artillery. Most of the EDI funding is intended for prepositioning a division-sized set of equipment in Europe and boosting the regional presence of U.S. forces. <4.5. Iraqi and Syrian Forces Training48> The act authorizes $1.4 billion in OCO funding for activities to counter the Islamic State of Iraq and Syria (ISIS) by training and equipping Iraqi Security Forces and vetted Syrian opposition forces. The act includes a provision (Section 1233) limiting the use of roughly half of the $850 million for Iraq until the Secretary of Defense submits a report to the congressional defense committees on the U.S. strategy in Iraq. Another provision (Section 1231) limits the use of all of the $300 million for Syria until the President submits a report to congressional committees on the U.S. strategy in Syria. The Administration submitted the required reports to Congress in early 2019. <4.6. Foreign Investment49> In response to concerns from some Members of Congress that certain foreign direct investment, primarily by Chinese firms, may pose risks to U.S. national defense and economic security, Title XVII of the act incorporates provisions designed to limit foreign access to sensitive U.S. technology. Subtitle A of Title XVII, the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), expands the purview of the Committee on Foreign Investment in the United States (CFIUS) to address national security concerns in part by amending the current process for the committee to review, on behalf of the President, the national security implications of foreign direct investment in U.S. companies. Subtitle B of Title XVII, the Export Controls Act of 2018, includes provisions to expand controls for exporting certain "dual-use" civilian and military items in part by requiring the establishment of an "interagency process to identify emerging and foundational technologies." <4.7. Prohibition on Chinese Telecommunications Equipment50> In response to concerns from some Members of Congress that Chinese telecommunications equipment manufacturers may pose a security risk to U.S. communications infrastructure, the act includes a provision (Section 889) prohibiting the heads of federal agencies from procuring telecommunications equipment or services from companies linked to the government of China, including Huawei Technologies Company and ZTE Corporation, among others. Huawei filed suit against the United States over the provision, arguing that it amounts to an unconstitutional "bill of attainder." Another provision of the act (Section 1091) prohibits DOD from obligating funds authorized to be appropriated by the act or otherwise available for Chinese language instruction provided by Confucius Institutes, language and culture centers affiliated with China's Ministry of Education, unless the Under Secretary of Defense for Personnel and Readiness issues a waiver. It also bars DOD use of any obligated funds to support a Chinese language program at an institution of higher education that hosts a Confucius Institute. <5. Selected Acquisition Programs52> <5.1. Strategic Nuclear Forces53> DOD has described upgrading the nuclear triad that is, submarines armed with submarine-launched ballistic missiles, land-based intercontinental ballistic missiles, and strategic bombers carrying gravity bombs and air-launched cruise missiles as its "number one priority." The Trump Administration's 2018 Nuclear Posture Review, released in February 2018, reiterated the findings of previous reviews "that the nuclear triad supported by North Atlantic Treaty Organization (NATO) dual-capable aircraft and a robust nuclear command, control, and communications system is the most cost-effective and strategically sound means of ensuring nuclear deterrence." The department said that programs such as the Columbia-class ballistic missile submarine, B-21 long-range strike bomber, and Long-Range Standoff (LRSO) cruise missile to replace the existing inventory of systems intended to deliver nuclear weapons would be "fully funded" for the year if its FY2019 budget requests were met. See Table 5 for information on the FY2019 budget request and authorizations for selected strategic offense and long-range systems. <5.1.1. Columbia-Class Ballistic Missile Submarine58> The Columbia-class program, previously known as the Ohio replacement program (ORP) or SSBN(X) program, is a program to design and build a new class of 12 ballistic missile submarines (SSBNs) to replace the Navy's current force of 14 Ohio-class SSBNs. The Navy has identified the Columbia-class program as its top priority program. The service wants to procure the first Columbia-class boat in FY2021. The Navy's proposed FY2019 budget requested $3 billion in advance procurement (AP) funding and $705 million in research and development funding for the program. The budget also included $1.3 billion to continue refurbishing the Trident II (or D-5) missiles that arm the submarines. The act authorizes $3.2 billion for the Columbia-class program. The act supports the President's request for refurbishment of the Trident II missiles, and increased research-and-development funding for the effort. <5.1.2. B-21 Long-Range Strike Bomber59> The budget request included $2.3 billion to continue development of the B-21 long-range bomber, which the Air Force describes as one of its top three acquisition priorities. Acquisition of the airplane is slated to begin in 2023. The new bomber like the B-2s and B-52s currently in U.S. service could carry conventional as well as nuclear weapons. For the latter role, the request included $615 million to continue development of the Long-Range Standoff Weapon (LRSO), a cruise missile that would replace the 1980s-vintage Air-Launched Cruise Missile (ALCM) currently carried by U.S. bombers. The act supports the President's budget request for the B-21 bomber. The act authorizes an increase of $85 billion for the LRSO to $700 million. <5.1.3. Land-Based Ballistic Missiles60> The budget request included $345 million to continue developing a new, land-based intercontinental ballistic missile (ICBM), known as the Ground-Based Strategic Deterrent (GBSD), which in 2029 would begin replacing the Minuteman III missiles currently in service. The act authorizes an increase of $69 million to $414 million for the new Ground-Based Strategic Deterrent. <5.1.4. Low-Yield D-5 Nuclear Warhead 61> The budget request included $65 million for the W76-2 warhead modification program. The effort is intended to modify an unspecified number of Trident II MK4/W76 warheads, each of which has a yield of 100 kilotons, into a lower-yield variant referred to as the W76-2. The atomic weapons used at Hiroshima and Nagasaki were roughly 15 and 20 kilotons, respectively. The Trump Administration's February 2018 Nuclear Posture Review called for "low-yield" nuclear options to preserve "credible deterrence against regional aggression." The act authorizes the requested funding. <5.2. Ballistic Missile Defense Programs63> Since the late 1940s, the United States has developed and deployed ballistic missile defenses (BMD) to defend against enemy missiles. Since the start of an expanded initiative under President Ronald Reagan in 1985, BMD has been a key national security interest in Congress. Lawmakers have since appropriated more than $200 billion for a broad range of research and development programs and deployment of BMD systems. The United States has deployed a global array of networked ground-, sea-, and space-based sensors for target detection and tracking, an extensive number of ground- and sea-based hit-to-kill (direct impact) and blast fragmentation warhead interceptors, and a global network of command, control, and battle management capabilities to link those sensors with those interceptors. The Trump Administration's FY2019 budget request included a total of $12.9 billion for defense against ballistic missiles, of which $9.9 billion would be allocated to the Missile Defense Agency (MDA). See Table 6 for information on the FY2019 budget request and authorization actions for selected ballistic missile defense systems. <5.2.1. U.S. Homeland Missile Defense> The Administration requested a total of approximately $2.6 billion for the Ground-Based Midcourse Defense (GMD), which included funding for systems and related improvements such as Common Kill Vehicle Technology, Pacific Discriminating Radar, and Long Range Discrimination Radar. As of November 2017, the system comprised 44 interceptor missiles at two sites, including 40 at Fort Greely in Alaska and four at Vandenberg Air Force Base in California. The interceptors are intended to destroy intercontinental ballistic missiles (ICBMs) with ranges in excess of 5,500 kilometers launched toward U.S. territory from countries such as North Korea. The department is adding another site at Fort Greely with 20 interceptors as part of a plan to expand the system to include 64 interceptors. The request included funding for an additional four interceptors and 10 silos, as well as continued development of a new warhead called the Redesigned Kill Vehicle (RKV) intended to replace the existing warhead known as the Exoatmospheric Kill Vehicle (EKV). While the House and Senate generally supported the request for the GMD system they authorized the procurement request and most of the RDT&E request conferees included a provision (Section 1683) that requires at least one successful flight intercept test of the RKV before it could enter production. The provision also requires the director of the Missile Defense Agency to report on ways to accelerate the fielding of the additional 20 interceptors with RKVs at Fort Greely. <5.2.2. Regional Missile Defense> The Administration's budget request included $1.1 billion for procurement and additional development work associated with the Terminal High-Altitude Air Defense (THAAD) interceptors, intended to intercept short-, medium-, and intermediate-range ballistic missiles. THAAD is a transportable system designed to defend troops abroad and population centers. In testing, the system has generally performed well by most measures, but it has not operated in combat. Both the House and Senate supported the Administration's request for $874 million in procurement for 82 THAAD interceptors and increased funding for associated research and development. The request included $1.4 billion in procurement funding for the Army's Patriot system, including 240 Patriot Advanced Capability (PAC-3)/Missile Segment Enhancement (MSE) interceptors. The most mature U.S. BMD system, Patriot was used with mixed results in combat in the 1991 and 2003 wars against Iraq and is fielded around the world by the United States and other countries that have purchased the system. Patriot is a mobile system and designed to defend relatively small areas such as military bases and airfields. Patriot works with THAAD to provide an integrated and overlapping defense against incoming missiles in their final phase of flight. The act supports the Administration's request. The act includes a provision (Section 241) requiring the Secretary of the Army to report on the survivability of air defense artillery, including "an analysis of the utility of relevant active kinetic capabilities, such as a new, long-range counter-maneuvering threat missile and additional indirect fire protection capability units to defend Patriot and Terminal High Altitude Area Defense batteries." <5.3. Military Space Programs70> The President's budget request included $9.3 billion in funding for National Security Space (NSS) acquisition programs. National Security Space is one of 12 Major Force Programs (MFP) of the DOD and includes funding for space launches, satellites, and support activities. MFP-12 includes funding for some classified programs and, for the most part, does not include funding for National Geospatial-Intelligence Agency (NGA) and National Reconnaissance Office (NRO) programs. See Table 7 for information on the FY2019 budget request and authorization actions for selected military space programs. <5.3.1. Evolved Expendable Launch Vehicle> The budget request for NSS acquisition programs included approximately $2 billion to continue acquiring satellite launchers under the Evolved Expendable Launch Vehicle (EELV) program and to continue developing a replacement for the Russian-made rocket engine used in some national security space launches since the early 2000s. The act supported the budget request. The act includes a provision (Section 1603) to designate the EELV program as the National Security Space Launch (NSSL) program, effective March 1, 2019. The provision also requires the Secretary of Defense to consider both "reusable and expendable launch vehicles" in any future solicitations "for which the use of a reusable launch vehicle is technically capable and maintains risk at acceptable levels." <5.3.2. Global Positioning System> The budget request included approximately $1.5 billion for the GPS satellite program and related projects. The technology provides worldwide positioning, navigation, and timing (PNT) information to military and civilian users. Funding would support launch of two GPS III satellites, development of GPS Next Generation Operational Control System (OCX), and integration of Military GPS User Equipment (MGUE) intended in part to provide a more powerful jam-resistant signal and information to military personnel in contested environments. The act authorizes $18 million less than the requested $1.4 billion in research and development funding due to what the conferees described as "insufficient justification." <5.3.3. Space-Based Infrared System> The budget request included $842 million for the Space-Based Infrared System (SBIRS), including $704 million for research, development, test, and evaluation and $138 million for procurement. The system is a successor to the Defense Support Program (DSP) designed in part to provide early warning of a strategic missile attack on the United States and to support missile defense activities. The request was intended to support launch of Geosynchronous Earth Orbit (GEO) satellites and development of Next-Generation Overhead Persistent Infrared (OPIR) satellites. The act authorizes increasing RDT&E funding by $100 million to $804 million to "accelerate sensor development." The act includes a provision (Section 1613) requiring the Secretary of Defense to evaluate supply chain vulnerabilities for protected satellite communications and OPIR. The conference report accompanying the bill directs the head of the Government Accountability Office (GAO) "to review the early planning for the next generation OPIR system and associated ground capabilities," and assess, in part, "to what extent will the next generation OPIR system continue to fulfill existing key SBIRS capabilities?" <5.3.4. Advanced Extremely High Frequency and Satellite Communications Projects> The budget request included $842 million for Advanced Extremely High Frequency (AEHF) and Satellite Communications (SATCOM) projects, including $677 million in research, development, test, and evaluation and $91 million in procurement. The projects are intended in part to provide communications that are secure, survivable, and resistant to jamming. Funding was to support the fifth and sixth AEHF satellites, as well as activities to improve AEHF operational resiliency through programs such as Protected Tactical Service (PTS), Protected SATCOM Services-Aggregated (PSCS-A), and Protected Tactical Enterprise Service (PTES). The act supports the budget request. The act includes a provision (Section 1614) requiring the Secretary of Defense to report on how the evolved strategic satellite program, PTS, and PTES "will meet the requirements for resilience, mission assurance, and the nuclear command, control, and communication missions of the Department of Defense." <5.3.5. U.S. Space Command> The act includes a provision (Section 1601) requiring the President, with the advice and assistance of the Chairman of the Joint Chiefs of Staff and through the Secretary of Defense, to establish U.S. Space Command as a subordinate unified command under U.S. Strategic Command "for carrying out joint space warfighting operations." The provision states the commander of U.S. Space Command is responsible for "ensuring the combat readiness of forces assigned to the space command" and "monitoring the preparedness to carry out assigned missions of space forces assigned to unified combatant commands other than the United States Strategic Command." <5.4. Ground Vehicle Programs94> In addition to modernizing the ground forces' existing armored combat vehicles such as the M-1 Abrams tank, M-2 Bradley Infantry Fighting Vehicle (IFV), and Stryker wheeled combat vehicle, the Administration's FY2019 budget request included funding for newer capabilities, including mobile defense against cruise missiles and unmanned aircraft, and improved firepower and mobility for infantry units. See Table 8 for information on the FY2019 budget request and authorizations for selected ground vehicle programs. <5.4.1. Legacy Systems> The act authorizes most of the approximately $2.7 billion requested to upgrade the Army's fleet of M-1 Abrams tanks, the service's main battle tank that entered service in 1980. The funding was intended to upgrade a portion of the fleet with a system enhancement package (SEP) that includes new armor, electronics, and weapons stations. It was also to equip three brigades with the Trophy active protection system (APS), designed in part to automatically acquire, track, and respond with hard or soft kill capabilities to a variety of threats, including rocket-propelled grenades (RPGs) and anti-tank guided missiles (ATGMs). The act authorizes more funds than requested to accelerate two other components of the Army's current combat vehicle fleet. It authorizes $413 million, $44 million more than requested, to replace the flat underside of many types of the Stryker wheeled combat vehicles with a V-shaped bottom intended to more effectively mitigate the explosive force of buried landmines or improvised explosive devices (IEDs). It also authorized $529 million, $110 million more than requested, to replace the chassis and powertrain of the M-109 Paladin self-propelled howitzer with the more powerful and robust chassis of the Bradley troop carrier. The act authorizes fewer funds than requested for components of the Army's existing combat vehicle fleet. It authorizes $875 million, $172 million less than requested, to continue modernizing the Bradley primarily due to a "program decrease." It also authorizes $244 million, $22 million less than requested, for the Amphibious Combat Vehicle (ACV), a successor to the Marine Corps' AAV-7 amphibious troop carrier; and $797 million, $31 million less than requested, for the Armored Multi-Purpose Vehicle (AMPV), intended to the place the Vietnam-era M-113 tracked personnel carrier. The act includes a provision (Section 254) requiring the Secretary of the Army to develop a strategy to competitively procure a new transmission for the Bradley fighting vehicle, including an analysis of potential cost savings and performance improvements from a transmission common to the Bradley family of vehicles, including the AMPV and Paladin. <5.4.2. Infantry Firepower and Mobility> The Administration requested $449 million to develop and begin purchasing vehicles intended to boost the lethality and mobility of Army Infantry Brigade Combat Teams (IBCTs). The bulk of the funds were to develop a lightweight tank, designated Mobile Protected Firepower (MPF). The remainder of the funds were to begin purchasing four-wheel-drive, off-road vehicles for reconnaissance missions and troop transport, designated Light Reconnaissance Vehicle (LRV) and Ground Mobility Vehicle (GMV), respectively. The act authorizes $370 million for the programs, $79 million less than requested, with most of the reduction due to a "Mobile Protected Firepower decrease." The act includes a provision (Section 248) requiring the Secretary of the Army to submit a report to the Armed Services Committees on active protection systems (APS) for armored combat and tactical vehicles. Specifically, the provision required the report to: assess the effectiveness of such systems recently tested on the Abrams, Bradley, and Stryker; discuss plans for further testing, proposals for future development, and a timeline for fielding; and describe how the service plans to incorporate such systems into new armored combat and tactical vehicles, such as MPF, AMPV, and the Next Generation Combat Vehicle (NGCV), the Army's replacement for the Bradley. <5.4.3. Air Defense> The Administration requested $504 million for programs intended to enhance mobile Army defense against aircraft, including unmanned aerial systems and cruise missiles. These include a Stryker combat vehicle equipped to launch Stinger missiles, designated Interim Maneuver Short-Range Air Defense systems (IM-SHORAD), and a larger, truck-mounted missile launcher, designated Indirect Fire Protection Capability (IFPC). The act authorizes $565 million for the programs, $61 million more than requested, driven by an increase to IFPC for "interim cruise missile defense." The act includes a provision (Section 241) requiring the Secretary of the Army to submit a report to the Armed Services Committees on the service's efforts to improve the survivability of air defense artillery, including an analysis of new technology and additional units to defend Patriot and THAAD batteries. <5.5. Shipbuilding Programs100> In December 2016, the Navy adopted a new force goal of 355 ships a total similar to the 350-ship fleet President Trump had called for during the 2016 election campaign. The 355-ship plan replaced a previous 308-ship plan the Navy had adopted in March 2015. The Navy's proposed FY2019 budget requested the procurement of 10 combat ships, including two Virginia-class attack submarines, three DDG-51 class destroyers, one Littoral Combat Ship (LCS), two TAO-205 class oilers, one Expeditionary Sea Base ship, and one towing, salvage, and rescue ship. The act authorizes $1.9 billion more than the request, including funding for the 10 combat ships requested, as well as two additional LCSs. The act authorizes procurement of a fourth Ford-class aircraft carrier (CVN-81). The act also authorizes procurement of additional noncombat ships, including a cable ship that was not requested and three more ship-to-shore connectors than the five that were requested. See Table 9 for summary information on the FY2019 budget request and authorization actions for selected shipbuilding programs. <5.5.1. Carrier 'Block Buy'> The Administration's $1.6 billion request to fund a Ford-class aircraft carrier was intended as the fourth of eight annual increments to cover the estimated $12.6 billion cost of what will be the third ship of the Ford class. That ship, designated CVN-80 and named Enterprise , is slated for delivery to the Navy at the end of FY2027. While the act does not authorize appropriations for a fourth Ford-class aircraft carrier (CVN-81), the law allows for the procurement to occur in conjunction with CVN-80. Proponents of such an arrangement, known as block buy contracting, contend that it could accelerate the delivery of the fourth ship and reduce the overall cost of the two vessels. The act includes a provision (Section 121) stating that before the funds could be used for a block buy, the Secretary of Defense would have to certify to the congressional defense committees an analysis demonstrating that the approach would "result in significant savings compared to the total anticipated costs of carrying out the program through annual contracts." <5.5.2. Littoral Combat Ships105> In addition to the Administration's request of $646 million to procure a Littoral Combat Ship, the act authorizes $950 million to procure two more LCSs, which conferees described as a "program increase two ships." The increase more than offset a decrease of $37.7 million in procurement funding for the program to "align plans and other costs with end of production." <5.5.3. Amphibious Landing Ships> The act authorizes an additional $500 million for an LPD-17-class amphibious landing transport or a variant of that ship designated LX(R) and an additional $182.5 million for three more air-cushion landing craft in addition to the five requested to haul tanks and other equipment ashore from transport ships. <5.5.4. 2017 Destroyer Collisions> The act includes provisions intended to address factors perceived to have contributed to the two separate collisions in 2017 involving Pacific Fleet destroyers that resulted in the deaths of 17 U.S. sailors. A provision (Section 322) requires that Navy ships be subject to inspections with "minimal notice" to the crew and annual reports on "the material readiness of Navy ships as compared to established material requirements standards," among other topics. Another provision (Section 323) limited to 10 years the time that aircraft carriers, amphibious ships, cruisers, destroyers, frigates, and littoral combat ships can be based outside the United States. Another provision (Section 526) stated the Secretary of the Navy is to require key watch standers that is, a person standing watch on a ship, such as an officer of the deck, engineering officer of the watch, conning officer or piloting officer to "maintain a career record of watchstanding hours and specific operational evolutions." <5.6. Aviation Systems106> The act, for the most part, authorizes funding for the Administration's request for military aircraft acquisition. The act authorizes additional funding for 15 more aircraft than requested, including six AH-64 Apache attack helicopters, five UH-60 Black Hawk utility helicopters, two MQ-9 Reaper reconnaissance and attack unmanned aerial vehicles (UAVs), one RQ-4 Global Hawk long-range reconnaissance UAV, and one E-2 Hawkeye airborne surveillance aircraft. The act authorizes less funding than requested for other programs, including the MQ-25 Stingray carrier-based refueling and reconnaissance UAV and the KC-46 refueling tanker aircraft. See Table 10 for information on the FY2019 budget request and authorizations for selected aircraft programs. <5.6.1. Fighter and Attack Aircraft> The budget request included $8.8 billion for the procurement of 77 F-35 Lightning II aircraft as part of the Joint Strike Fighter (JSF) program. The quantity includes 48 Air Force F-35As, equipped for conventional runway operations, 20 Marine Corps F-35Bs, equipped for short takeoff and vertical landing (STOVL) operations; and nine Navy F-35Cs, equipped for aircraft carrier operations. The House version of the bill generally would have supported the Administration's request, while the Senate amendment would have cut funding associated with two aircraft one F-35A and one F-35C due to "program realignment." While the act authorizes $133 million (1%) less procurement funding than requested, it authorizes the requested quantity of F-35 aircraft. The act includes a provision (Section 1282) limiting the delivery of any F-35s to Turkey (which plans to buy 100 of the aircraft) until the Secretary of Defense submits a report to congressional committees on the Turkish government's plan to purchase the S-400 air and missile defense system from Russia. The report was to include "an assessment of impacts on other United States weapon systems and platforms operated jointly with the Republic of Turkey," including the F-35, Patriot surface-to-air missile system, CH-47 Chinook heavy-lift helicopter, AH-64 Apache helicopter, UH-60 Black Hawk helicopter, and F-16 Fighting Falcon fighter jet. To compensate for the slower-than-planned fielding of the F-35 aircraft, the budget request included funds to mitigate a shortfall in the Navy's fleet of strike fighters by buying new F/A-18s and upgrading planes of that type already in service. The House version of the bill and the Senate amendment would have supported the request. The act generally supports the request, authorizing $56 million (3%) less than the $2 billion requested for 24 F/A-18s and $18 million (1%) more than the $1.5 billion requested to modify existing versions of the aircraft. Section 127 of the act requires the Secretary of the Navy to work to modify the F/A-18 aircraft "to reduce the occurrence of, and mitigate the risk posed by, physiological episodes affecting crewmembers of aircraft," by replacing the cockpit altimeter, upgrading the onboard oxygen system generation system, redesigning aircraft life support systems, and installing equipment associated with improved physiological monitoring and alert systems. The act authorizes $300 million in procurement funding not included in the President's request to begin buying an unspecified number of new OA-X light attack aircraft. Section 246 of the act requires the Secretary of the Air Force to submit to the congressional defense committees a report on the service's OA-X "experiment" and how the program incorporates partner nation requirements. The act authorizes $201 million for modifications to the A-10 Thunderbolt II ground-attack aircraft known as the Warthog, including $65 million more than the President's request for additional wing replacements. <5.6.2. Tanker Aircraft> The Administration requested $2.6 billion to procure 15 KC-46A Pegasus aircraft as part of low-rate initial production (LRIP). The KC-46A Pegasus is an aerial refueling tanker intended to replace approximately one-third of the existing Cold War-era KC-135 Stratotanker fleet. The House version of the bill would have cut the procurement quantity to 12 planes and the Senate amendment to 14 planes. While the act authorizes $213 million (8%) less than requested in procurement funding for the program, it authorizes the requested quantity of aircraft. Section 146 of the act limits the use of the funding to procure some of the aircraft until the Secretary of the Air Force certifies to the congressional defense committees the plane's refueling and mission avionics systems meet FAA and Air Force requirements. <5.6.3. Combat Support and Surveillance Aircraft> The act authorizes $1.1 billion to procure five E-2D Advanced Hawkeye early-warning aircraft, $152 million and one aircraft more than the Administration's request. The report accompanying the Senate Armed Services Committee's version of the bill noted "the vital contributions of the E-2D Advanced Hawkeye to present and future carrier air wing operations" and recommended the increase, which was included on the Chief of Naval Operations' unfunded priorities list. The President's budget request included an Air Force plan to develop a network of sensors called Advanced Battle Management System (ABMS) rather than move forward, as planned, with recapitalizing the E-8C Joint Surveillance Target Attack Radar System (JSTARS) aircraft, which provides airborne battle management, command and control, intelligence, surveillance, and reconnaissance. The House version of the bill would have authorized $623 million not included in the request to fund the E-8C recapitalization. The act authorizes $30 million to "continue JSTARS recap [ground moving target indicator] radar development." The act also includes a provision (Section 147) limiting funds to retire any JSTARS aircraft until the Secretary of Defense certifies to the congressional defense committees that ABMS is ready for operations. The act authorizes $820 million to procure 31 MQ-9 Reapers, a reconnaissance and ground-attack unmanned aerial vehicle (UAV), $46 million and two aircraft more than the Administration's request, to accelerate development of ABMS. The act authorizes $780 million to procure four MQ-4 Global Hawks, a long-range reconnaissance UAV, $81 million and one aircraft more than the Administration's request. The report accompanying the House Armed Services Committee's version of the bill recommends an increase in funding to procure an additional EQ-4 variant equipped with the Battlefield Airborne Communications Node (BACN) to improve tactical communications. The act authorizes $567 million to continue research and development of the MQ-25 Stingray, a carrier-based aerial refueling and reconnaissance UAV, $117 million less than the Administration's request due to what conferees described as "Insufficient Air Vehicle budget justification." Section 219 of the act instructs the Secretary of the Navy to work to modify the aircraft carrier USS George Washington (CVN-73) to support the fielding of the MQ-25. <5.6.4. Helicopters> The act authorizes $1.5 billion to procure 66 AH-64 Apache attack helicopters (including new and remanufactured models), $168 million and six helicopters more than the request "to address [Army National Guard] shortfalls." Similarly, the act authorizes $1.3 billion to procure 73 UH-60 Black Hawk utility helicopters (including new models and upgrades), $85 million and five helicopters more than the request for "additional UH-60Ms for [Army National Guard]." <5.6.4.1. Appendix.> Following are the full citations of CRS products identified in tables by reference number only. CRS Reports CRS Report R41129, Navy Columbia (SSBN-826) Class Ballistic Missile Submarine Program: Background and Issues for Congress , by Ronald O'Rourke. CRS Report R44463, Air Force B-21 Raider Long-Range Strike Bomber , by Jeremiah Gertler. CRS Report R43049, U.S. Air Force Bomber Sustainment and Modernization: Background and Issues for Congress , by Jeremiah Gertler. CRS Report R41464, Conventional Prompt Global Strike and Long-Range Ballistic Missiles: Background and Issues , by Amy F. Woolf. CRS Report RL33745, Navy Aegis Ballistic Missile Defense (BMD) Program: Background and Issues for Congress , by Ronald O'Rourke. CRS Report R44498, National Security Space Launch at a Crossroads , by Steven A. Hildreth. CRS Report R43240, The Army's Armored Multi-Purpose Vehicle (AMPV): Background and Issues for Congress , by Andrew Feickert. CRS Report R42723, Marine Corps Amphibious Combat Vehicle (ACV): Background and Issues for Congress , by Andrew Feickert. CRS Report R44968, Infantry Brigade Combat Team (IBCT) Mobility, Reconnaissance, and Firepower Programs , by Andrew Feickert. CRS Report RS20643, Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress , by Ronald O'Rourke. CRS Report RL32418, Navy Virginia (SSN-774) Class Attack Submarine Procurement: Background and Issues for Congress , by Ronald O'Rourke. CRS Report RL32109, Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress , by Ronald O'Rourke. CRS Report RL33741, Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress , by Ronald O'Rourke. CRS Report R44972, Navy Frigate (FFG[X]) Program: Background and Issues for Congress , by Ronald O'Rourke. CRS Report RL30563, F-35 Joint Strike Fighter (JSF) Program , by Jeremiah Gertler. CRS Report RL34398, Air Force KC-46A Tanker Aircraft Program , by Jeremiah Gertler. CRS Report RS22103, VH-71/VXX Presidential Helicopter Program: Background and Issues for Congress , by Jeremiah Gertler. CRS Report R43618, C-130 Hercules: Background, Sustainment, Modernization, Issues for Congress , by Jeremiah Gertler and Timrek Heisler. CRS Report RL31384, V-22 Osprey Tilt-Rotor Aircraft Program , by Jeremiah Gertler. Insights, In Focus CRS Insight IN10931, U.S. Army's Initial Maneuver, Short-Range Air Defense (IM-SHORAD) System , by Andrew Feickert. CRS In Focus IF10954, Air Force OA-X Light Attack Aircraft Program , by Jeremiah Gertler.

For FY2019, the Trump Administration requested $708.1 billion to fund programs falling under the jurisdiction of the House and Senate Armed Services Committees and subject to authorization by the annual National Defense Authorization Act (NDAA). The annual National Defense Authorization Act (NDAA) authorizes appropriations for the Department of Defense (DOD) and defense-related atomic energy programs of the Department of Energy. In addition to authorizing appropriations, the NDAA establishes defense policies and restrictions, and addresses organizational administrative matters related to DOD. Unlike an appropriations bill, the NDAA does not provide budget authority for government activities. The President's FY2019 budget request for DOD reflected in part the department's efforts to align its priorities with the 2018 National Defense Strategy and conform to discretionary spending limits set by the Budget Control Act of 2011 (BCA; P.L. 112-25 ) as amended by the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-23 ). Of the $708.1 billion, the Trump Administration's request included $639.1 billion in discretionary funding for the so-called base budget—that is, funds intended to pay for defense-related activities that DOD and other agencies would pursue even if U.S. armed forces were not engaged in contingency operations in Afghanistan, Iraq, Syria, and elsewhere. The remaining $69 billion of the request, designated as funding for Overseas Contingency Operations (OCO), would fund the incremental costs of those ongoing contingency operations, as well as any other costs that Congress and the President agreed to so designate. The request was consistent with discretionary spending limits (or caps) on defense activities originally established by the Budget Control Act of 2011 (BCA; P.L. 112-25 ) and amended by the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ). The FY2019 defense spending cap is $647 billion and applies to discretionary defense programs (excluding OCO). The cap includes programs outside the scope of the NDAA and for which the Administration requested approximately $8 billion. Thus, the portion of the cap applicable to spending authorized by the NDAA is approximately $639 billion. On May 24, 2018, the House voted 351-66 to pass H.R. 5515 , an amended version of the FY2019 NDAA reported by the House Armed Services Committee. On June 18, 2018, the Senate voted 85-10 to pass its version of H.R. 5515 , after replacing the House-passed text of H.R. 5515 with an amended version of the FY2019 proposal reported by the Senate Armed Services Committee ( S. 2987 ). On July 25, 2018, a conference committee reported a revised version of the bill ( H.Rept. 115-874 ). On July 26, 2018, the House voted 359-54 to approve the conference report. On August 1, the Senate voted 87-10 to approve the conference report. The conference version authorized approximately the same amount as the President's request, though with several billions of dollars of adjustments to amounts within the appropriation titles. On August 13, 2018, President Donald J. Trump signed the bill into law ( P.L. 115-232 ). Congressional authorization of FY2019 defense authorizations reflected a running debate about the size of the defense budget given the strategic and budgetary issues facing the United States.

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<1. Introduction> On March 18, 2020, the American Civil Liberties Union (ACLU) sent a letter to Attorney General William Barr and Bureau of Prisons (BOP) Director Michael Carvajal asking them to release federal prisoners who might be at risk of serious illness due to coronavirus disease 2019 (COVID-19) infection and to reduce the intake of new prisoners to reduce overcrowding. The ACLU called on BOP to utilize authorities granted to it, such as compassionate release and home confinement for elderly offenders, to reduce the number of at-risk prisoners in the federal prison system. The ACLU also asked the Department of Justice (DOJ) to direct the U.S. Marshals Service (USMS) to release from custody any individuals who are at risk of serious illness related to COVID-19, such as those who are elderly and/or have chronic health conditions. Multiple Members of Congress have additionally urged DOJ and its BOP to take steps "to reduce the incarcerated population and guard against potential exposure to coronavirus," and legislation has been introduced that would require the release of some prisoners during a national emergency relating to a communicable disease. BOP data indicate that COVID-19 has become widespread in the federal prison system. As of April 22, 2020, BOP reported that 566 federal prisoners and 342 BOP staff members in 47 prisons and 16 Residential Reentry Centers had tested positive for COVID-19 and 24 prisoners have died from the disease (no BOP staff have died). Prior to these positive tests, BOP released a COVID-19 action plan. The action plan, discussed below, largely focuses on restricting access to federal prisons and limiting the movement of prisoners. In addition, the Attorney General has issued three memoranda outlining how DOJ will use the legal authorities available to address the COVID-19 pandemic. Two of the memoranda direct BOP to use available authorities to place more prisoners on home confinement and the other memorandum provides directives for prosecutors when deciding whether to seek pretrial detention for federal defendants. This report provides information on DOJ's response to the threat of COVID-19 as it pertains to federal prisons and the authorities that may permit the release of some federal prisoners because of the pandemic. The report starts with a brief overview of why the prison environment is conducive to the spread of COVID-19 and the federal prisoners who might be at risk of serious complications if they contract the virus. Next, the report provides an overview of BOP's COVID-19 action plan. The report then turns to a discussion of current authorities that could allow for some federal prisoners to be released and directives from the Attorney General on how DOJ is to use those authorities to respond to the COVID-19 pandemic. The report concludes with a review of legislation introduced in the House and the Senate that would alter the operation of some of those authorities. <2. Background on People Confined in the Federal Criminal Justice System> USMS is responsible for initially confining people who have been arrested and charged for a federal offense and are not granted pre-trial release. USMS does not operate any of its own jails. Rather, prisoners in USMS custody are housed in a combination of BOP-operated facilities, as well as state, local, and private facilities. While most facilities operated by BOP are prisons that hold people who have been convicted of federal offenses and sentenced to a period of incarceration, BOP operates a series of facilities that largely function in a manner similar to local jails (i.e., they hold people who have not been convicted and are awaiting the resolution of their case or people who have been convicted but are awaiting transfer to a prison where they will serve their sentence). These facilities referred to as Metropolitan Detention Centers, Metropolitan Correctional Centers, or Federal Detention Centers are generally located in metropolitan areas and can hold prisoners of any security designation (i.e., high, medium, low, or minimum). The majority of prisoners in USMS custody are housed in state and local facilities; data from USMS indicate that in FY2019, approximately 16% of USMS prisoners were housed in BOP-operated facilities. USMS says it "relies on state and local jails as well as Bureau of Prisons detention facilities to provide medical care inside the facilities." Therefore, defendants in the custody of USMS would be subject to any plan that the facility they are housed in implements to prevent the spread of COVID-19. For example, a USMS prisoner held in BOP-operated facility would be subject to BOP's COVID-19 action plan, outlined below, while a prisoner held in a local jail would be subject to any steps that facility takes to prevent the spread of COVID-19 in its facility. If a defendant is convicted of or pleads guilty to a federal offense, USMS is to turn the prisoner over to the custody of BOP, which is responsible for confining the prisoner until completion of his or her sentence. BOP is to assign prisoners to one of its facilities based on a series of factors, including the level of security and supervision the prisoner requires, the level of security and staff supervision the facility is able to provide, and the prisoner's program needs (i.e., sex offender, substance abuse treatment, educational/vocational training, individual counseling, group counseling, or medical/mental health treatment). <3. COVID-19 and the Prison Environment> According to the Vera Institute of Justice, "it is not a matter of if, but when, coronavirus shows up in courts, jails, detention centers, prisons, and other places where the work of the criminal and immigration systems occur." While prisons may appear to be closed environments, because prisoners cannot leave and return to the facility on their own volition, there are opportunities for the disease to be introduced into any prison. COVID-19 could be introduced by the prison's staff, who could be exposed when they are not at the prison and subsequently introduce it to the facility when they come to work. COVID-19 could also be transmitted to a prisoner though face-to-face visits with family, friends, or attorneys. Also, while prisoners cannot freely leave the facility, they do travel outside it for things such as court appearances or medical appointments. The introduction of COVID-19 into a prison raises the concern that the nature of the prison environment can facilitate its spread. Prisons typically hold hundreds of prisoners who live in close proximity to one another. In some facilities, prisoners might live in dormitory-style housing where many share the same space. Even if prisoners are housed in individual cells, they typically share the same ventilation system with prisoners in other cells. There are also concerns about hygiene. Prisoners might not have regular access to soap and water to wash their hands, and hand sanitizer can be considered contraband because it contains alcohol. These concerns are especially acute for prison systems that are operating over capacity. There are also concerns about whether prisoners will have access to adequate medical care if a prison's staff is hit hard by the disease. If COVID-19 were to spread among prison staff resulting in wide spread quarantines, there could be fewer medical staff to deliver care or fewer correctional staff available to transport critically ill prisoners to outside medical facilities. Also, prison infirmaries tend to have fewer medical resources, such as isolation beds, compared to hospitals. However, one expert at the National Commission on Correctional Health Care believes that the prisons are prepared to handle potential COVID-19 infections because prisons have experience with preventing the spread of communicable diseases. As of April 16, 2020, BOP has approximately 172,300 prisoners under its jurisdiction, who are held in a combination of BOP-operated facilities (122 in total), privately operated prisons, Residential Reentry Centers (RRCs; i.e., halfway houses), and state prisons. While the federal prison population decreased by approximately 42,000 prisoners (19%) from FY2013 to FY2019, the federal prison system operated at 12% over its rated capacity in FY2019. According to USMS, in FY2019 they received approximately 248,900 prisoners and their average daily detention population was approximately 61,500 prisoners. While BOP does not publish data on the number of prisoners that have health conditions that might make them more susceptible to serious complications if they were to contract COVID-19, as of April 18, 2020, approximately 10,200 prisoners (6% of all prisoners) under BOP's jurisdiction were age 61 or older. BOP also notes, "the average age of offenders in BOP-managed facilities is 41 years and average length of sentence is 128 months. The average age of offenders in BOP facilities has increased by 8 percent over the past decade. Approximately 45 percent of offenders have multiple chronic conditions that, despite management with medications and other therapeutic interventions, will progress and may result in serious complications." USMS does not publish data on the age or health issues of prisoners in their custody. <4. BOP's COVID-19 Action Plan> BOP's COVID-19 action plan was announced on March 13, 2020. BOP has modified its action plan as the situation in the federal prison system has dictated. On March 19, 2020, BOP clarified that while there are restrictions on the movement of prisoners between facilities, BOP will transfer prisoners if necessary to properly manage the prison population, subject to certain conditions. On March 31, 2020, BOP announced that effective April 1, 2020, all prisoners would be placed on lockdown, meaning that they may not leave their assigned cell unless it is to attend programs or services offered as a part of normal operating procedures, such as educational programs or mental health treatment. On April 14, 2020, BOP announced that its action plan, which was initially set to expire on April 12, 2020, would be extended until May 18, 2020. BOP's action plan includes the following measures: Sus pending social visits . BOP has suspended social visits for prisoners. To allow prisoners to maintain social ties while social visits are suspended, BOP is allowing prisoners to have 500 minutes per month (compared to the usual 300 minutes) of telephone time. Suspe nding attorney . Like social visits, BOP is suspending visits from attorneys, though BOP is to allow visits from attorneys on a case-by-case basis. Prisoners are to still be allowed to have confidential phone calls with their attorneys, which do not count against the 500 minutes per month limit. Limiting movement of prisoners . BOP is suspending transferring prisoners between facilities, with the exception of transfers for forensic studies, writs, Interstate Agreements on Detainers, medical or mental health treatment, and transfers to pre-release custody. BOP will continue to accept new prisoners, though BOP is working with USMS to limit the number of prisoners transferred from jail facilities to BOP's custody. Prisoners who are moved from one facility to another must have been in BOP's custody for at least 14 days. Prisoners are also to be screened for COVID-19 symptoms (e.g., fever, cough, shortness of breath) before being transferred, and those who present symptoms or have a temperature greater than 100.4 degrees are not to be transferred and instead are to be placed in isolation. Limiting official travel . BOP is suspending official staff travel, with the exception of relocation. Suspending tours . BOP is suspending prison tours, though it can grant exceptions on a case-by-case basis. Reducing staff training . BOP is suspending all staff training, with the exception of basic staff training for new employees at the Federal Law Enforcement Training Center. Limiting contractor access to prisons . BOP is only allowing access for contractors who are providing essential services or those who provide maintenance on essential systems. Essential services include medical or mental health care, religious services, and critical infrastructure repairs. Limiting volunteer access to prisons . BOP is suspending visits to prisons from volunteers, though it can grant some exceptions on a case-by-case basis. Alternative means of communication (e.g., telephone calls) will be provided to prisoners who want to speak privately with a religious volunteer. It is not clear if telephone calls with volunteers count against a prisoner's 500 minutes per month limit. Screening employees . BOP is instituting advanced health screenings of employees at prisons in areas with "sustained community transmission" as determined by the Centers for Disease Control and Prevention (CDC). Advanced health screening involves self-reporting of possible exposure to COVID-19 and temperature checks. Volunteers, contractors, attorneys, and tour participants who are granted access to a prison are subject to the same screening procedures. Screening prisoners . BOP maintains an infectious disease management program as a matter of course, but in response to the COVID-19 pandemic BOP has instituted practices specific to mitigating the spread of the disease in its facilities. All new arrivals to the prison are to be screened for COVID-19 exposure risk factors and symptoms, asymptomatic prisoners with noted exposure risk factors are quarantined, and symptomatic prisoners with noted exposure risk factors are to be isolated and tested for COVID-19. Modifications to operations . BOP is making modifications to its operations, if the facility's population and physical layout make modifications feasible, to allow for social distancing and to limit group gatherings. For example, prisons might stagger meal and recreation times. USMS has not released a COVID-19 prevention plan, but as discussed above, USMS does not operate its own jail system and prisoners are subject to any plans developed and implemented by the facility in which they are housed. However, if a prisoner develops complications from COVID-19 that could not be adequately treated in the facility in which he or she is housed, USMS would assume the cost of transporting the prisoner to a local medical facility and covering the cost of the medical care provided. <5. Existing Authorities to Grant Release to Prisoners> DOJ lacks the authority to grant early release to prisoners for the specific purpose of mitigating the transmission of a communicable disease. However, there are authorities that may provide avenues for some federal prisoners to be released in response to the COVID-19 pandemic. These authorities include statutory provisions allowing (1) federal courts to reopen pretrial detention hearings or permit temporary release of prisoners under certain circumstances, (2) for federal prisoners to be released before completing their sentences, and (3) for federal prisoners to be placed in the community to serve the final portion of their sentences. Additionally, the President retains constitutional authority to grant clemency for federal offenses, which can include commuting a prisoner's sentence to time served. <5.1. Pretrial Detention and Release> A person arrested for a federal offense must be brought before a judge "without unnecessary delay," and the judge "shall order that such person be released or detained, pending judicial proceedings." 18 U.S.C. Section 3142 governs the circumstances under which a person charged with a federal offense may be ordered released or incarcerated pending trial. The statute reflects a preference for release on personal recognizance or unsecured appearance bond, subject to limited conditions, "unless the judicial officer determines that such release will not reasonably assure the appearance of the person as required or will endanger the safety of any other person or the community." However, if after a hearing the judge finds by clear and convincing evidence that no condition or combination of conditions will reasonably assure the defendant's appearance and the safety of others, the judge must order the detention of the person before trial. Though the statute purports to establish an order of preference favoring release for federal criminal defendants, it appears that the majority of defendants accused of federal crimes and presented to a judge are, in fact, incarcerated. Two provisions of Section 3142 provide means to seek court-ordered release from pretrial detention after a detention determination has been made. First, under Section 3142(f)(2) a detention hearing may be "reopened" at any time prior to trial if the judge "finds that information exists that was not known to the movant at the time of the hearing and that has a material bearing on the issue" of whether any conditions of release would reasonably assure the defendant's appearance and the safety of others. Second, under Section 3142(i) a judge who has entered a detention order may issue a subsequent order permitting the "temporary release" of the accused where "necessary for preparation of the person's defense or for another compelling reason." Thus, release under either provision is necessarily dependent on judge-made determinations that may be highly case- and fact-specific. Multiple federal courts have addressed requests for release under these provisions of Section 3142 in light of COVID-19 concerns, considering factors including "(1) the original grounds for the defendant's pretrial detention, (2) the specificity of the defendant's stated COVID-19 concerns, (3) the extent to which [a] proposed release plan is tailored to mitigate or exacerbate other COVID-19 risks to the defendant, and (4) the likelihood that the defendant's proposed release would increase COVID-19 risks to others." The courts' responses to the requests have been mixed. In one case, the U.S. District Court for the Southern District of New York ruled that both provisions of Section 3142 supported a defendant's release subject to conditions of home incarceration and electronic location monitoring. At the outset, the court viewed the "unprecedented and extraordinarily dangerous nature of the COVID-19 pandemic," in conjunction with new information that had come to light about the defendant's dangerousness, as sufficiently changed circumstances bearing on risk to the community to necessitate reconsideration of the defendant's detention. And in light of those changed circumstances, the court determined that the weight of the evidence now clearly and convincingly tipped in favor of concluding that the defendant did not pose a danger to the community and should be conditionally released. The court also ruled that the impact of the COVID-19 outbreak on the defendant's ability to prepare his defense constituted a "compelling reason" justifying temporary release under Section 3142(i), noting that BOP's suspension of visits except on a case-by-case basis limited the defendant's access to his attorney. By contrast, other federal courts have rejected arguments that the COVID-19 pandemic justifies release under Section 3142. In one case, where the defendant argued that his "advanced age" and medical conditions (which included a history of stroke and heart attack) warranted temporary release under Section 3142(i) in response to the ongoing outbreak, the court recognized that that provision has been used only "sparingly" and noted that (1) the defendant's medical conditions appeared to be "well managed," (2) there were no reported incidents of COVID-19 within the defendant's detention center, and (3) BOP was taking "system-wide precautions to mitigate the possibility of infection within its facilities." Accordingly, the court concluded that the possibility of an outbreak in the facility was not a "compelling" reason under Section 3142(i). Likewise, a district court in Maryland, while acknowledging that the health risk from COVID-19 can constitute new information with a material bearing on release under Section 3142(f)(2) and may even implicate constitutional concerns under the Due Process Clauses if conditions of confinement expose a defendant to serious illness, ruled that a defendant charged with a serious crime and who has an extensive criminal history should be detained despite health conditions like high blood pressure and diabetes. The court in that case viewed defendant's health conditions as insufficient on their own to rebut the government's proffer that precautionary measures were being implemented at the defendant's detention center to protect detainees from exposure to COVID-19. In short, although a significant number of federal defendants have sought release under Section 3142 in light of the COVID-19 outbreak, the highly individualized and fact-specific nature of the inquiry makes Section 3142 a somewhat limited avenue for the release of federal prisoners in response to COVID-19. <5.2. Compassionate Release> Once a person has been convicted of a federal offense and sentenced to a term of imprisonment, a federal court can reduce the sentence under 18 U.S.C. Section 3582(c)(1)(A) and impose a term of probation or supervised release, with or without conditions, equal to the amount of time remaining on the prisoner's sentence if the court finds that "extraordinary and compelling reasons warrant such a reduction," or, for certain offenders, if the prisoner is at least 70 years of age, the prisoner has served at least 30 years of his or her sentence, and a determination has been made by BOP that the prisoner is not a danger to the safety of any other person or the community. A petition for compassionate release can be filed by BOP itself. In the alternative, a prisoner can file such a petition if he or she has fully exhausted all administrative rights to appeal BOP's refusal to bring a motion on the prisoner's behalf or upon a lapse of 30 days from the receipt of such a request by the warden of the prisoner's facility, whichever is earlier. Sentence reductions under Section 3582(c)(1)(A) must be consistent with any applicable policy statements issued by the U.S. Sentencing Commission. Under the current sentencing guidelines, "extraordinary and compelling reasons" for a sentence reduction include the following: The prisoner is suffering from a terminal illness (i.e., a serious and advanced illness with an end of life trajectory). A specific prognosis of life expectancy (i.e., a probability of death within a specific time period) is not required. The prisoner is suffering from a serious physical or medical condition, suffering from a serious functional or cognitive impairment, or experiencing deteriorating physical or mental health because of the aging process that substantially diminishes the ability of the prisoner to care for himself or herself while incarcerated and the prisoner is not expected to recover from the condition. The prisoner is at least 65 years old, is experiencing a serious deterioration in physical or mental health because of the aging process, and has served at least 10 years or 75% of his or her term of imprisonment, whichever is less. The caregiver of the prisoner's minor child or minor children dies or is incapacitated. The prisoner's spouse or registered partner is incapacitated, and the prisoner is the only available caregiver. BOP determines that there is an extraordinary and compelling reason other than, or in combination with, the reasons described above. There are limits on whether a prisoner can be released from BOP's custody using compassionate release. First, BOP cannot unilaterally release elderly or terminally ill offenders under this authority; a petition for compassionate release has to be approved by a federal court, based on consideration of multiple case-specific factors. Also, only certain prisoners 70 years of age or older can be released without a finding that there is a compelling and extraordinary circumstance for their release. While the compassionate release statute allows for prisoners who are under the age of 70 to be released from prison before completing their sentence, in cases where the prisoner would potentially be released for reasons related to the prisoner's health, the prisoner must be seriously ill. A prisoner's ability to seek release from a federal court is also limited by the requirement contained in Section 3582 that the prisoner exhaust all administrative rights of review or wait 30 days. Courts have split on whether that requirement may be waived in the context of the COVID-19 pandemic. The U.S. Court of Appeals for the Third Circuit has viewed the exhaustion requirement as unwaivable, characterizing a prisoner's failure to comply with the requirement as "a glaring roadblock foreclosing compassionate release" and observing that "strict compliance" with the statutory obligation is of "critical ... importance" even during the ongoing pandemic. However, other lower federal courts have concluded that they have the discretion to waive the exhaustion requirement, indicating (among other things) that Congress could not "have intended the 30-day waiting period of 3582(c)(1)(A) to rigidly apply in the highly unusual" circumstances of the COVID-19 pandemic. Assuming the exhaustion requirement is not an impediment to judicial relief, a court still might not consider people with underlying medical conditions such as hypertension, heart disease, lung disease, or diabetes, which might make them more likely to suffer from serious complications if they were to contract COVID-19 to meet any of the "extraordinary and compelling reasons" specified in the U.S. Sentencing Guidelines. Multiple federal courts have rejected requests for release under Section 3582 in light of COVID-19 transmission risk. For instance, a prisoner in one case argued that he should be released to home confinement in part because the conditions of his confinement in a federal prison facility created "the ideal environment for the transmission" of COVID-19 and he was "at a heightened risk" in light of health conditions such as high blood pressure, high cholesterol, asthma, and allergies. The government opposed the prisoner's request, pointing to BOP's "extensive action plan" to address the pandemic, and the court sided with the government. Specifically, the court determined that the prisoner's motion did not meet the requirements for modifying a sentence for extraordinary and compelling reasons because, among other things, the prisoner had "not shown that the plan proposed by the Bureau of Prisons is inadequate to manage the pandemic within [the prisoner's] correctional facility, or that the facility is specifically unable to adequately treat" him. As such, though the court noted that "public health recommendations are rapidly changing," it concluded that at least as of the ruling date, it could not assume that BOP would "be unable to manage the outbreak or adequately treat [the prisoner] should it emerge at his correctional facility while he is still incarcerated." Nevertheless, some other courts have authorized compassionate release because of the COVID-19 pandemic. One federal court, for example, concluded that a prisoner with a compromised immune system had shown an extraordinary and compelling reason justifying release to home incarceration under Section 3582 in light of "the COVID-19 public health crisis," though the government in that case did not oppose the request. Aside from the question of whether COVID-19 transmission risk would be considered an "extraordinary and compelling reason[]" to grant release, which could vary depending on the circumstances before the court considering the request, if a prisoner is granted compassionate release it does not mean that the prisoner is no longer involved in the criminal justice system. The court can impose a term of probation or supervised release for the prisoner, and there might be a question about whether U.S. Probation and Pretrial Services Offices has the necessary resources to handle an unexpected influx of probationers. <5.3. Early Release Pilot Program> Under 34 U.S.C. Section 60541(g), BOP is authorized to conduct a program that places eligible elderly and terminally ill prisoners on home confinement. The Attorney General is authorized to designate the prisons at which the program will be conducted. Elderly prisoners who are eligible for home confinement under the program are those who are at least 60 years old; have never been convicted of a violent, sex-related, espionage, or terrorism offense; are sentenced to less than life; have served two-thirds of their sentence; have not been determined by BOP to have a history of violence, or of engaging in conduct constituting a sex, espionage, or terrorism offense; have not escaped or attempted to escape; received a determination that release to home detention would result in a substantial reduction in cost to the federal government; and received a determination that he or she is not a substantial risk of engaging in criminal conduct or of endangering any person or the public if released to home detention. Terminally ill prisoners who are eligible for early release under the program generally have to meet the same criteria as eligible elderly prisoners, except they can be of any age and have served any portion of their sentences, even life sentences. The ability of BOP to release prisoners under this authority has some limitations similar to those associated with compassionate release, except under this authority BOP can place prisoners on home confinement without the approval of a federal court. <5.4. Community Confinement> Under 18 U.S.C. Section 3624(c), BOP is authorized to place a prisoner in a Residential Reentry Center for up to 12 months at the end of his or her sentence. BOP is also ordinarily authorized to place a prisoner on home confinement for a period of time equal to 10% of his or her sentence or six months, whichever is shorter. Though BOP must make individualized determinations as to whether placement in an RRC or home confinement is appropriate, the statute "grants considerable discretion to the BOP" in making such determinations. The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act; P.L. 116-136 ), permits the BOP Director to lengthen the maximum amount of time for which a prisoner may be placed on home confinement under Section 3624(c)(2) "as the Director determines appropriate" when the Attorney General "finds that emergency conditions will materially affect the functioning" of BOP. The authority is limited, however, to "the covered emergency period," which is defined as the period spanning from the President's declaration of a national emergency with respect to COVID-19 to the date that is 30 days after the date on which the declaration terminates. As discussed below, the Attorney General issued a memorandum to the BOP Director making the requisite finding under the CARES Act and thereby authorizing the director to make expanded use of home confinement. <5.5. Executive Clemency> Under Article II, Section 2 of the U.S. Constitution, the President has broad authority to grant relief from punishment for federal criminal offenses. One form of executive clemency is commutation of a sentence, whereby the sentence imposed by a federal court is replaced by a less severe punishment, such as reducing a prisoner's sentence to time served. While it is not required by the Constitution, there is a process for prisoners who want to have their sentences commuted to submit a petition for executive clemency through DOJ's Office of the Pardon Attorney. Regulations state that prisoners should not submit petitions for commutations if other forms of judicial or administrative relief are available, unless there is a showing of "exceptional circumstances" for submitting the petition. When a petition is received, the Pardon Attorney conducts an investigation to determine the merit of the petition, which can include collecting reports from or using the services of federal agencies, such as the Federal Bureau of Investigation. After the investigation is concluded, the Pardon Attorney submits a recommendation about the merits of the petition to the Attorney General through the Deputy Attorney General. The Attorney General makes a final recommendation to the President about whether the petition for clemency should be granted. Guidance issued by DOJ notes that commuting a sentence is an "extraordinary remedy" and that grounds for considering commutation include "disparity or undue severity of sentence, critical illness or old age, and meritorious service rendered to the government by the petitioner" (such as aiding the government in an investigation) and/or "other equitable factors," such as demonstrating rehabilitation or "exigent circumstances unforeseen by the court at the time of sentencing." The process for applying for executive clemency established by DOJ regulations and guidance does not "restrict the authority granted to the President under Article II, Section 2 of the Constitution." Therefore, the President could grant commutations to federal prisoners who do not submit a petition to DOJ or to those who do not meet the standards outlined by DOJ. Some advocates and commentators have called for the President to exercise this authority to commute federal prison sentences for populations vulnerable to COVID-19. <6. The Attorney General's Directives Regarding DOJ's Response to COVID-19> As of April 6, 2020, Attorney General William Barr has issued three memoranda that provide direction on DOJ's response to the COVID-19 pandemic. Two of the memoranda were to BOP, and they outlined how BOP should use its home confinement authorities to reduce the spread of COVID-19 in federal prisons. The other memorandum was to all components of DOJ, including all U.S. Attorney's Offices, and it provides guidance regarding when prosecutors should seek pretrial detention for federal defendants in light of the risks some people might face if they were jailed pending adjudication of their cases. <6.1. Memoranda Regarding Home Confinement> On March 26, 2020, Attorney General William Barr issued a memorandum to BOP Director Michael Carvajal directing him to "prioritize the use of [BOP's] various statutory authorities to grant home confinement for inmates seeking transfer in connection with the ongoing COVID-19 pandemic." In the memorandum, the Attorney General notes that there are some at-risk prisoners who are incarcerated for nonviolent crimes, pose a minimal risk of recidivism, and might be safer serving their sentences on home confinement rather than in a BOP facility. However, the Attorney General also states that many prisoners will be safer in BOP facilities where the population is controlled and there is ready access to doctors and medical care. The memorandum requires BOP when making a decision about which prisoners to place on home confinement to consider the "totality of the circumstances" for each prisoner, statutory requirements for home confinement, and the following discretionary factors: the age and vulnerability of the prisoner to COVID-19, in accordance with CDC guidelines; the security level of the facility where the prisoner is held, with priority given to prisoners held in low- and minimum-security facilities; the prisoner's conduct in prison, with those who have engaged in violent or gang-related activities while incarcerated or who have been found to have violated institutional rules not receiving priority consideration for home confinement; the prisoner's risk assessment score under BOP's risk and needs assessment system, with prisoners who have more than a minimum score not receiving priority consideration for home confinement; whether the prisoner has a re-entry plan, which includes verification that the conditions under which the prisoner would be confined after release would present a lower risk of contracting COVID-19 than if the prisoner remained incarcerated in a BOP facility; the prisoner's crime of conviction and an assessment of the risk to public safety posed by him or her (the memorandum notes that some offenses, such as sex offenses, will make a prisoner ineligible for home confinement, while convictions for other "serious" offenses should weigh more heavily against placing the prisoner on home confinement). In addition to these factors, prisoners considered for home confinement must be assessed, based on CDC guidance, for risk factors for "severe COVID-19 illness," risks of COVID-19 illness at the prisoner's current facility, and risk of COVID-19 illness at the location where the prisoner would be placed on home confinement. BOP is not to place prisoners on home confinement if it would increase their risk of contracting COVID-19 or increase the risk of spreading COVID-19 in the community. The memorandum also directs BOP to place prisoners in a 14-day quarantine before they are transferred to home confinement. In a subsequent memorandum issued on April 3, 2020, the Attorney General invokes the authority granted under the CARES Act and directs BOP to review all prisoners with risk factors for serious complications related to COVID-19 for possible placement on home confinement. The memorandum directs BOP to focus on prisoners incarcerated at Federal Correctional Institution (FCI) Oakdale, FCI Danbury, and FCI Elkton, and any other "similarly situated facilities where [BOP] determine[s] that COVID-19 is materially affecting operations." BOP is directed to immediately process all prisoners who are deemed to be suitable candidates for home confinement. Prisoners are to be placed on home confinement after a 14-day in-prison quarantine. BOP is also authorized on a case-by-case basis to place prisoners on home confinement without first quarantining them in prison. In these cases, a prisoner would be required to quarantine at home for a 14-day period. The Attorney General warns against potentially spreading COVID-19 by releasing prisoners to home confinement. Thus, BOP is directed to follow the criteria outlined in the March 26 memorandum when making decisions about which prisoners should be released, with the understanding that prisoners "with a suitable confinement plan will generally be approved candidates for home confinement rather than continued detention at institutions in which COVID-19 is materially affecting their operations." In the memorandum, the Attorney General acknowledges that BOP has limited resources to monitor all prisoners on home confinement and the U.S. Probation Office is unable to monitor large numbers of prisoners in the community. Despite these limitations, the Attorney General authorizes BOP to place prisoners on home confinement even if electronic monitoring is not available, "so long as BOP determines in every such instance that doing so is appropriate and consistent with [DOJ's] obligation to protect public safety." Regarding public safety, the Attorney General notes that while DOJ has an obligation to protect federal prisoners, DOJ also has an obligation to protect public safety and cannot "simply release prison populations en masse onto the streets." The Attorney General notes that while he is directing BOP to expand the use of home confinement for prisoners at affected prisons, "it is essential that [BOP] continue making careful, individualized determinations BOP makes in the typical case. Each inmate is unique and each requires the same individualized determinations [that] have always been made in this context." <6.2. Memorandum Regarding Pretrial Detention> On April 6, 2020, the Attorney General issued a memorandum to the U.S. Attorney's Offices and the heads of components of DOJ that provides guidance on when DOJ should seek pretrial detention for defendants. The Attorney General notes that under the Bail Reform Act (BRA), defendants must be detained pending trial where "no condition or combination of conditions will reasonably assure the appearance of the person as required and the safety of any other person and the community" and that for certain crimes it is assumed that "no condition or combination of conditions will reasonably assure the appearance of the person as required and the safety of the community." The Attorney General encourages prosecutors to continue to seek pretrial detention for defendants that pose a risk to public safety or a flight risk as outlined in the BRA. The Attorney General also notes that a defendant's physical and mental condition can be considered when making determinations about pretrial detention under the BRA and prosecutors should consider the "medical risks associated with individuals being remanded into federal custody during the COVID-19 pandemic." The Attorney General directs prosecutors to consider not seeking pretrial detention to the extent that they would under normal circumstances, especially for defendants who have "not committed serious crimes and who pose little risk of flight (but no threat to the public) and who are clearly vulnerable to COVID-19 under CDC Guidelines." The memorandum directs prosecutors to conduct the same analysis when litigating motions filed by defendants who want the court to reconsider its decision to order pretrial detention in light of the pandemic. When considering motions filed by defendants, prosecutors are also directed to consider the risk a defendant poses of spreading COVID-19 in the community if he or she were released. <7. Current Legislation> As described previously, Congress has passed legislation in response to the COVID-19 pandemic that modifies one of the authorities addressed in this report release to home confinement under 18 U.S.C. Section 3624(c)(2). However, at least one bill has been introduced that would appear to further facilitate the release of some federal prisoners in the context of a national emergency related to a communicable disease. Introduced legislation would appear to further supplement some of the authorities discussed above. S. 3579 and H.R. 6400 would require that certain federal prisoners in the custody of BOP or USMS those who are pregnant, age 50 or older, have certain underlying medical conditions, or have 12 months or less to serve immediately be placed in community supervision when a "national emergency relating to a communicable disease" has been declared and for 60 days after it has expired. In making such placements, the directors of BOP and USMS would be obligated to "take into account and prioritize" placements enabling "adequate social distancing," with home confinement given as one example. Individuals falling into qualifying categories would be excepted from placement in community supervision under the bills, however, if the Director of BOP or Director of USMS determines by clear and convincing evidence that they are "likely to pose a specific and substantial risk of causing bodily injury or using violent force against the person of another." It thus appears that S. 3579 and H.R. 6400 would enhance current authorities that permit the release of federal prisoners in response to COVID-19. Specifically, under both bills some federal criminal defendants in pretrial detention would be eligible for immediate release to community supervision (assuming they meet the health or other criteria) without the need to file individual petitions seeking the reopening of their detention hearing based on new information or asserting a "compelling reason" for temporary release. And those detained solely because they were previously determined to be a flight risk would appear to qualify for relief under both bills, as the bills' only exception for those eligible for relief are detainees that are determined to pose a risk of causing bodily injury or using violent force against another. Additionally, for those currently serving federal sentences in BOP facilities, S. 3579 and H.R. 6400 would appear to establish another alternative for release to community confinement in the context of the COVID-19 pandemic beyond 18 U.S.C. Section 3624(c) and 34 U.S.C. Section 60541(g), as BOP would be required to release a prisoner over 50 years old, with a covered health condition, or who is within 12 months of release from incarceration unless the exception applied.

There is concern that coronavirus disease 2019 (COVID-19) could quickly spread among federal prisoners and prison staff because of the nature of the prison environment. Prisons are places where hundreds of prisoners and staff are living and working in close proximity to each other and where they are forced to have regular contact. Prisons are generally not conducive to social distancing. Also, prison infirmaries typically do not have the resources available to most hospitals, such as isolation beds, that would help prevent the spread of the disease. There are also concerns that if prison staff were hard hit by COVID-19, a significant number of staff would require quarantine; they would be unavailable to perform their duties, including providing care to sick prisoners; and the disease could spread. On March 13, 2020, the Bureau of Prisons (BOP) released a COVID-19 action plan. The action plan largely focuses on restricting access to federal prisons and limiting the movement of prisoners between prisons. On March 18, 2020, the American Civil Liberties Union (ACLU) sent a letter to the Department of Justice (DOJ) and its BOP seeking the release of prisoners in the custody of BOP and the U.S. Marshals Service (USMS) who might be at risk for serious illness because of COVID-19, and a reduction in the intake of new prisoners to avoid overcrowding. In addition, multiple Members of Congress have also urged DOJ and BOP to take steps "to reduce the incarcerated population and guard against potential exposure to coronavirus," and legislation has been introduced that would require the release of some federal prisoners during a national emergency relating to a communicable disease. BOP updated its action plan on March 19, 2020, to clarify that while prisoner movement is limited under the plan, BOP will still move prisoners as needed to properly manage the prison population and to outline new conditions that must be met if a prisoner is transferred. On March 31, 2020, BOP announced that effective April 1, 2020, all prisoners will be placed on a 14-day lockdown in their assigned cells as a measure to prevent the spread of COVID-19. Prisoners will be allowed to leave their cells during this period for certain reasons, such as attending programming or to shower and use the phone. On April 14, 2020, BOP announced that its action plan, which was initially set to expire on April 12, 2020, would be extended until May 18, 2020. Regarding the release of federal criminal defendants in detention pending trial, 18 U.S.C. Section 3142 allows for federal courts to reopen pretrial detention hearings based on new information or permit temporary release of pretrial detainees for "compelling" reasons. With respect to the release of federal prisoners who are currently serving their court-imposed sentences, 18 U.S.C. Section 3582(c)(1)(A) permits a federal court to reduce a prisoner's sentence and impose a term of probation or supervised release if the court finds that "extraordinary and compelling reasons warrant such a reduction," or the prisoner is at least 70 years of age, the prisoner has served at least 30 years of his or her sentence, and BOP has determined that the prisoner is not a danger to the safety of any other person or the community. Under 34 U.S.C. Section 60541(g), BOP is authorized to conduct a program whereby elderly and terminally ill prisoners who meet certain statutory requirements can be placed on home confinement. Under 18 U.S.C. Section 3624(c), BOP is authorized to place prisoners in a Residential Reentry Center (i.e., a halfway house) and/or on home confinement at the end of their sentences. The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act; P.L. 116-136 ) permits the BOP Director to extend the maximum amount of time for which a prisoner may be placed on home confinement under Section 3624(c)(2) under certain circumstances. Under Article II, Section 2 of the U.S. Constitution, the President has broad authority to grant clemency for federal offenses, which can include commuting a prisoner's sentence to time served. The Attorney General has issued three memoranda outlining how DOJ will utilize the legal authorities available to it to respond to the COVID-19 pandemic. Two of the memoranda are to the BOP Director, and they direct BOP to increase the number of prisoners placed on home confinement and outline factors for BOP to consider when making decisions about which prisoners should be released from federal prison. The other memorandum is for all components of DOJ, including all United States Attorneys, and it provides a directive on how prosecutors should make decisions about the use of pretrial detention for federal defendants in light of possible exposure to COVID-19.

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<1. Introduction> The federal research and development (R&D) enterprise is a large and complex system, spanning the country, that includes government facilities and employees as well as federally funded work in industry, academia, and the nonprofit sector. In FY2019, federal agencies obligated an estimated $141.5 billion for R&D, including $39.6 billion for intramural R&D and $101.9 billion for extramural R&D. Its work is essential to U.S. economic prosperity, national security, health care, and other national priorities. It also plays a substantial direct role in the U.S. economy. Today, the operation of the system is being affected profoundly by the Coronavirus Disease 2019 (COVID-19) pandemic and the national response to it. This report provides an overview of how the nation's response to COVID-19 is affecting the federal R&D enterprise, how the federal government and others are addressing those effects, and issues that may arise as the situation develops. The scope of this report is limited to the effects of COVID-19 on federally funded R&D. It does not attempt to address effects on the broader U.S. R&D enterprise, the majority of which is funded by and conducted in the private sector. In addition, it does not attempt to address the federal R&D resources now being focused on understanding the science of COVID-19, developing tests and treatments, and otherwise applying R&D to address the pandemic. As the scientific, government, and public understanding of COVID-19 has grown, the national response has evolved, and it is likely to continue to evolve. The scope, scale, and dynamism of responses by the federal government, state and local governments, and the private sector are too great to catalog fully in this report. Rather, the report highlights key effects and issues of concern and provides examples of agency actions. <2. Effects on R&D Institutions and Projects> Faced with the global spread of a contagious and deadly virus, U.S. institutions have taken a number of extraordinary measures. One key response has been social distancing limiting close contacts between individuals in order to reduce opportunities for transmission of the virus. This response has led to the closure of many businesses, schools, government offices, and other institutions. Where possible, these institutions have continued to operate via telework and e-learning. Research and development activities, however, often require physical access to unique facilities and equipment. As a result, many R&D organizations including federal facilities as well as industrial and academic laboratories supported by federal funds have closed or curtailed operations. <2.1. Closure of Laboratories and Laboratory Activities> Closures of R&D facilities and social distancing requirements for researchers depend less on coordinated national policies than on the independent decisions of individual agencies, universities, and other institutions. For example, the National Aeronautics and Space Administration (NASA) decides the status of each of its centers separately, based on local conditions, according to a four-stage response framework. At the same time, some NASA centers may be at stage 3 (open to mission-essential personnel) while others are at stage 4 (closed except to protect life and critical infrastructure). During March 2020, NASA made the decision to move to stage 3 and subsequently from stage 3 to stage 4 at different times for different centers. Actions by state or local governments may be a factor in the decisions of some facilities. For example, shutdowns at Department of Energy (DOE) laboratories in California and Illinois followed statewide social distancing orders issued by the governors of those states. In some cases, specific R&D activities may be allowed to continue, despite closures, if an institution determines that the work is sufficiently important, that suspending it would be too costly or disruptive, or that it can be conducted remotely. For example, most employees of the National Institute of Standards and Technology (NIST) are on telework with limited access to the laboratories' physical facilities and only with supervisor approval. However, some NIST employees continue to work onsite to provide certain limited essential services, including the sale of Standard Reference Materials, calibration of precision instruments, distribution of time and frequency signals, and maintenance of the National Vulnerability Database. Many of these considerations for laboratories and other research facilities apply similarly to research conducted in the field. <2.1.1. Identification of Essential and Critical R&D Activities> The policies guiding these decisions often use terms like essential or critical . In the NASA response framework, for example, mission-essential work includes work needed for the safety of human life or protection of property and "work that must be performed to maintain mission/project operations or schedules and cannot be performed remotely/virtually." The Office of Management and Budget (OMB) has provided guidance to agencies about what travel (including travel to conduct R&D or to attend scientific meetings) should be considered mission-critical, based on a list of 11 factors, such as whether the travel is for activities essential to national security or whether it is time-sensitive. Presidential Policy Directive 21 (PPD-21) identifies the defense industrial base, including defense R&D, as one of 16 critical infrastructure sectors. A memorandum from the Under Secretary of Defense for Acquisition and Sustainment identifies development and testing by Department of Defense (DOD) contractors as an essential part of this critical infrastructure. Some state emergency orders have included exemptions for facilities and organizations that are considered critical infrastructure, suggesting that defense-related R&D may be allowed to continue even when other R&D is suspended. In general, however, state and local authorities not federal agencies assume responsibility for adjudicating claims of criticality by private-sector organizations. In some cases, the determination of whether an R&D project should continue is based on how severely it would be affected by being suspended. For example, the relative positions of Earth and Mars in their respective orbits typically create a narrow launch window for NASA science missions to Mars. If a mission misses that window, it is likely to be delayed 26 months until the next launch window. While NASA has suspended a number of other major projects, it is continuing work on the Mars 2020 mission, scheduled for a launch window that opens in mid-July 2020. Other time-sensitive projects may include experiments that require continuity of data collection or that involve caring for live animals or maintaining cell cultures. University decisions about essential research functions may be informed by local conditions, federal funding agency directives, ethical considerations about the well-being of human subjects and animals in discontinued or scaled-back research, and each university's own risk management decisionmaking. Columbia University has defined essential functions to include, in addition to COVID-19 research and ongoing clinical trials, "the maintenance of equipment, laboratory resources, critical animal resources, and cell lines." Johns Hopkins University has defined three tiers of its clinical research. The top, essential, tier includes trials of potential COVID-19 treatments and trials that address certain acute, life-threatening conditions such as Huntington's disease. Only trials in this tier can continue normally, including enrolling new patients. According to the Association of Public and Land-Grant Universities, research functions that some (but not necessarily all) universities have identified as essential include COVID-19 related research; activity that if discontinued would generate significant data and sample loss; activity that if discontinued would pose a safety hazard; activity that maintains critical equipment or core facilities; activity that maintains critical samples, reagents, and materials; activity that maintains animal populations; activity that maintains critically needed plant populations, tissue cultures, or other living organisms; activity in support of essential human subjects research; and clinical trial activity that if discontinued would adversely affect patient care. Not all time-sensitive research is necessarily considered essential, however. One example of an activity that is generally not being treated as essential is agricultural research that depends on an annual planting cycle or an animal maturation cycle. <2.1.2. Continuing R&D Remotely> Whether researchers can continue to make progress on a particular R&D project remotely may also depend on the nature of the project. For example, researchers working remotely may be able to perform scientific computations, engage in modeling and simulation, design experimental hardware, analyze data already obtained, and prepare journal articles. In contrast, handling physical and biological samples, caring for laboratory animals, and building or operating specialized equipment likely require a researcher to be present in the laboratory. Research involving human subjects may be interrupted if those subjects are unavailable because of social distancing. In some cases, the extent to which research activities can continue may depend on the duration of the disruption; for example, analyzing data and preparing results for publication may no longer be an option once all existing data have been analyzed and written up. These factors may affect different disciplines differently; for example, research in mathematics, computer science, and theoretical physics may be more amenable to remote working than research in agricultural science, geology, or microbiology. <2.2. Cancellation of Conferences> Travel restrictions and social distancing requirements have also resulted in the cancellation of numerous scientific and technical conferences. The person-to-person interactions both formal and informal that take place at such conferences are an instrumental mechanism for knowledge sharing, peer feedback, the ideation of new research, technology transfer, and interactions between researchers and agency program managers. Other mechanisms, such as scientific papers and electronic communications, also offer other important ways to exchange knowledge and share ideas, but they lack some of the interactive advantages of in-person conferences. Accordingly, the cancellation of scientific and technical conferences may have a detrimental impact on advances in knowledge and the benefits that emerge from such knowledge. These adverse effects apply both to federal scientists and engineers and to their counterparts in academia and the private sector who work on federally funded R&D. The impact of cancelling conferences may be particularly significant in certain fields. In computer science, for example, papers published in conference proceedings may be as influential as journal articles, to an extent that is rare in other fields. In some cases, conferences are continuing virtually with attempts to facilitate informal interactions that would normally take place in person. For example, the annual Conference on Retroviruses and Opportunistic Infections, originally scheduled to be held in Boston in March 2020, was converted to a virtual conference, with prerecorded presentations, live webcasts, and electronic poster presentations. In April 2020, the annual International Conference on Learning Representations (devoted to machine learning) plans to present papers using prerecorded videos and offer online opportunities to ask questions of speakers, see questions and answers from other participants, take part in discussion groups, meet with sponsors, and join groups for networking. Scientific and technical conferences are often run by professional societies and other organizations that rely on them for revenue. Cancellations are likely to result in financial losses for these organizations as expected revenues are not realized and cancellation costs associated with the use of hotels, meeting facilities, and other services are incurred. Such losses can be considerable for the organizations involved. The cancellation of the March 2020 annual meeting of the American Physical Society cost the society about $7 million, about 12% of its typical annual revenues; other societies have reported cancellation losses that wiped out essentially all of their financial reserves. Federal agencies also run scientific and technical conferences. While these conferences are not generally a significant source of agency revenues, some agencies are likely to face one-time cancellation costs that may be considerable. Researchers planning to attend conferences that have been cancelled may have incurred nonrefundable travel or lodging expenses. Some agencies have determined that awardees may charge these costs to their research awards despite regulations that would normally prohibit doing so. Some of the same considerations apply to other types of meetings. For example, some DOE scientific user facilities have cancelled or postponed their annual user meetings, limiting opportunities for facility outreach and user engagement. <2.3. Effects on R&D That Is Not Suspended> <2.3.1. Efficiency and Quality> Even when R&D projects can continue, restrictions may affect efficiency or quality. According to one space policy expert, "The enforced separation of people working on the same or related tasks will inject delays and miscommunications. It will certainly be an obstacle to schedules and success in activities like preparing for a launch or building an exploratory spacecraft." A U.S. researcher working remotely on a particle physics experiment has described the inefficiency of guiding an on-site technician through installing a piece of electronics: "I've spent probably 3 hours over the past 24 on Skype with somebody . He says something then points the webcam at what we're looking at, then we talk a little bit more." Others note the need to devote time to emergency planning. <2.3.2. Additional Costs> Institutions may incur unplanned expenses even for R&D that is not suspended. For example, they may need additional computing and networking equipment and services to accommodate researchers working remotely. Janitorial expenses may increase at facilities that remain open, if additional cleaning is required to guard against the spread of infection. Prices may increase for materials and equipment that are in short supply. <2.3.3. Disrupted Access to Supplies and Services> R&D at institutions that remain open may also be affected by disruptions to the supply of materials and equipment or by closures at collaborating research institutions. Laboratories have reported shortages of widely used supplies, such as RNA-extraction kits, swabs, and personal protective equipment, that are in high demand for COVID-19 testing and patient care. Basic laboratory supplies such as reagents and pipette tips, when still available, may be on backorder or available only at multiples of the usual price. Depending on the duration of the pandemic, NASA's plans for a 2021 launch of the James Webb Space Telescope may be jeopardized. It is to be launched from a European Space Agency spaceport in Kourou, French Guiana, but France suspended launch campaigns from the Guiana Space Center on March 16, 2020, due to the COVID-19 pandemic. <2.3.4. Shifts in R&D Focus> In some cases, agencies and researchers are shifting their research focus to COVID-19 related topics. The National Institutes of Health (NIH) has issued several funding opportunity announcements for researchers to submit competitive revisions or seek supplemental funding for existing projects, in order to redirect their research efforts to COVID-19. Other agencies that are typically less focused on health research have also sought to shift their R&D priorities. For example, light source user facilities operated by the DOE Office of Basic Energy Sciences are used for structural biology research in partnership with NIH and universities. According to DOE, these facilities are making "every effort to give [COVID-19] researchers priority access" and "want to ensure they are doing everything possible to enable research into this virus and the search for an effective vaccine or other treatment." More generally, DOE wrote an open letter to the research community asking for "ideas about how DOE and the National Labs might contribute resources to help address COVID-19 through science and technology efforts and collaborations." A newly formed consortium of agencies, universities, and companies is making supercomputing resources available "to accelerate understanding of the COVID-19 virus and the development of treatments and vaccines." The NASA Earth Science program has provided guidance to "investigators looking to reprioritize currently-funded efforts" and noted that an existing funding opportunity could support "investigations making innovative use of NASA satellite data to address impacts of the COVID-19 pandemic." NIST has announced a new grant opportunity under the Manufacturing USA National Emergency Assistance Program to support rapid, high-impact projects that support the nation's response to the COVID-19 pandemic. Up to $2 million is to be available to Manufacturing USA institutes under the program. <2.4. Other Financial and Infrastructural Effects> <2.4.1. Shutdown and Restart Costs> Suspending research may result in additional costs for activities such as animal care, maintenance of cell cultures and biological samples, and safe storage of hazardous materials. Restarting research, when conditions permit, may also incur costs for staff time and supplies to bring experimental equipment back to operational status, reestablish laboratory animal populations, or replace masks and other personal protective equipment that was donated to hospitals and first responders during the pandemic. The extent to which these costs may be covered out of existing federal research awards is not yet clear. <2.4.2. Auditing Issues> There may be future auditing issues for federally funded research that is redirected to address COVID-19, or for federally funded researchers who incurred costs to shut down and restart their projects or donated personal protective gear that had been paid for out of grant funds. Even if these changes had the support of the federal funding agency, the time-sensitive circumstances may mean that not all approvals were adequately documented to satisfy auditing requirements. The flexibilities provided to funding agencies in these circumstances (see " Federal Actions to Date " below) may not yet be aligned with corresponding flexibilities for accounting and auditing. <2.4.3. University-Based Shared Research Infrastructure> There are specific challenges for shared university research infrastructure, including core facilities specialized laboratories with unique instruments and capabilities that provide services to an institution's researchers as well as animal care facilities and clinical trial infrastructure. These facilities are typically supported mostly through user fees, often paid from federal funds that are supporting a user's research. They are widely used: one university reported that a majority of its grant-funded research in FY2019 relied in part on core facilities, while a majority of its NIH-funded research made use of shared animal care facilities. Much of this infrastructure has closed, creating uncertainty about funding for shutdown and restart costs as well as continuity of pay for technical staff. Some facilities remain open to support research that is continuing, but open facilities may face their own financial challenges in continuing to operate, as the fees that usually support them are likely to be reduced by the suspension of research by some of their users. <2.4.4. Delayed Availability of Major R&D Equipment> Planned R&D may be delayed by interruptions in the development or manufacturing of major equipment. NASA, for example, has suspended work on the James Webb Space Telescope, which had been scheduled for launch in March 2021, and on the Space Launch System rocket and Orion crew capsule, needed for its plans to land humans on the Moon in 2024. <2.4.5. Loss of Revenues by Federal R&D Agencies> Some federal laboratories engage in R&D activities under a Work for Others (WFO) or similar agreement. Using a WFO, a federal agency, federal laboratory, or company can pay to have R&D conducted by another federal laboratory. This often enables access to unique facilities, equipment, and personnel. While the cancellation or suspension of WFO projects due to the COVID-19 response may reduce costs to the sponsoring organization, it may simultaneously reduce revenue that would otherwise have supported the staff, facilities, and equipment of the laboratory that was to perform the work. According to the Government Accountability Office, from FY2008 through FY2012, DOE performed about $2 billion worth of R&D annually under WFO agreements, accounting for 13%-17% of total DOE laboratory revenues. Most of the work (88%) was performed for other federal agencies. NIST conducted $94.4 million in research, development and supporting services for other federal agencies in FY2019. NIST certifies and provides more than 1,300 Standard Reference Materials (SRM) that are used to perform instrument calibrations, verify the accuracy of specific measurements, and support the development of new measurement methods. NIST SRMs are used by industry, academia, and government to facilitate commerce and trade and advance R&D. NIST revenues from SRMs in FY2019 were $21.8 million. NIST also provides calibration and testing services for industry, academia, and government; its FY2019 revenues for these services were $33.5 million. As of the date of this report, NIST continues to provide SRM and calibration services, but it is unclear how long NIST will be able to provide these services if the pandemic continues for an extended period. <2.4.6. Future Availability of Federal Funding> As some agencies and researchers shift their R&D priorities to respond to the COVID-19 pandemic, the funding available for R&D on other topics may be reduced, at least in the near term. More generally, the federal funding needed for the national response to COVID-19 may reduce the overall federal resources available for R&D. While supplemental appropriations already enacted include additional funds for R&D and institutions that conduct R&D, increased federal spending to address the pandemic, coupled with decreased federal revenue associated with potential economic contraction, may lead to a future fiscal environment with constrained spending across the government. These outcomes may not be clear for some time, however, and may depend on a host of independent decisions by agencies and Congress. <2.5. Impact on Students, Postdoctoral Researchers, and Early-Career Faculty> University research typically involves postdoctoral researchers (postdocs), graduate students, and sometimes undergraduate students in addition to faculty members. Even if the nature of a particular research project qualifies it to continue despite COVID-19, many universities are limiting the continued participation of postdocs and students. Cancelled or suspended research may be of particular concern to these groups. Continuing to work remotely may also be more challenging for students, postdocs, and early-career faculty who have families, as their children are more likely to be young than those of more senior researchers. Failing to complete a project on time may delay the completion of a degree or make it difficult to demonstrate research success when applying for a job or seeking tenure. Cancelled conferences are also a particular concern for postdocs, students, and other early-career researchers, who often rely on conferences to meet more senior scientists, present their work, and find jobs. In some circumstances, there may be uncertainty about continuity of pay for students employed as research assistants or teaching assistants. Because there are disparities between disciplines in the extent to which research can continue while working remotely, students and postdocs in different disciplines may find disparities in how their careers are affected. Disparities may also arise between students and postdocs whose experiments can be suspended and restarted and those whose experiments must simply be abandoned and begun afresh. To the extent that research disruptions, delayed graduation, or difficulty obtaining in-field employment discourage students and early-career researchers from continuing in their field of research, those outcomes could create challenges for the future science and engineering workforce. Continued travel restrictions may also affect the enrollment of foreign science and engineering students in U.S. universities in the 2020-2021 academic year. As well as potentially creating financial challenges for some universities, reduced international enrollment could have long-term workforce consequences, given that many foreign students in science and engineering remain in the United States after graduation. <3. Federal Actions to Date> On March 9, 2020, OMB authorized federal agencies to provide certain short-term relief from administrative, financial management, and auditing requirements for grantees involved in research related to COVID-19. On March 18, four organizations representing universities and other research organizations wrote to OMB requesting the expansion of these flexibilities to all research grants. On March 19, OMB provided relief for "an expanded scope of recipients affected by the loss of operational capacity and increased costs due to the COVID-19 crisis." The Appendix summarizes OMB's government-wide administrative actions, extensions of authorities, and guidance. It also provides a link to a compilation maintained by the Council on Governmental Relations (COGR) of guidance from federal agencies, academic institutions, and other organizations, as well as frequently asked questions about how federal agencies that fund R&D are implementing the OMB-directed flexibilities. Some agencies have compiled special guidance for awardees. For example, an NIH webpage provides information on changes to proposal submission and award management, updated policies on clinical trials and animal welfare, and revised procedures for peer review. The National Science Foundation (NSF) has issued guidance for contractors operating NSF-funded facilities. COGR has compiled links to such guidance, sorted by agency, along with links to institutional guidance from a long list of individual universities. Some agencies have extended the due dates for research proposals, announced that they will accommodate applications received late, or reduced the institutional approvals required for an initial proposal. While these accommodations provide additional flexibility for researchers, delays in receiving and acting on proposals may result in delays in issuing awards. Some agencies have announced accommodations for existing awardees, such as no-cost extensions of awards, extensions of financial and other reporting deadlines, changes to the allowability of cancellation fees and costs resulting from the pausing and restarting of research, and allowing the continued payment of salaries and benefits out of grant funds. While these steps give researchers additional flexibility, they may create challenges once research resumes. For example, grant funds that have been spent on cancellation fees, activities required for the suspension of research, or researcher salaries while research is suspended necessarily reduce the balance of funds subsequently available to complete a research project. No-cost extensions extend an award's completion date; they do not provide additional funds to cover costs incurred because of delays. Congress has already enacted some legislation with R&D-related funding and provisions in response to the COVID-19 pandemic. For example The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 ), enacted on March 6, 2020, appropriated $836 million in supplemental funding for NIH, with additional transferrable amounts from other accounts. Some of the $3.1 billion appropriated to the Public Health and Social Services Emergency Fund may also be made available to the Biomedical Advanced Research and Development Authority for the development of COVID-19 medical countermeasures, such as therapies and vaccines. The Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136 ), enacted on March 27, 2020, appropriated more than $1 billion in supplemental funding for R&D. Most of this total was for research on COVID-19 itself, including $945 million for NIH, $415 million for research, development, testing, and evaluation (RDT&E) in the DOD Defense Health Program, and smaller sums for several other agencies. The act also provided funding to several R&D agencies to offset unanticipated costs arising from the pandemic. For example, NASA received $60 million to cover the costs of mission delays caused by center closures, while the U.S. Forest Service received $3 million to reestablish experiments affected by travel restrictions. Section 18004 of the CARES Act established a $14 billion Higher Education Emergency Relief Fund for colleges and universities. At least half of this total must be allocated for emergency financial aid grants to students. It is not yet clear how much, if any, will be available to address issues directly related to R&D. Section 3610 of the CARES Act authorized federal agencies to reimburse contractors for "any paid leave, including sick leave, a contractor provides to keep its employees or subcontractors in a ready state" when they are unable to work on-site due to facility closures and telework is not an option. Although this provision is not specifically directed at R&D, it could be significant for agencies such as DOE and NASA whose R&D facilities are staffed with numerous contractor employees. Section 12004 of the CARES Act authorized the Patent and Trademark Office to temporarily suspend, modify, adjust, or waive timing deadlines under the Patent Act and the Trademark Act during the COVID-19 emergency period. Section 13006 of the CARES Act gave DOD additional flexibility in the use of its other transaction authority for the development of prototypes related to COVID-19. The CARES Act provided NIST laboratories with $6 million in additional funding, including $5 million to support and accelerate measurement science related to viral testing and biomanufacturing; $50 million for the NIST Manufacturing Extension Partnership program to help companies across the country transform operations in support of COVID-19 related needs and to foster development of COVID-19 related supply chains; and $10 million for research related activities at Manufacturing USA's National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL). The CARES Act provided $2.25 million for the Environmental Protection Agency's Science and Technology account to prevent, prepare for, and respond to coronavirus, domestically or internationally, including $1.5 million for research on methods to reduce the risks from environmental transmission of coronavirus via contaminated surfaces or materials. The CARES Act provided NSF with $76 million "to prevent, prepare for, and respond to coronavirus, domestically or internationally, including to fund research grants and other necessary expenses." The Senate Appropriations Committee summary notes that $75 million is to support NSF's RAPID grant mechanism, "which will support near real-time research at the cellular, physiological, and ecological levels to better understand coronavirus," and $1 million is to assist in the administration of these grants. In the House, Speaker Pelosi has announced plans for a special committee to oversee the federal response to COVID-19, including the spending of supplemental funding provided under the above legislation. <4. Potential Additional Federal Actions> Several organizations from industry and academia have put forward policy recommendations to address R&D-related challenges resulting from COVID-19. Congress may also seek to take additional actions through legislation or oversight. The Commercial Spaceflight Federation, an industry group, has asked Congress for legislation directing the Internal Revenue Service to provide for immediate refunds of accumulated research and experimentation (R&E) tax credits. It argues that this would allow "continued innovation through R&D reinvestment." In many cases, under current law, companies that qualify for this credit are unable to use the full amount immediately because of insufficient tax liability or other factors; unused amounts can be carried forward for up to 20 years. The credit only applies to R&D funded by a company itself, but companies that conduct R&D with federal funding often fund their own R&D as well. Organizations representing research universities, medical schools, and teaching hospitals have asked Congress, among other steps, to give research institutions receiving federal funding additional flexibility to cover researcher salaries and benefits while their institutions are affected, to provide $13 billion in additional extramural research funding, and to allow agencies to reprogram any supplemental funds that are not spent within a year for new awards. The latter proposal, they argued, "could have a stimulative effect and help to address the nation's research competitiveness." Noting that "many scientific societies have been and will continue to be adversely impacted by meeting and conference cancellations as a result of COVID-19," the Federation of American Societies for Experimental Biology has asked Congress to include measures such as zero-interest loans and grant to associations, nonprofit organizations, and other tax-exempt organizations in future economic stimulus packages and supplemental appropriations measures. While OMB has issued guidance to agencies regarding administrative flexibilities and other issues, as described above, agency implementation of that guidance has varied. Representatives of the Association of American Universities have indicated that more uniform implementation by federal research funding agencies would reduce administrative burdens and uncertainties for award recipients. Congress may consider a variety of other legislative and oversight actions, either in the near term while the pandemic continues or retrospectively to improve the response to future crises. These might include seeking a clearer understanding of how federally funded R&D is being affected by COVID-19, through hearings, mandates for agency reports, support for academic studies, or mandates for reports by organizations such as the Government Accountability Office or the National Academies of Sciences, Engineering, and Medicine; directing OMB, the Office of Science and Technology Policy, or an interagency task force to develop more uniform guidance on how to identify essential or critical R&D activities, with recommendations for implementing that guidance at government laboratories, universities, companies, and other institutions involved in intramural and extramural federally funded R&D; and establishing a post-pandemic task force on the federal R&D enterprise to examine lessons learned from the COVID-19 pandemic and recommend policy changes to improve the national response of the R&D community in the event of future pandemics. <5. Concluding Observations> Over time, the near-term and long-term effects of COVID-19 on the nation's R&D enterprise will become more apparent. Congress may monitor these effects and develop a deeper understanding of their implications for the wide-ranging national policy objectives that motivate federal spending on R&D such as national security, economic growth and job creation, public health, transportation, and agriculture as well as the implications for the U.S. science and engineering workforce and the education of the next generation of American scientists, engineers, and technicians. The effects of COVID-19 on federally funded R&D, as described in this report, may adversely affect the pace of R&D generally and the pace of the innovation that builds on it. The national and global economic consequences may have implications for economic growth, the workforce, the development of new products and services, and the competitiveness of companies and nations. The extent of these effects cannot yet be known and may not be fully understood for years. An optimist might hope for a silver lining. If the R&D community learns to overcome some of the challenges of remote working and travel restrictions, that might create future opportunities, after the COVID-19 pandemic is over, for increased workplace flexibilities and reduced travel expenses. The pandemic has also highlighted issues that Congress may seek to address in the future, such as additional R&D on cybersecurity for virtual collaboration and rural access to broadband internet for off-site work during emergencies. <5.1. Appendix. Government-wide COVID-19 Related Guidance and Other Resources> Office of Management and Budget Memoranda OMB has issued a number of memoranda related to the COVID-19 response. These memoranda are written broadly, not focused solely on federal R&D activities. Nevertheless, elements included in these memoranda have relevant information regarding the operation of the federal R&D enterprise. The memoranda are downloadable from the OMB website. As of the date of this report, COVID-19-related memoranda include M-20-19 Harnessing Technology to Support Mission Continuity (March 22, 2020) Directs agencies to utilize technology to the greatest extent practicable to support mission continuity. The memorandum addresses a set of frequently asked questions to provide additional guidance and assist the IT workforce as it addresses impacts of COVID-19. https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-19.pdf M-20-18 Managing Federal Contract Performance Issues Associated with the Novel Coronavirus (COVID-19) (March 20, 2020) Identifies certain agency actions to relieve short-term administrative, financial management, and audit requirements under 2 C.F.R. 200, Uniform Administrative Requirements, Cost P rinciples and Audit Requirements for Federal Awards , without compromising federal financial assistance accountability requirements. These include (1) flexibility with System for Award Management (SAM) registration/recertification for applicants, (2) waiver for Notice of Funding Opportunities (NOFOs) publication, (3) pre-award costs, (4) no-cost extensions on expiring awards, (5) abbreviated noncompetitive continuation requests, (6) expenditure of award funds for salaries and other project activities, (7) waivers from prior approval requirements, (8) exemption of certain procurement requirements, (9) extension of financial and other reporting, and (10) extension of Single Audit submission. In accordance with 2 CFR 200.102, "Exceptions," OMB is allowing federal agencies to grant class exceptions in instances where the agency has determined that the purpose of the federal awards is to support the continued research and services necessary to carry out the emergency response related to COVID-19. The memorandum also reminds agencies of existing flexibility to issue exceptions on a case-by-case basis in accordance with 2 CFR 200.102, "Exceptions." https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-18.pdf M-20-17 Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) Due to Loss of Operations (March 19, 2020) Identifies steps to help ensure safety while maintaining continued contract performance in support of agency missions, wherever possible and consistent with the precautions issued by the Centers for Disease Control and Prevention (CDC). Agencies are urged to work with their contractors, if they have not already, to evaluate and maximize telework for contractor employees, wherever possible; be flexible in providing extensions to performance dates if telework or other flexible work solutions, such as virtual work environments, are not possible, or if a contractor is unable to perform in a timely manner due to quarantining, social distancing, or other COVID-19 related interruptions; take into consideration whether it is beneficial to keep skilled professionals or key personnel in a mobile-ready state for activities the agency deems critical to national security or other high priorities; consider whether contracts that possess capabilities for addressing impending requirements such as security, logistics, or other functions may be retooled for pandemic response consistent with the scope of the contract; and leverage the special emergency procurement authorities authorized in connection with the President's emergency declaration under Section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5207 (the Stafford Act). The memorandum also provides answers to a set of frequently asked questions intended to assist the acquisition workforce as it addresses impacts due to COVID-19. https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-17.pdf M-20-16 Federal Agency Operational Alignment to Slow the Spread of Coronavirus COVID-19 (March 17, 2020) Provided agencies with initial guidance, consistent with the President's Coronavirus Guidelines for America, directing agencies to take appropriate steps to prioritize all resources to slow the transmission of COVID-19, while ensuring mission-critical activities continue. The memorandum further required all agencies, within 48 hours, to review, modify, and begin implementing risk-based policies and procedures based on CDC guidance and legal advice, as necessary to safeguard the health and safety of federal workplaces to restrict the transmission of COVID-19. https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-16.pdf M-20-15 Updated Guidance for the National Capital Region on Telework Flexibilities in Response to Coronavirus (March 15, 2020) Directs agencies to offer maximum telework flexibilities to all current telework-eligible employees, consistent with operational needs of the departments and agencies as determined by their heads, as well as to use all existing authorities to offer telework to additional employees, to the extent their work could be telework enabled. https://www.whitehouse.gov/wp-content/uploads/2020/03/M20-15-Telework-Guidance-OMB.pdf M-20-14 Updated Federal Travel Guidance in Response to Coronavirus (March 14, 2020) Advises that "only mission-critical travel is recommended at this time." The memorandum also authorizes executive branch agency heads to determine what travel meets the mission-critical threshold and provides a list of factors to be considered in this determination. https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-14-travel-guidance-OMB-1.pdf M-20-13 Updated Guidance on Telework Flexibilities in Response to Coronavirus (March 12, 2020) Encourages agencies to maximize telework flexibilities (1) to eligible workers within those populations that the CDC identified as being at higher risk for serious complications from COVID-19 (e.g., older adults and individuals who have chronic health conditions, such as high blood pressure, heart disease, diabetes, lung disease, compromised immune systems); and (2) to CDC-identified special populations including pregnant women. Further directs that agencies do not need to require certification by a medical professional, and may accept self-identification by employees in one of these populations. The memorandum also encourages agencies to consult with local public health officials and the CDC about whether to extend telework flexibilities more broadly to all eligible teleworkers in areas in which either such local officials or the CDC have determined there is community spread. Agencies are also encouraged to extend telework flexibilities more broadly to accommodate state and local responses to the outbreak, including, but not limited to, school closures. Agencies are encouraged to consider the mission-critical nature of employees' work in determining telework and leave decisions. https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-13.pdf M-20-11 Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) (March 9, 2020) Identifies and authorizes agency actions to relieve short-term administrative, financial management and audit requirements under 2 C.F.R. 200, Uniform Administrative Requirements, Cost P rinciples and Audit Requirements for Federal Awards , without compromising federal financial assistance accountability requirements. Notes that OMB is allowing federal agencies to grant class exceptions in instances where the agency has determined that the purpose of the federal awards is to support the continued research and services necessary to carry out the emergency response related to COVID-19. The memorandum also notes agencies' existing flexibility to issue exceptions on a case-by-case basis in accordance with 2 C.F.R. 200.102, "Exceptions." https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-11.pdf Compilation of Other Resources The Council on Governmental Relations maintains an online compilation of guidance from federal agencies, academic institutions, and other organizations, as well as responses to frequently asked questions about how federal agencies that fund R&D are implementing the OMB-directed flexibilities. See "Institutional and Agency Responses to COVID-19 and Additional Resources," https://www.cogr.edu/institutional-and-agency-responses-covid-19-and-additional-resources .

The federal research and development (R&D) enterprise is a large and complex system that includes government facilities and employees as well as federally funded work in industry, academia, and the nonprofit sector. The nation's response to the Coronavirus Disease 2019 (COVID-19) pandemic is affecting the federal R&D enterprise, and the federal government and others are trying to address those effects. A number of congressional and other policy issues may arise as the situation develops. Implementation of social distancing guidelines had led many laboratories and R&D projects to close. Where possible, researchers have continued to work remotely, but R&D often requires physical access to unique facilities and equipment. Institutions have faced decisions about which projects—such as research on COVID-19 itself—are sufficiently essential that they should continue. Many scientific and technical conferences have also been cancelled, with consequences for the sharing and advancement of knowledge and for the conference organizers, which are now often faced with substantial cancellation costs. In some cases, conferences are continuing virtually. Even for continuing R&D projects, there may be efficiency and quality impacts, additional costs, and challenges such as the closure of suppliers and service providers. Some resources dedicated to ongoing R&D are also being redirected toward work focused on COVID-19. Other potential effects of the pandemic include unplanned costs for the shutdown and restarting of R&D projects that are suspended, delays in the availability of major new R&D equipment, the loss of anticipated revenues by some federal R&D agencies, uncertainty about the future stability of federal R&D funding if COVID-19 affects the government's fiscal situation, and impacts on the graduation schedules and career prospects of students, postdoctoral researchers, and early-career faculty whose research is interrupted. Federal actions to date to address these challenges include a wide variety of government-wide and agency-specific policy changes to accommodate the R&D community's needs and provide agencies with additional flexibilities, as well as legislation enacted by Congress to provide supplemental funding for R&D and for R&D organizations affected by closures, and to provide new authorities to agencies. Groups representing R&D organizations in industry and academia have proposed a variety of additional steps, including further increases in funding for the federal R&D agencies, more flexibility in the expenses that can be paid using federal R&D awards, and other support for R&D organizations in the form of loans, grants, and tax changes. As the near-term and long-term effects of COVID-19 on the nation's R&D enterprise become more apparent, Congress may seek to monitor those effects, develop a deeper understanding of their implications, and consider whether additional legislative actions are necessary.

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<1. Introduction> The Department of Veterans Affairs (VA) provides a range of benefits and services to veterans who meet certain eligibility criteria. These benefits and services include, among other things, hospital and medical care; disability compensation and pensions; education; vocational rehabilitation and employment services; assistance to homeless veterans; home loan guarantees; administration of life insurance, as well as traumatic injury protection insurance for servicemembers; and death benefits that cover burial expenses. The department carries out its programs nationwide through three administrations and the Board of Veterans' Appeals (BVA). The Veterans Health Administration (VHA) is responsible for health care services and medical and prosthetic research programs. The Veterans Benefits Administration (VBA) is responsible for, among other things, providing disability compensation, pensions, and education assistance. The National Cemetery Administration (NCA) is responsible for maintaining national veterans cemeteries; providing grants to states for establishing, expanding, or improving state veterans cemeteries; and providing headstones and markers for the graves of eligible persons, among other things. In addition to providing health care services to veterans and certain eligible dependents, the VHA must, by statute, serve as a contingency backup to the Department of Defense (DOD) medical system during a national security emergency and provide support to the National Disaster Medical System and the Department of Health and Human Services (HHS) as necessary in response to national crises. The department must also take appropriate actions to ensure VA medical centers are prepared to protect veteran patients and staff during a public health emergency. <2. Novel Coronavirus (COVID-19)13> On December 31, 2019, the World Health Organization (WHO) learned of a cluster of pneumonia cases in Wuhan City, Hubei Province of China. The WHO has since linked these illnesses to a disease, called Coronavirus Disease 2019 or COVID-19, caused by a previously unidentified strain of coronavirus, designated SARS-CoV-2. On January 30, 2020, an Emergency Committee convened by the WHO Director-General declared the COVID-19 outbreak to be a Public Health Emergency of International Concern (PHEIC). On January 31, the Secretary of Health and Human Services declared a public health emergency under Section 319 of the Public Health Service Act (42 U.S.C. 247d). On March 11, 2020, the WHO characterized the COVID-19 outbreak as a pandemic. Two days later, on March 13, the President declared the COVID-19 outbreak a national emergency, beginning March 1, 2020. The VHA plays a significant role in the domestic response to a pandemic. The VHA is one of the largest integrated direct health care delivery systems in the nation, caring for more than 7.1 million patients in FY2020 and providing 123.8 million outpatient visits at approximately 1,450 VA sites of care. The VHA employs a workforce of 337,908 full-time equivalent employees (FTEs), largely composed of health care professionals. In addition, the VHA has a statutory mission to contribute to the overall federal emergency response capabilities. <3. Scope and Limitations of This Report> This report provides an overview of VA's and Congress's response thus far to the rapidly evolving COVID-19 pandemic. The report does not provide an exhaustive description of all of the department's activities, and it is based on publicly available information and daily updates provided from the VA. The report is organized as follows: first, it provides details on VHA's, VBA's, and NCA's response activities; second, it provides details on VA's emergency preparedness ("Fourth Mission") activities to provide support to the overall federal emergency response; and third, it describes congressional activity related to VA and veterans programs and services. The COVID-19 pandemic is a rapidly evolving situation and information changes on a daily, or often hourly, basis. The Appendix provides a summary of VHA's emergency authorities. <4. Medical Care for Veterans During the COVID-19 Outbreak> VHA's provision of medical care to veterans in response to the COVID-19 outbreak includes implementing mitigation strategies at VHA sites of care, as well as testing and treating veterans diagnosed with or suspected of having COVID-19. (A general description of medical care to veterans is provided in other CRS reports. ) In late February 2020, the VA provided information to congressional oversight committees on the number of positive and presumptive positive cases of COVID-19. On March 13, 2020, the department began publishing this information publicly on its website, which it updates on a regular basis. The VA has been providing regular updates to congressional oversight committees since that time. The VA has published two public documents that provide valuable information to patients and the public regarding the response to COVID-19: (1) a COVID-19 response plan that provides operational details for both medical care for veterans, as well as other VHA missions, and (2) Coronavirus Frequently Asked Questions (FAQ) for patients. The VA COVID-19 response plan is summarized in more detail in the " Emergency Preparedness ("Fourth Mission") " section of this report. This section describes current health system capacity (including staffing changes), guidance for patients, mitigation at VHA sites of care (including limitations to community care), and testing and treatment for COVID-19. <4.1. Health System Capacity> This subsection reflects point-in-time information provided by the VA to reflect the current capacity of the system. As of April 14, 2020, veterans and VHA employees at sites of care spanning the United States have been diagnosed with COVID-19. The vast majority of COVID-19-positive veterans are being treated in outpatient settings, with a minority in VA inpatient intensive care unit (ICU) and acute care settings. The COVID-19 pandemic is a rapidly evolving situation and information changes on a daily, or often hourly, basis. In response to the pandemic, the VA increased the number of ICU and acute care beds that are typically available. As of April 29, 2020, bed capacity across the health system is 12,215, with far less than half occupied. No regional or local level occupancy data have been reported. The VA started deploying Vet Centers, which provide a range of counseling services, in locations facing large COVID-19 outbreaks. The VA is reporting that the health system has adequate levels of personal protective equipment (PPE), including N95 respirators. Earlier media reports, citing internal VA memoranda, stated that the VA has a shortage of PPE and hospitals are being directed to decide which employees get certain supplies. The media reports suggested that only employees that work directly with COVID-19 patients are to be provided N95 respirators. An April 16, 2020, memorandum to Veterans Integrated Service Networks (VISN) directors from the VA Deputy Under Secretary for Health for Operations and Management confirmed that the VA received a significant number of N95 respirators and is working to secure additional facemasks and surgical masks. The memo specified that facilities have enough masks and respirators to follow CDC-based contingency strategies for supply management. The memo provides system-wide guidance for staff use of respirators and masks. Staff providing direct care should use N95 respirators. If N95 respirators are in short supply, staff are directed to use surgical masks for low-risk care on suspected or confirmed COVID-19 patients. Staff providing care for patients in specified institutional settings will be provided with one facemask or surgical mask per day. It goes on to provide guidance to VISN directors on how to support medical facility directors in implementing contingency and crisis strategies based on the referenced CDC guidelines. Medical facility directors have authority to determine allocation and crisis standards of care, in the event that resources become scarce. The VA is allocating equipment within VISNs, as needed, and it has increased pharmaceutical inventories from 8 days to 10 days and is utilizing certain medications needed for hospitalized COVID-19 patients as national system-wide resources. As described below, the VA has taken a number of actions to ensure that there is adequate staffing and that safeguards are in place to protect frontline employees. These actions are described in the next section. <4.1.1. Employment Actions Related to the Pandemic Response> Actions related to employment can be separated into two categories: (1) actions to increase the capacity of the health system during the pandemic response and (2) actions to protect current employees from contracting the COVID-19 virus. <4.1.1.1. Employment Actions to Increase Health System Capacity> The VA submitted a request to the Office of Personnel Management (OPM) and received approval to waive a requirement that retiree' salaries be reduced when rehired to reflect the retirement annuity they already receive, otherwise known as a dual compensation reduction waiver. The VA is asking retired clinicians to register online to join the workforce and to act as surge capacity if needed. The registration form adds the reemployed retirees to VHA's national provider database and matches them to opportunities based on their specialties. The VA has indicated that it is exploring the use of existing hiring authorities to make 30-day appointments where a critical need exists, one-year appointments in remote/isolated areas, and temporary not-to-exceed 120-day appointments. VA on-boarded 3,107 new hires in the period between April 22 and April 28, 2020. In addition, activation of the Disaster Emergency Medical Personnel System (DEMPS) allows the VA to deploy personnel from areas that are less impacted by COVID-19 to reinforce staff levels at other facilities as needed (e.g., facilities in New York City and New Orleans). Under DEMPS, movement of personnel must be approved by the VISN and the originating medical center's director. <4.1.1.2. Employment Actions to Protect Employees> A number of VHA employees have been diagnosed with COVID-19 or are being monitored for COVID-19. As of April 29, 2020, over 2,200 employees have been diagnosed with COVID-19 and 20 employees have died from the disease. The VA has taken specific actions to protect employees, which, in turn, increases health system capacity by reducing the need for front-line employees to take leave during the pandemic. The VA is following CDC precautions to reduce the likelihood of transmission of COVID-19 among employees. According to the VA, staff have been given guidance to remain home if symptoms develop, to obtain health checks for symptoms associated with COVID-19 while at work, and to report symptoms through the correct process. Employees are also being encouraged to develop personal and family disaster plans that enable them to continue working. Employees are encouraged to telework, if their work can be accomplished remotely. Sites of care are encouraged to use alternative treatment methods wherever possible, such as telemedicine and telehealth. To prevent the spread of infection, the VA has dedicated specific treatment areas for COVID-19 patients. This and other mitigation efforts at VHA sites of care are discussed below. <4.2. Mitigation at VHA Sites of Care> The VHA operates care settings with varying levels of patient risk for developing severe symptoms if COVID-19 is contracted. Each VA medical center is implementing a two-tiered system to mitigate the potential for spread of the virus, with one zone for active COVID-19 cases and a passive zone for care unrelated to COVID-19. The VA has canceled all elective surgeries and limited routine appointments to only those with the most critical need. This section describes mitigation efforts at community living centers (CLCs; nursing homes) and spinal cord injury/disorder (SCI/D) centers, which are high-risk settings, separate from other care settings. The VA has implemented different screening processes and other pandemic responses depending on the care setting. On March 26, 2020, the VA Office of Inspector General (OIG) published the results of inspections of VA facilities for implementing the enhanced screening processes and pandemic readiness, which took place between March 19 and March 24. The findings of those inspections for each care setting appear in the appropriate sections below. <4.2.1. CLCs and SCI/Ds> On March 10, 2020, the VA announced safeguards to protect nursing home residents and spinal cord injury patients. As of that date, no visitors are allowed at either VA nursing homes or spinal cord injury/disorder centers. The only exception to this policy is if a veteran is in the last stages of life, in which case the VA allows visitors in the veteran's room only. The VA is not accepting any new admissions to nursing homes and is limiting new admissions to SCI/D centers. The OIG tested the no-access policy at 54 CLCs and found the majority to be in compliance with the policy. Nine of the 54 CLCs tested were prepared to allow OIG staff to enter, despite the no-access policy. <4.2.2. Enhanced Screening at All Sites of Care> The VA implemented enhanced screening procedures at all sites of care to screen for respiratory illness and COVID-19 exposure. Because each facility determines its own enhanced screening procedures, those procedures vary at the local level. However, the VA has designed standardized screening questions for each facility. Screening consists of the following three general questions: Do you have a fever or worsening cough or shortness of breath or flu-like symptoms? Have you or a close contact traveled to an area with widespread or sustained community transmission of COVID-19 within 14 days of symptom onset? Have you been in close contact with someone, including health care workers, confirmed to have COVID-19? The VA's COVID-19 response plan provided specific potential questions that sites of care can implement in different care settings. Those screening questions also include screening scenarios for virtual triage via phone, telehealth, or secure messaging. If screened individuals are determined to be at risk, staff are instructed to isolate them immediately. If critically ill, individuals are transferred to the emergency department. If stable, individuals are sent home with printed instructions to isolate and contact their primary care providers. The OIG evaluated screening procedures at 58 medical centers and 125 community-based outpatient clinics (CBOC). The OIG found that 41 of 58 (71%) of medical centers' screening processes were generally adequate, 16 (28%) had some opportunities for improvement, and one medical center had inadequate screening procedures. The OIG found that the vast majority of CBOCs (97%) had screening processes in place. Four CBOCs had no screening process in place. <4.2.3. Limitations on Community Care> The VA instituted several changes to community care guidance during the COVID-19 pandemic response on community care access under the Veterans Community Care Program (VCCP). Under normal circumstances, veterans generally are eligible for access to medical care from non-VA community providers if they meet certain criteria, including wait time and drive time access standards and if the veteran elects to receive community care. The eligibility criteria are mandated by law, and the VA has no authority to waive them. However, as many non-VA providers are postponing or canceling routine care to mitigate the spread of COVID-19, wait times may be just as long or longer in the community. In addition, the VA indicated that community providers should not have veterans attend routine appointments in-person except where the urgency of in-person treatment outweighs the risk of contracting COVID-19. VA issued the following guidance to providers: convert routine in-person appointments to telehealth; follow CMS, CDC, state, and local guidance regarding screening, testing, case reporting, and PPE; plan for increased high acuity demand; communicate with local VA medical center regarding any veteran cases or exposure to COVID-19; episodes of care ordered through the VA can be extended by 60 days; and work with the third-party administrators of the community care network (CCN) to expand enrollment where possible. <4.3. Guidance for Patients> The VA is promoting the Coronavirus FAQ document as the main source of guidance for veterans. This document includes answers to broad questions about COVID-19, VA's role, testing, access to care, mental health, and visiting patients. A fact sheet with similar information is also available to patients. The VA is advising veterans who may be sick or who are exhibiting flu-like symptoms not to come to a VA facility. Instead, patients are asked to send a secure message through the VHA online portal, My HealtheVet, or to schedule a telehealth appointment. The VA is experiencing high call volumes at some facilities and call centers, so it is advising veterans to use online tools first. However, patients can call their health care providers instead of using the online tools available from the VA. In addition, the VA is advising patients to budget additional time for appointments due to enhanced screening measures at VA facilities. These enhanced screening measures, as well as other mitigation strategies at VHA facilities, are described below. <4.4. COVID-19 Testing and Treatment65> This section describes the current VA policy on testing patients for COVID-19 and treatment following a COVID-19 diagnosis. <4.4.1. COVID-19 Diagnostic Testing> On March 13, 2020, the department began publishing the number of positive cases of COVID-19, and the number of tests conducted, on its public website, which it updates on a regular basis. Individual medical centers have discretion on where to send samples for testing. Samples can be tested at the Palo Alto VA Medical Center, state public health labs, or private labs. Individual providers decide whether to test for COVID-19 on a patient-by-patient basis. However, the VA has advised providers that to be tested, patients must be exhibiting respiratory symptoms and have another factor, such as recent travel or known exposure to someone who tested positive. Generally, diagnostic testing is a covered service under VA's standard medical benefits package, which is available to all veterans enrolled in the VA health care system. Some veterans are required to pay copayments for care that is not related to a service-connected disability. However, routine lab tests are exempt from copayment requirements. The Families First Coronavirus Response Act ( P.L. 116-127 ), enacted on March 18, 2020, does not allow the VA to charge any copayment or other cost-sharing payments for COVID-19 testing or medical visits during any period of this public health emergency. (For a discussion of P.L. 116-127 , see the " Congressional Response " section of this report.) <4.4.2. COVID-19 Treatment> The VA has not indicated whether it has developed a specific treatment plan for patients diagnosed with COVID-19. Treatment depends largely on the severity of symptoms that each patient experiences. The VA is handling coverage and cost of treatment for COVID-19 as it would for any other treatment for a condition that is not service-connected. Treatment for COVID-19 is a covered benefit under the VA standard medical benefits package. However, some veterans may have to pay copayments for both outpatient and inpatient care. Normal coverage rules apply for veterans who report to urgent care or walk-in clinics. To be eligible, a veteran must be enrolled in the VA health care system and must have received VA care in the past 24 months preceding the episode of urgent or walk-in care. Eligible veterans needing urgent care must obtain care through facilities that are part of VA's contracted network of community providers. These facilities typically post information indicating that they are part of VA's contracted network. If an eligible veteran receives urgent care from a noncontracted provider or receives services that are not covered under the urgent care benefit, the veteran may be required to pay the full cost of such care. Certain veterans are required to pay copayments for care obtained at a VA-contracted urgent care facility or walk-in retail health clinic. In addition, normal rules apply for veterans who report to non-VA emergency departments. To be eligible for VA payment or reimbursement, a veteran's non-VA care must meet the following criteria: The emergency care or services were provided in a hospital emergency department or a similar facility that provides emergency care to the public. The claim for payment or reimbursement for the initial evaluation and treatment was for a condition of such a nature that a prudent layperson would have reasonably expected that delay in seeking immediate medical attention would have been hazardous to life or health. A VA or other federal facility or provider was not feasibly available, and an attempt to use them beforehand would not have been considered reasonable by a prudent layperson. At the time the emergency care or services were furnished, the veteran was enrolled in the VA health care system and had received medical services from the VHA within the 24-month period preceding the furnishing of such emergency treatment. The veteran was financially liable to the provider of emergency treatment for that treatment. The veteran had no coverage under a health plan contract that would fully cancel the medical liability for the emergency treatment. If the condition for which the emergency treatment was furnished was caused by an accident or work-related injury, the veteran is required to first pursue all claims against a third party for payment of such treatment. <4.4.2.1. Potential Vaccine Cost-sharing> In the event that a vaccine is approved by FDA and brought to market, it is unclear whether certain veterans would be charged copayments for administration of the vaccine. Under current regulations, the VA is prohibited from charging copayments for "an outpatient visit solely consisting of preventive screening and immunizations (e.g., influenza immunization, pneumococcal immunization)." <5. Homelessness and Housing> Veterans experiencing homelessness live in conditions that could make them particularly vulnerable to COVID-19. Those who are unsheltered lack access to sanitary facilities. For those sleeping in emergency shelters, conditions may be crowded, with short distances between beds, and there may be limited facilities for washing and keeping clean. The VA administers programs to assist veterans experiencing homelessness and also manages several grant programs for nonprofit and public entities to provide housing and services to homeless veterans. These include the Homeless Providers Grant and Per Diem program (GPD), for transitional housing and services; the Supportive Services for Veteran Families program (SSVF), for short- to medium-term rental assistance and services; and Contract Residential Services (CRS), for providing housing for veterans participating in VA's Health Care for Homeless Veterans program. In addition, the Department of Housing and Urban Development (HUD), together with VA, administers the HUD-VA Supportive Housing program (HUD-VASH), through which veterans who are homeless may receive Section 8 vouchers to cover the costs of permanent housing and VA provides case management services. <5.1. VA General Guidance for Homeless Program Grantees> The VA released guidance on March 13, 2020, for its grantees that administer programs for veterans who are homeless. The guidance suggests grantees take a number of actions: Develop a response plan, or review an existing plan, and coordinate response planning with local entities, including health departments, local VA medical providers, and Continuums of Care. Plans should address staff health, potential staff shortages, and acquisition of food and other supplies, as well as how to assist veteran clients. Prevent infection through methods recommended by the CDC, such as frequent handwashing, wiping down surfaces, and informing clients about prevention techniques. In congregate living facilities, such as those provided through VA's Grant and Per Diem program, keep beds at least three feet apart (preferably six, if space permits), sleep head-to-toe, or place barriers between beds, if possible. Develop questions to ask clients about their health to determine their needs and how best to serve them. For new clients, interviews should occur prior to entry into a facility (such as over the phone), if possible, or in a place separate from other clients. If a client's answers to questions indicate risk of COVID-19, separate them from other program participants (have an isolation area, if possible), clean surfaces, and reach out to medical professionals. If isolation is not practical, reach out to other providers who might be able to isolate. <5.2. Supportive Services for Veteran Families (SSVF)> The VA has released additional specific guidance and flexibilities for SSVF providers. SSVF regulations allow funds to be used for emergency housing, including hotels and motels; however, this use of funds may occur only when no other housing options, such as transitional housing through GPD, are available. In response to COVID-19, however, grantees may use funds for high-risk veterans to live in hotels and motels instead of congregate settings. Due to Public Housing Authority (PHA) closures and remote work, veterans who have HUD-VASH vouchers, but who have not yet moved into a housing unit, may face delays in receiving rental assistance. This delay may occur if a PHA cannot conduct a housing quality standards (HQS) inspection or complete other administrative tasks that allow move-in to occur. In these cases, SSVF grantees may use funds to cover rental assistance until a PHA has completed the tasks allowing the voucher to be used. <5.3. HUD-VA Supportive Housing program (HUD-VASH)> For veterans residing in rental housing using HUD-VASH vouchers, HUD has waived certain requirements pursuant to CARES Act ( P.L. 116-136 ) waiver authority to address situations that may arise due to COVID-19. For example, ordinarily HUD will not approve a unit for Section 8 rental assistance (which includes HUD-VASH vouchers) unless it has passed an HQS inspection. However, HUD has waived this requirement and will accept an owner certification that there is "no reasonable basis to have knowledge that life threatening conditions exist in the unit." PHAs must conduct inspections of units as soon as reasonably possible, and no later than October 31, 2020. PHAs may also accept alternative inspection results rather than HQS inspections and allow families to move into units in these cases. For existing tenants, PHAs may change from an annual unit inspection schedule to a biennial schedule without updating their administrative plan. If resident income changes due to an inability to work, or other reason, residents should report the change to their local PHA and rent should be adjusted accordingly. HUD has waived the requirement that PHAs obtain third-party verification of an income change for these income recertifications. In addition, as part of the CARES Act ( P.L. 116-136 ), residents receiving Section 8 rental assistance cannot be evicted for nonpayment of rent for 120 days from the date of the bill's enactment (March 27, 2020). <5.4. VA Loan Programs> The VA administers both guaranteed and direct loans for veterans through the Veterans Benefits Administration. Prior to enactment of the CARES Act, VA encouraged lenders to establish a foreclosure moratorium for borrowers with VA loans, but a moratorium was not required. However, the CARES Act provides for both forbearance (i.e., allowing borrowers to reduce or suspend mortgage payments) and a foreclosure moratorium for federally backed single-family mortgages, including guaranteed VA loans. Direct VA loans do not appear to be included in the CARES Act definition of federally backed mortgage. Borrowers may request forbearance from their loan servicer for up to 180 days, with another 180-day extension, due to financial hardship caused directly or indirectly by COVID-19. The foreclosure moratorium is in effect for 60 days beginning March 18, 2020. For more information about these provisions, see CRS Insight IN11334, Mortgage Provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act . <6. Veterans Benefits Administration> The Veterans Benefits Administration has taken several actions to assure continued delivery of disability compensation, pensions, and education assistance. <6.1. Compensation and Pension Benefits> On March 18, 2020, the Veterans Benefits Administration announced via Facebook and Twitter that all regional offices would be closed to the public starting March 19. The regional offices are to remain open to ensure the continuity of benefits, however, the offices are longer accepting walk-ins for claims assistance, scheduled appointments, counseling, or other in-person services. The VBA is directing veterans who have claims-specific questions or any other questions to use the Inquiry Routing & Information System (IRIS) or to call 1-800-827-1000. In a March 26 interview, VA Under Secretary for Benefits, Dr. Paul Lawrence, assured veterans and their families that benefits were still being processed thanks in part to the large telework capability in place for the VBA. Lawrence stated that about 90% of all VBA employees, approximately 22,500 individuals, are set up and teleworking to retain the continuity of processing claims. Dr. Lawrence also addressed the issue of veterans who need a compensation and pension exam completed as part of their benefits application. Due to travel restrictions and social distancing policies, Lawrence explained VBA's attempt at still providing the exams but without in-person contact. He stated: So we're trying to do more, a lot more through telehealth, You know phone call or a Skype session or something. We can get these exams done that we're flexing in new ways. Where once things were done in person now they're being done electronically. Following Dr. Lawrence's interview, on March 31, the VA issued a press release announcing changes to several in-person meetings and programs to ensure the safety of both the staff and veteran/dependent during this time. Some of these changes included providing educational counseling through online and telephone services; using teleconferencing and VA Video Connect for case management, general counseling and connecting veterans to VR&E services; conducting informal conference hearings by telephone or video conferencing; providing virtual briefings and individualized counseling for transitioning servicemembers; and conducting examinations for disability benefits using tele-compensation and pension (Tele-C&P) exams. If an in-person examination is required, veterans will be notified for scheduling. However, on April 6, the VBA announced via email that it is "suspending in-person C&P examinations until further notice and will continue to conduct C&P exams through ACE and Tele-C&P, when possible." The email also provided guidance on filing claims and information to assist veterans with submitting medical documentation without appearing in person. On April 3, the VA announced that claimants who need an extension in filing their paperwork "can simply submit [the request] with any late-filed paperwork and veterans do not have to proactively request an extension in advance." <6.2. Educational Assistance> In FY2020, over 900,000 individuals are expected to receive veterans educational assistance from the GI Bills (e.g., the Post-9/11 GI Bill), Vocational Rehabilitation & Employment (VR&E), Veteran Employment Through Technology Education Courses (VET TEC), Veterans Work-Study, Veterans Counseling, and VetSuccess on Campus (VSOC). As a result of COVID-19, some participants' training and education may be disrupted, and some participants may receive a lower level of benefits, or none at all. These concerns may directly affect beneficiaries in several ways, including the following: Some students may be required to stop out, discontinue working, or take a leave of absence as a result of their own illness. Some training establishments, educational institutions, and work-study providers may close temporarily or permanently. Some training establishments, educational institutions, and work-study providers may be required to reduce participants' hours, enrollment rate, or rate of pursuit. Some educational institutions may transition some courses to a distance learning format. Some educational institutions may require students living on campus to move off campus. Individuals receiving benefits in foreign countries may encounter any of the above circumstances while residing in a foreign country whose COVID-19 situation may differ from that in the United States, or may stop out, discontinue working, or take a leave of absence and return to the United States. Since mid-March, the VA has sent direct emails to GI Bill participants and school certifying officials (SCOs) and held webinars for SCOs to explain its authority and payment processing procedures that are directly relevant to COVID-19 disruptions. On March 13, 2020, the VBA Education Service requested that school-certifying officials "temporarily refrain from making any adjustments to enrollment certifications" if resident courses transitioned to distance education pending subsequent VA guidance and/or legislative action. The VBA Education Service administers VA educational assistance programs. Prior to the COVID-19 emergency, educational institutions were required to receive approval before transitioning any courses to a distance learning format for the courses to remain GI Bill-eligible. GI Bill benefits could not be paid for the pursuit of online courses that had not been previously approved as online courses. This limitation was alleviated by recently enacted legislation (for a discussion of P.L. 116-128 , see the " Congressional Response " section of this report). In addition, on April 3, 2020, the VA announced that it was suspending for sixty days the collection of institutions' and veterans' debt, including for debts under the jurisdiction of the Department of the Treasury. Individuals with an existing repayment plan must request a suspension if they are unable to make payments. In 2019, the VA indicated that approximately 25% of GI Bill participants must resolve an overpayment-related debt at some point. The VBA Education Service has announced that it is moving away from paper correspondence, including faxes. In an effort to accomplish this transition, VBA has requested that GI Bill participants provide or update their email addresses. On-the-job training (OJT) and apprenticeship training establishments must submit certifications electronically. <7. National Cemetery Administration> The National Cemetery Administration has provided information for the survivors and dependents of veterans who have passed away and are scheduled to be buried in a National Cemetery during this national emergency. Effective March 23, 2020, the NCA announced that all "committal services and the rendering of military funeral honors, whether by military personnel or volunteer organizations, will be discontinued until further notice at VA national cemeteries." VA National Cemeteries will remain open to visitors and for interments, but visitors should follow their local communities' restrictions on visitations and travel. In addition, visitors should be prepared for certain areas of the cemetery typically open to the public to be closed. These areas include public information centers, visitor centers, and chapels. For direct interments, the NCA is limiting attendance to immediate family of deceased family members, up to 10 individuals. In addition, the NCA is to work with families to schedule a committal or memorial service at a later date. On Friday, March 27, the NCA informed funeral directors of a change in the floral arrangement policy, stating that national cemeteries will no longer accept floral arrangements with direct interments. If families want to place a floral arrangement at the gravesite, they may do so after 4:30 pm on the day of interment or any time after. In addition, the NCA limited floral arrangements to two per gravesite. The NCA announced that the National Cemetery Scheduling Office in St. Louis will continue to provide scheduling services. The NCA has set up an "Alerts" web page for the public to check cemetery operating status and is directing the public to its Facebook and Twitter pages for the most recent operating information. <8. Emergency Preparedness ("Fourth Mission")> In 1982, the Veterans Administration and Department of Defense Health Resources Sharing and Emergency Operations Act ( P.L. 97-174 ) was enacted to serve as the primary health care backup to the military health care system during and immediately following an outbreak of war or a national emergency. Since then, Congress has provided additional authorities to VA to "use its vast infrastructure and resources, geographic reach, deployable assets, and health care expertise, to make significant contributions to the Federal emergency response effort in times of emergencies and disasters." Among other authorities, the VHA may care for nonveterans, as well as veterans not enrolled in the VA health care system. The VA also has authority to provide certain health services such as medical counter measures to VA employees. The authority to care for care for nonveterans, applies in situations where the President has declared a major disaster or emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), or where the HHS Secretary has declared a disaster or emergency activating the National Disaster Medical System established pursuant to Section 2811(b) of the Public Health Service Act (42 U.S.C. 300hh-11(b)). The President's March 13, 2020, declaration of a national emergency under Section 501(b) of the Stafford Act allows VA to use this authority. On March 27, 2020, the VA released its COVID-19 Response Plan. The plan defines the VA's national level roles and responsibilities: VHA will provide [personal protective equipment] PPE fit-testing, medical screening, and training for [Emergency Support Function #8] ESF #8 and other Federal response personnel. Provide VHA staff as ESF #8 liaisons to [Federal Emergency Management Agency] FEMA the Incident Management Assistance Teams deploying to the state emergency operations center. Provide VHA planners currently trained to support ESF #8 teams. VHA provides vaccination services to VA staff and VA beneficiaries in order to minimize stress on local communities. VHA furnishes available VA hospital care and medical services to individuals responding to a major disaster or emergency, including active duty members of the Armed Forces as well as National Guard and military Reserve members activated by state or Federal authority for disaster response support. VHA provides ventilators, medical equipment and supplies, pharmaceuticals, and acquisition and logistical support through VA National Acquisition Center. [NCA] provides burial services for eligible veterans and dependents and advises on methods for interment during national security emergencies. VHA designates and deploys available medical, surgical, mental health, and other health service support assets. VHA provides one representative to the National Response Coordination Center (NRCC) during the operational period on a 24/7 basis. According to the VA, during declared major disasters and emergencies, service-connected veterans receive the highest priority for VA care and services, followed by members of the Armed Forces receiving care under 38 U.S.C. Section 8111A, and then followed by individuals affected by a disaster or emergency described in 38 U.S.C. Section 1785 (i.e., individuals requiring care during a declared disaster or emergency or during activation of the National Disaster Medical System [NDMS]). In general, care is prioritized based on clinical need that is, urgent, life-threating medical conditions are treated before routine medical conditions (see the Appendix ). The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ), provided funding for the Public Health and Social Services Emergency Fund to reimburse the VHA to respond to COVID-19 and to provide medical care for nonveterans. However, prior to reimbursing the VHA, the HHS Secretary is required to certify to congressional appropriations committees that funds available under the Robert T. Stafford Disaster Relief and Emergency Assistance Act are insufficient and that funds provided under the CARES Act are necessary to reimburse the VHA for expenses incurred to provide health care to nonveterans . Generally, if a state, tribal, or territorial government needs resources, it can request assistance from the federal government through its local HHS regional emergency coordinator (REC), which is a part of FEMA's NRCC. The VA cannot receive direct requests for assistance from state and local governments. In addition, the VA does not support providing VA medical personnel to nondepartment facilities. The VHA has accepted several "fourth mission" assignments from FEMA/HHS. For example, the VHA has responded and provided assistance to New York and New Jersey. On March 29, VA New York Harbor Healthcare System's Manhattan and Brooklyn VA medical centers admitted nonveteran, non-COVID-19 patients, and on April 1, East Orange, New Jersey VA Medical Center, admitted nonveteran critical and noncritical COVID-19 patients. Furthermore, the VHA is providing laboratory services, pharmaceutical and medication supply through the National Acquisition Center (NAC), and mobile pharmacy units, among others, as requested by FEMA/HHS. <9. Congressional Response> In response to the COVID-19 pandemic, Congress passed several measures to provide the VA with supplemental appropriations and provided temporary statutory changes to enhance veterans' benefits and services during this public health emergency. <9.1. Families First Coronavirus Response Act (P.L. 116-127)> <9.1.1. Supplemental Appropriations and Cost-Sharing> On March 18, 2020, the President signed into law the Families First Coronavirus Response Act ( P.L. 116-127 ). The act provides $30 million for VHA's medical services account to fund health services and related items pertaining to COVID-19, and $30 million for VHA's medical community care account (see Table 1 ). These funds are designated as emergency spending and are to remain available until September 30, 2022. Among other things, the act does not allow the VA to charge any copayment or other cost-sharing payments for COVID-19 testing or medical visits during any period of this public health emergency. <9.2. P.L. 116-128> <9.2.1. Education Assistance> P.L. 116-128 , as enacted on March 21, 2020, allows the VA to continue to provide GI Bill benefits from March 1, 2020, through December 21, 2020, for courses at educational institutions that are converted from in-residence to distance learning by reason of an emergency or health-related situation. P.L. 116-128 further permits the VA to pay the Post-9/11 GI Bill housing allowance as if the courses were not offered through distance learning throughout the same period. With the exception of those participants covered under this P.L. 116-128 exemption, Post-9/11 GI Bill participants enrolled exclusively in distance education are eligible for no more than one-half the national average of the housing allowance. <9.3. Coronavirus Aid, Relief, and Economic Security Act, "CARES Act" (P.L. 116-136)> <9.3.1. Emergency Supplemental Appropriations> On March 17, 2020, the Administration submitted to Congress a supplemental appropriations request. The Administration sought $16.6 billion for FY2020 for VA's response to the COVID-19 outbreak. This amount included $13.1 billion for the medical services account. According to the request, this additional amount would provide funding for "healthcare treatment costs, testing kits, temporary intensive care unit bed conversion and expansion, and personal protective equipment." The request also included $2.1 billion for the medical community care account to provide three months of health care treatment provided in the community in response to COVID-19. The VA assumes that about 20% of care for eligible veterans will be provided in the community, since community care facilities would be at full capacity with nonveteran patients. Furthermore, the emergency supplemental appropriations request included $100 million for the medical support and compliance account to provide 24-hour emergency management coordination overtime payments, to cover costs associated with travel and transport of materials, and to enable VHA' s Office of Emergency Management to manage its response to COVID-19; $175 million for the medical facilities account to upgrade VA medical facilities to respond to the virus; and $1.2 billion for the information technology systems account to upgrade telehealth and related internet technology to deliver more health care services remotely. On March 27, the President signed into law the CARES Act ( P.L. 116-136 ). Division B of this act included an emergency supplemental appropriations measure. Title X of Division B provides supplemental appropriations for FY2020 for certain VA accounts totaling $19.6 billion, and is designated as emergency spending. Unless otherwise noted below, funds remain available until September 30, 2021. Funding provided in the CARES Act is broken down as follows (see Table 1 ): VBA, general operating expenses account, $13 million, for enhancing telework support for VBA staff and for additional cleaning contracts. VHA, medical services account, $14.4 billion, for increased telehealth services; purchasing of additional medical equipment and supplies, testing kits, and personal protective equipment; and to provide additional support to homeless veterans, among other things. VHA, medical community care account, $2.1 billion, for increased emergency room and urgent care usage in the community. VHA, medical support and compliance account, $100 million, for the provision of 24-hour emergency management coordination overtime payments, and for costs associated with travel and transport of materials. VHA, medical facilities account, $606 million, for the procurement of mobile treatment facilities, improvements in security, and nonrecurring maintenance projects. VA, general administration account, $6.0 million, for maintaining 24-hour operations of crisis response and continuity of operations plans at VA facilities, among other things. VA, information technology systems account, 2.2 billion, for increased telework capacity, purchasing additional laptops for telework and telehealth-enabled laptops for VHA providers to work from home, and to increase bandwidth and IT infrastructure needs, among other things. VA, Office of Inspector General account, $12.5 million, for increased oversight of VA's preparation and response to COVID-19 (funds remain available until September 30, 2022). VA, grants for construction of state extended care facilities account, $150 million, to assist state homes to renovate, alter, or repair facilities to respond to COVID-19. <9.3.2. General CARES Act Provisions Affecting VA Programs and Services> <9.3.3. Section 20001. Transfer of Funds> This section allows the VA to transfer funds between the medical services, medical community care, medical support and compliance, and medical facilities accounts. The VA can make any transfer that is less than 2% of the total amount appropriated to an account and may follow after notifying the congressional appropriations committees. Any transfer that is greater than 2% of the total amount appropriated to an account or exceeding a cumulative 2% for all of the funds appropriated to the VA in the CARES Act requires Senate and House Appropriations Committee approval. <9.3.4. Section 20002. Monthly Reports> This section requires the VA to provide monthly reports to the Senate and House Appropriations Committees detailing obligations, expenditures, and planned activities for all the funds provided to the VA in the CARES Act. <9.3.5. Section 20003. Public Health Emergency> This section defines a public health emergency as an emergency with respect to COVID-19 declared by a federal, state, or local authority. <9.3.6. Section 20004. Short-Term Agreements or Contracts with Telecommunications Providers to Expand Telemental Health Services for Isolated Veterans During A Public Health Emergency> The VHA provides telehealth services to veteran patients in their communities from any location in the United States, including U.S. territories, the District of Columbia, and the Commonwealth of Puerto Rico. Section 20004 defines telehealth as "the use of electronic information and telecommunications technologies to support and promote long-distance clinical health care, patient and professional health-related education, public health, and health administration." Examples of telecommunications technologies include the internet, videoconferencing, streaming media, and terrestrial and wireless communications. This section allows the VA Secretary to enter into short-term agreements or contracts with telecommunications companies to expand veteran patients' access to telemental health care services . The goal of the short-term agreements and contracts is for the telecommunications companies to provide temporary, complimentary, or subsidized fixed and mobile broadband services to veteran patients. The Secretary is allowed to enter into short-term agreements or contracts with telecommunications companies only during the period of the COVID-19 outbreak. During this period, covered veteran patients can assess VA telemental health care services through telehealth and the VA Video Connect (VVC) mobile application, which the act refers to as the VA program that connects veteran patients with their health care teams using encryption. Veteran patients can access the VVC on their mobile devices, such as laptops and smartphones. The short-term agreements or contracts with telecommunications companies must address the telemental health care needs of isolated veterans; therefore, the VA Secretary must prioritize eligibility to veterans who either have low-incomes, live in unserved and underserved areas, reside in rural and highly rural areas, or are considered by the Secretary as having a higher risk of committing suicide and mental health care needs while being isolated during the COVID-19 outbreak. The VA, however, may expand eligibility for telemental health care services to veteran patients who are currently receiving VA care but who are ineligible to receive mental health care services and other health care services through telehealth and/or the VVC. <9.3.7. Section 20005. Treatment of State Homes During Public Health Emergency> The state veterans' home program is a federal-state partnership to construct or acquire nursing home, domiciliary, and adult day health care facilities. VA provides assistance to states in three ways: First, VA provides states with up to 65% of the cost to construct, acquire, remodel, or modify state homes. Second, VA provides per diem payments to states for the care of eligible veterans in state homes. VA may adjust the per diem rates each year. A state home is required to meet all VA standards in order to continue to receive per diem payments. Third, VA is required to support states financially to assist state homes in the hiring and retention of nurses to reduce nursing shortages at state veterans' homes. This section modifies the treatment of state homes during the public health emergency by (1) waiving requirements for per diem reimbursements for state homes under the VHA State Home Per Diem Program and (2) authorizing the Secretary to provide equipment to state homes. The section waives the occupancy rate requirement under 38 C.F.R. Section 51.40(c), authorizing a state home to receive per diem payments for veterans who are temporarily absent from nursing home care regardless of the state home's occupancy rate. In addition, the section waives the requirement under 38 C.F.R. Section 51.210(d) that a state home must maintain a certain percentage of veteran residents. Lastly, the section authorizes the Secretary to provide state homes with medication, personal protective equipment, medical supplies, and any other equipment, supplies, and assistance available to VA. The personal protective equipment may be provided through the All Hazards Emergency Cache in addition to any other source available. <9.3.8. Section 20006. Modifications to Veteran Directed Care Program of Department of Veterans Affairs> The Veteran Directed Care Program helps isolated veterans who need assistance with activities of daily living or instrumental activities of daily living, and who are at high risk of nursing home placement, to live in their own homes. Veterans in this program are provided a budget for services that can be managed by the veteran or a family caregiver. This section modifies the Veterans Directed Care Program during the public health emergency to require that the Secretary (1) accept telephone or telehealth enrollments and renewals; (2) stop all suspensions or disenrollments unless requested by a veteran or representative, or the veteran and provider make a mutual decision; (3) waive paperwork requirements and penalties for late paperwork; and (4) waive any requirement to stop payments under the program if the veteran or caregiver is out of state for more than 14 days. <9.3.9. Section 20007. Provision by Department of Veterans Affairs of Prosthetic Appliances through Non-Department Providers During Public Health Emergency> In general, VHA prosthetics staff are responsible for providing and fitting prosthetic appliances that meet the best medical needs of the veteran patient. This provision requires the Secretary to ensure that eligible veterans receiving or requiring prosthetic appliances and services are able to obtain them from contracted non-VA providers during this emergency period. <9.3.10. Section 20008. Waiver of Pay Caps for Employees of Department Of Veterans Affairs During Public Health Emergencies> Under existing regulations, certain VA employees may not receive any combination of premium pay, including overtime pay, that, when added to their base pay, results in total pay above the higher of two rates: GS-15, step 10, or the rate payable for Level V of the Executive Schedule on a biweekly basis. This provision allows the Secretary waive any limitation on pay for any employee of the VA during a public health emergency for work done in support of the emergency. The Secretary is required to provide reports on a monthly basis to the Senate and House Committees on Veterans' Affairs detailing the waivers. <9.3.11. Section 20009. Provision by Department of Veterans Affairs of Personal Protective Equipment for Home Health Workers> This section requires the Secretary to provide VA home health workers with personal protective equipment from the All Hazards Emergency Cache or any other available source. <9.3.12. Section 20010. Clarification of Treatment of Payments for Purposes of Eligibility for Veterans Pension and Other Veterans Benefits> Under ordinary circumstances, eligibility for a VA pension is, in part, based upon the annual income of the individual. Generally, "all payments of any kind or from any source (including salary, retirement or annuity payments, or similar income, which has been waived, irrespective of whether the waiver was made pursuant to statute, contract, or otherwise) shall be included" when calculating a veteran's annual income. This provision of the CARES Act excludes the recovery rebate from a veteran's annual income, thereby preventing it from counting towards the income limit associated with pension eligibility. It explicitly states that the rebate "shall not be treated as income or resources for purposes of determining eligibility for pension under chapter 15 of title 38." Consequently, the direct individual payment included in the CARES Act will not affect a veteran's eligibility for a VA pension. <9.3.13. Section 20011. Availability of Telehealth for Case Managers and Homeless Veterans> Formerly homeless veterans participating in the HUD-VASH program are assigned VA case managers to assist with their health and other needs. This section requires the VA to ensure that telehealth capabilities are available to veterans and case managers participating in HUD-VASH. <9.3.14. Section 20012. Funding Limits for Financial Assistance for Supportive Services for Very Low-Income Veteran Families in Permanent Housing During A Public Health Emergency> The SSVF program, which provides short- to medium-term rental assistance and supportive services to homeless veterans and their families, is authorized at $380 million through FY2021. Without legislative authority, the VA cannot obligate additional funding for the program. This provision removes the SSVF funding limitation in cases of public health emergencies. <9.3.15. Section 20013. Modifications to Comprehensive Service Programs for Homeless Veterans During A Public Health Emergency> The Homeless Providers Grant and Per Diem (GPD) program provides grants to public entities and private nonprofit organizations for the capital costs associated with developing facilities to serve homeless veterans and also makes per diem payments to grantees for the costs of providing housing and supportive services to homeless veterans. Together, grant and per diem funding is authorized at approximately $258 million per year. In addition, grant costs are limited to 65% of the costs of acquisition, construction, expansion, or remodeling of facilities, and per diem payments are limited to the VA domiciliary care per diem rate, which, for FY2020, is $48.50 per day. This section allows additional appropriations for the GPD program in cases of public health emergencies notwithstanding the FY2020 authorization level, and it also allows the Secretary to waive statutory limitations on grant and per diem payments to grantees. Generally, VA, under GPD guidance, requires providers to discharge veterans residing in GPD housing who are absent for more than 14 days. In addition, VA will not make per diem payments after a veteran has been absent for more than 72 consecutive hours. This section requires the VA Secretary to waive the discharge requirement and allows the Secretary to reimburse providers for veterans who have been absent for more than 72 hours. <9.4. Student Veteran Coronavirus Response Act of 2020 (P.L. 116-140)> The Student Veteran Coronavirus Response Act of 2020 ( P.L. 116-140 ), as enacted on April 28, 2020, responds to concerns that abrupt and temporary closures or suspensions of educational institutions, programs of education, and employment could negatively impact the short-term finances of eligible beneficiaries and their continued pursuit of educational programs. Eligible beneficiaries include participants in several VA educational assistance programs and Vocational Rehabilitation and Employment (VR&E). The act provides special authorities for the period beginning on March 1, 2020, and ending on December 21, 2020, including academic terms beginning prior to December 21, 2020. Selected sections of the bill are discussed below. <9.4.1. Section 3. Payment of Work-Study Allowances During Emergency Situations> The Veterans Work-Study Program allows GI Bill and VR&E participants to receive additional financial assistance through the VA in exchange for employment. Provisions in this section permit Work-Study payments in accordance with an existing Work-Study agreement or at a lesser amount despite the participant's inability to perform work by reason of an emergency situation. These provisions further require the VA to extend an existing agreement for a subsequent period beginning during the covered period if requested by the Work-Study participant. <9.4.2. Section 4. Payment of Allowances to Veterans Enrolled in Educational Institutions Closed for Emergency Situations> The VA has authority under 38 U.S.C. Section 3680(a)(2)(A) to pay GI Bill and VR&E allowances for up to four weeks when an educational institution temporarily closes under an established policy based on an Executive order of the President or due to an emergency situation. The provisions in this section permit GI Bill and VR&E payments for up to four weeks, in addition to any payments under 38 U.S.C. Section 3680(a)(2)(A), if an educational institution closes or the program of education is suspended due to an emergency situation. <9.4.3. Section 5. Prohibition of Charge to Entitlement of Students Unable to Pursue a Program of Education Due to an Emergency Situation> In general, the GI Bills provide eligible persons a 36-month entitlement to educational assistance. GI Bill entitlement is restored in the following instances: for an incomplete course if an individual is unable to receive credit or lost training time as a result of an educational institution closing; for an incomplete course if an individual is unable to receive credit or lost training time because the course or program is disapproved by a subsequently established or modified policy, regulation, or law; and for the interim (through the end of the academic term but no more than 120 days) Post-9/11 GI Bill housing allowance paid following either a closure or disapproval. The provisions in this section require that the VA restore entitlement for an incomplete course if an individual is unable to receive credit or lost training time as a result of a temporary closure of an educational institution or the temporary termination of a course or program of education by reason of an emergency situation. <9.4.4. Section 6. Extension of Time Limitations for Use of Entitlement> Many GI Bill participants must use their educational entitlement within a specified time period beginning upon discharge or release from active duty or eligibility. There are notable exceptions to the time limitation. For example, Post-9/11 GI Bill participants whose last discharge or release from active duty was on or after January 1, 2013, are not subject to a time limitation. The provisions in this section exempt from the time limitation, the period during which an individual is prevented from pursuing a program of education because the educational institution closed (temporarily or permanently) under an established policy based on an Executive order of the President or due to an emergency situation until the individual is able to resume pursuit. The provisions are applicable to the Montgomery GI Bill-Active Duty (MGIB-AD) 10-year limitation, the Post-9/11 GI Bill 15-year limitation and age limitation for children using transferred benefits, the VR&E 12-year limitation and the period of a veteran's vocational rehabilitation program, and the Montgomery GI Bill-Selected Reserve (MGIB-SR) limitation. <9.4.5. Section 7. Restoration of Entitlement to Rehabilitation Programs for Veterans Affected by School Closure or Disapproval> Typically, programs under VR&E are limited to 48 months of entitlement and veterans pursuing an education program under VR&E must be enrolled to receive a subsistence allowance. For the covered period, the provisions in this section extend protections from entitlement charges following school closures that are established for the GI Bills to veterans participating in education programs under the VR&E program. The provisions further allow the VA to (1) continue paying subsistence allowances to VR&E participants through the end of the academic term but no more than 120 days following either a closure or disapproval and (2) prohibits VA from charging the impacted term against a veteran's VR&E entitlement if the veteran did not receive credit for classes. <9.4.6. Section 8. Extension of Payment of Vocational Rehabilitation Subsistence Allowances> The provisions in this section provide two additional months of subsistence allowance to veterans who were following a program of employment services under the VR&E program during the covered period. <9.4.6.1. Appendix. VHA Emergency Powers>

The Department of Veterans Affairs (VA) provides a range of benefits to eligible veterans and their dependents. The department carries out its programs nationwide through three administrations and the Board of Veterans' Appeals (BVA). The Veterans Health Administration (VHA) is responsible for health care services and medical and prosthetic research programs. The Veterans Benefits Administration (VBA) is responsible for, among other things, providing disability compensation, pensions, and education assistance. The National Cemetery Administration (NCA) is responsible for maintaining national veterans cemeteries; providing grants to states for establishing, expanding, or improving state veterans cemeteries; and providing headstones and markers for the graves of eligible persons, among other things. With a vast integrated health care delivery system spread across the United States, the VHA is statutorily required to serve as a contingency backup to the Department of Defense (DOD) medical system during a national security emergency and to provide support to the National Disaster Medical System and the Department of Health and Human Services (HHS), as necessary, in support of national emergencies. These functions are known as VA's "Fourth Mission." Since the onset of the Coronavirus Disease 2019 (COVID-19) pandemic, Congress has passed a number of relief measures affecting the VA and its Fourth Mission. T he Families First Coronavirus Response Act ( P.L. 116-127 ), enacted on March 18, 2020, provides $60 million for the VHA in emergency supplemental appropriations. Among other things, the act also prohibits the VA from charging any copayment or other cost-sharing payments for COVID-19 testing or medical visits during any period of this public health emergency. P.L. 116-128 , enacted on March 21, allows the VA to continue to provide GI Bill benefits from March 1, 2020, through December 21, 2020, for courses at educational institutions that are converted from in-residence to distance learning by reason of an emergency or health-related situation. T he Coronavirus Aid, Relief, and Economic Security Act (CARES Act) ( P.L. 116-136 ), enacted on March 27, provides a total of $19.6 billion in emergency supplemental appropriations for FY2020 for certain VA accounts, as well as temporary statutory relief for various VA programs and services during the COVID-19 public health emergency. The Student Veteran Coronavirus Response Act of 2020 ( P.L. 116-140 ), enacted on April 28, 2020, is intended to mitigate the disruption to VA educational benefits, including Vocational Rehabilitation & Employment (VR&E), when schools, programs of education, and work are suspended or closed from March 1, 2020, to December 21, 2020.

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<1. Budget Structure> The Defense Nuclear Nonproliferation (DNN) programs were reorganized starting with the FY2016 request. There are two main mission areas under the DNN appropriation: the Defense Nuclear Nonproliferation Program and the Nuclear Counterterrorism and Incident Response Program (NCTIR). NCTIR was previously funded under Weapons Activities. According to the FY2016 budget justification, "These transfers align all NNSA funding to prevent, counter, and respond to nuclear proliferation and terrorism in one appropriation." The DNN Program is now divided into six functional areas: Materials Management and Minimization (M3) conducts activities to reduce and, where possible, eliminate stockpiles of weapons-useable material around the world. Major activities include conversion of reactors that use highly enriched uranium (useable for weapons) to low enriched uranium, removal and consolidation of nuclear material stockpiles, and disposition of excess nuclear materials. Global Material Security has three major program elements: international nuclear security, radiological security, and nuclear smuggling detection and deterrence. Activities toward achieving those goals include the provision of equipment and training, workshops and exercises, and collaboration with international organizations. Nonproliferation and Arms Control implements programs that aim to strengthen international nuclear safeguards, control the spread of dual-use technologies and expertise, and verify nuclear reductions and compliance with treaties and agreements. This program conducts reviews of nuclear export applications and technology transfer authorizations. National Technical Nuclear Forensics Research and Development (NTNF R&D ) examines and evaluates nuclear materials and devices, nuclear test explosions or radiological dispersals, and post-detonation debris through nuclear forensics development at the national laboratories. The program includes a field response capability to assist the interagency in the event of a nuclear or radiological incident. Defense Nuclear Nonproliferation Research and Development ( DNN R&D ) advances U.S. capabilities to detect and characterize global nuclear security threats such as foreign nuclear material and weapons production, diversion of special nuclear material, and nuclear detonations. The Nonproliferation Construction program consists of the Surplus Plutonium Disposition Project (SPD) and the Mixed-Oxide (MOX) Fuel Fabrication Facility (MFFF), which was to be built in South Carolina to convert surplus weapons plutonium into nuclear reactor fuel. This project was terminated and replaced with a different disposal method (see below). The Nuclear Counterterrorism and Incident Response Program (NCTIR) evaluates nuclear and radiological threats and develops emergency preparedness plans, including organizing scientific teams to provide rapid response to nuclear or radiological incidents or accidents worldwide. <2. FY2021 Request> The FY2021 request for DNN appropriations totaled $2.031 billion, reflecting a 6.2% decrease from FY2020-enacted levels. The budget justification says that this decrease is mainly due to the "completion of funding for contractual termination" of the Mixed Oxide Fuel Fabrication Facility (MOX) project at the Savannah River Site. Funding for that program was decreased by 50% (-$150 million). A $42 million, or 9.65%, decrease to the Global Material Security program was due to an increase in FY2020 funds for the Cesium Irradiator Replace Program. The budget proposal requests a $37.2 million, or 10%, increase in funding for the Material Management Minimization program. The increase is mainly in the conversion subprogram, which is working to establish non-HEU based molybdenum-99 production technologies in the United States. The National Technical Nuclear Forensics Research and Development (NTNF R&D) is a new program in FY2021. The budget request says that the program will allow NNSA to "take on a more active leadership role" in nuclear forensics. The $40 million in funding for NTNF was moved from the DNN R&D Nuclear Detonation Detection subprogram. As in past years, the FY2020 appropriations included a provision prohibiting funds in the Defense Nuclear Nonproliferation account for certain activities and assistance in the Russian Federation. Appropriations bills have prohibited this since FY2015. <2.1. U.S. Plutonium Disposition> The FY2021 budget justification requests funds related to the U.S. plutonium disposition program in the M3 Material Disposition subprogram and Nonproliferation Construction Surplus Plutonium Disposition subprogram. The United States pledged to dispose of 34 metric tons of U.S. surplus weapons plutonium, which was originally to be converted into fuel for commercial power reactors. The U.S. facility for this purpose was to be the Mixed Oxide Fuel Fabrication Facility (MFFF), which had been under construction at the DOE Savannah River site in South Carolina. The MFFF faced sharply escalating construction and operation cost estimates, and the Obama Administration proposed to terminate it in FY2017. After congressional approval, in 2018 DOE ended MFFF construction and began pursuing a replacement disposal method, Dilute and Dispose (D&D), for this material . The D&D method consists of "blending plutonium with an inert mixture, packaging it for safe storage and transport, and disposing of it in a geologic repository," according to the FY2021 request. The Nonproliferation Construction account's proposed decrease of $150 million in FY2021 is due to the final steps in ending construction of the MFFF. In her testimony before the House Appropriations Committee, NNSA Administrator Lisa Gordon-Hagerty said that decrease reflects the completion of the MOX contractual termination settlement. She said that the requested $148.6 million would be used for the Surplus Plutonium Disposition (SPD) project, in support of the D&D method. FY2021 activities would include "execution of early site preparation and long lead procurements activities, as well as continuing the maturation of the design for all major systems supporting the plutonium processing gloveboxes."

The Department of Energy's (DOE's) nonproliferation and national security programs provide technical capabilities to support U.S. efforts to "prevent, counter, respond" to the proliferation of nuclear weapons worldwide, including by both states and non-state actors. These programs are administered by the National Nuclear Security Administration (NNSA), a semi-autonomous agency established within DOE in 2000. NNSA is responsible for maintaining the U.S. nuclear weapons stockpile, providing nuclear fuel to the Navy, nuclear and radiological emergency response, and nonproliferation. NNSA recently reorganized the Office of Defense Nuclear Nonproliferation, which is funded under the Defense Nuclear Nonproliferation (DNN) account. This report addresses the programs in the NNSA's DNN account, appropriated by the Energy and Water appropriations bill. The FY2020 Consolidated Appropriations bill ( P.L. 116-94) funded the NNSA DNN accounts at $2.164 billion. The FY2021 request for DNN appropriations was $2.031 billion. The proposal would include unobligated prior year balances. The reduction continues an earlier trend to reduce prior-year carryover balances. According to the budget justi fication, the decrease of 6.2% from the FY2020-enacted level is due to "completion of funding for contractual termination" of the mixed-oxide fuel (MOX) project at the Savannah River Site.

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<1. Introduction> The Elementary and Secondary Education Act (ESEA), most recently comprehensively amended by the Every Student Succeeds Act (ESSA; P.L. 114-95 ), is the primary source of federal aid to elementary and secondary education. Title I-A is the largest program in the ESEA, funded at $15.9 billion for FY2019. Title I-A is designed to provide supplementary educational and related services to low-achieving and other students attending elementary and secondary schools with relatively high concentrations of students from low-income families. The U.S. Department of Education (ED) determines Title I-A grants to local educational agencies (LEAs) based on four separate funding formulas: Basic Grants, Concentration Grants, Targeted Grants, and Education Finance Incentive Grants (EFIG). This report provides FY2019 state grant amounts under each of the four formulas used to determine Title I-A grants. For a general overview of the Title I-A formulas, see CRS Report R44164, ESEA Title I-A Formulas: In Brief . For a more detailed discussion of the Title I-A formulas, see CRS Report R44461, Allocation of Funds Under Title I-A of the Elementary and Secondary Education Act . <2. Methodology> Under Title I-A, funds are allocated to LEAs via state educational agencies (SEAs) using the four Title I-A formulas. Annual appropriations acts specify portions of each year's Title I-A appropriation to be allocated to LEAs and states under each of the formulas. In FY2019, about 41% of Title I-A appropriations were allocated through the Basic Grants formula, 9% through the Concentration Grants formula, and 25% each through the Targeted Grants and EFIG formulas. Once funds reach LEAs, the amounts allocated under the four formulas are combined and used jointly. For each formula, a maximum grant is calculated by multiplying a "formula child count," consisting primarily of estimated numbers of school-age children living in families in poverty, by an "expenditure factor" based on state average per pupil expenditures for public elementary and secondary education. In some of the Title I-A formulas, additional factors are multiplied by the formula child count and expenditure factor to determine a maximum grant amount. These maximum grants are then reduced to equal the level of available appropriations for each formula, taking into account a variety of state and LEA minimum grant provisions. In general, LEAs must have a minimum number of formula children and/or a minimum formula child rate to be eligible to receive a grant under a specific Title I-A formula. Some LEAs may qualify for a grant under only one formula, while other LEAs may be eligible to receive grants under multiple formulas. Under three of the formulas Basic, Concentration, and Targeted Grants grants are initially calculated at the LEA level. State grants are the total of allocations for all LEAs in the state, adjusted for state minimum grant provisions. Under EFIG, grants are first calculated for each state overall and then are subsequently suballocated to LEAs within the state using a different formula. FY2019 grants included in this report were calculated by ED. The percentage share of funds allocated under each of the Title I-A formulas was calculated by CRS for each state by dividing the total grant received by the total amount allocated under each respective formula. <3. FY2019 Title I-A Grants> Table 1 provides each state's grant amount and percentage share of funds allocated under each of the Title I-A formulas for FY2019. Total Title I-A grants, calculated by summing the state level grant for each of the four formulas, are also shown in Table 1 . Overall, California received the largest total Title I-A grant amount ($2.0 billion) and, as a result, the largest percentage share (12.52%) of Title I-A grants. Vermont received the smallest total Title I-A grant amount ($36.9 million) and, as a result, the smallest percentage share (0.24%) of Title I-A grants. In general, grant amounts for states vary among formulas due to the different allocation amounts for the formulas. For example, the Basic Grant formula receives a greater share of overall Title I-A appropriations than the Concentration Grant formula, so states generally receive higher grant amounts under the Basic Grant formula than under the Concentration Grant formula. Among states, Title I-A grant amounts and the percentage shares of funds vary due to the different characteristics of each state. For example, Texas has a larger population of children included in the formula calculations than North Carolina and, therefore, is to receive a higher grant amount and larger share of Title I-A funds. Within a state, the percentage share of funds allocated may vary by formula, as certain formulas are more favorable to certain types of states (e.g., EFIG is generally more favorable to states with comparatively equal levels of spending per pupil among their LEAs). If a state's share of a given Title I-A formula exceeds its share of overall Title I-A funds, this is generally an indication that this particular formula is more favorable to the state than formulas for which the state's share of funds is below its overall share of Title I-A funds. For example, Alaska, Arizona, California, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Illinois, Louisiana, Maine, Maryland, Montana, Nevada, New Hampshire, New Mexico, New York, North Dakota, Rhode Island, South Dakota, Texas, Vermont, and Wyoming each received a higher percentage share of Targeted Grants than of overall Title I-A funds, indicating that the Targeted Grant formula is more favorable to them than other Title I-A formulas may be. In states that received a minimum grant under all four formulas (Montana, North Dakota, New Hampshire, South Dakota, Vermont, and Wyoming), the shares under the Targeted Grant and EFIG formulas are greater than under the Basic Grant or Concentration Grant formulas, due to higher state minimums under these formulas. If a state received the minimum grant under a given Title I-A formula, the grant amount is denoted with an asterisk (*) in Table 1 .

The Elementary and Secondary Education Act (ESEA), most recently comprehensively amended by the Every Student Succeeds Act (ESSA; P.L. 114-95 ), is the primary source of federal aid to K-12 education. The Title I-A program is the largest grant program authorized under the ESEA and was funded at $15.9 billion for FY2019. It is designed to provide supplementary educational and related services to low-achieving and other students attending elementary and secondary schools with relatively high concentrations of students from low-income families. Under current law, the U.S. Department of Education (ED) determines Title I-A grants to local educational agencies (LEAs) based on four separate funding formulas: Basic Grants, Concentration Grants, Targeted Grants, and Education Finance Incentive Grants (EFIG). The four Title I-A formulas have somewhat distinct allocation patterns, providing varying shares of allocated funds to different types of states. Thus, for some states, certain formulas are more favorable than others. This report provides FY2019 state grant amounts under each of the four formulas used to determine Title I-A grants. Overall, California received the largest FY2019 Title I-A grant amount ($2.0 billion, or 12.52% of total Title I-A grants). Vermont received the smallest FY2019 Title I-A grant amount ($36.9 million, or 0.24% of total Title I-A grants).

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<1. "Privileged" Nominations> Every year the Senate routinely considers whether to give its advice and consent to hundreds of nominations submitted by the President. From start to finish, the confirmation process can be a lengthy one, even for relatively noncontroversial nominees. Each nomination is typically referred to one or more committees having subject matter jurisdiction over the position. Committees may bear a significant workload in examining nominees often including questionnaires, optional public hearings, and individual meetings with Senators to determine whether to report a nomination to the full Senate. Once a committee has reported a nomination or been discharged from its further consideration, the Senate may take up a nomination for deliberation, though a cloture process may be required to ensure a final vote to confirm. As part of an effort to streamline the nominations process during the 112 th Congress (2011-2012), a standing order of the Senate, S.Res. 116 , created a new designation of certain nominations as "privileged." These so-called privileged nominations are subject to special procedures that may save the time of committees in processing these appointments. In total, there are 285 positions to which nominations are privileged, the majority of which are part-time appointments to oversight boards and advisory commissions, but they also include full-time chief financial officers and certain assistant secretaries to cabinet-level agencies. A full list of privileged nominations, organized by their committees of jurisdiction, can be found in Appendix . This report first examines, in detail, the special procedures under which privileged nominations are processed, as well as the action by which a Senator may have a privileged nomination referred to its committee of jurisdiction. It then provides a brief legislative history of S.Res. 116 and subsequent legislation that has created additional privileged nominations. Finally, this report includes data on and a discussion of Senators' requests to refer privileged nominations to committee. Figure A-1 contains an example of the "Privileged Nominations" section of the Senate's Executive Calendar . <1.1. Consideration of Privileged Nominations> The sections below discuss each step of how a privileged nomination might be processed under potentially expedited procedures before consideration by the full Senate. Pursuant to Section 1(d) of S.Res. 116 , any Senator may insist that a privileged nomination be referred to its committee of jurisdiction, making it no longer eligible for procedures under S.Res. 116 . Further discussion of when and why a Senator might make such a request follows after the sections on consideration. <1.1.1. Receipt in Senate> Unlike a typical nomination which, when received by the Senate, is usually referred to its committee of jurisdiction a privileged nomination goes directly to the "Privileged Nominations" section of the Executive Calendar . There, the nominee and position to which he or she was nominated is to be recorded, along with the date the nomination was received by the Senate. An example page of the "Privileged Nominations" section of the Executive Calendar appears in Figure A-1 . The same day a privileged nomination is received in the Senate, the Office of the Executive Clerk sends a notification form to its committee of jurisdiction. This transmittal from the Executive Clerk is not a referral of the nomination to the committee but rather serves to inform the committee it should proceed to request information from the nominee. A column in the Privileged Nominations section of the Executive Calendar entitled "Information Requested by Committee" is marked with a "Yes" to denote this transaction. <1.1.2. Information Requested and Received by Committee> Though under the terms of S.Res. 116 , privileged nominations are not referred to their committees of jurisdiction, these committees are still responsible for obtaining certain background information from nominees before they can be considered by the full Senate. Section 1(b) of S.Res. 116 directs that the "appropriate biographical and financial questionnaires" be collected by committees of jurisdiction from privileged nominees. This broad requirement gives committees some discretion in determining what information to collect. As a result, committee practices on obtaining information from privileged nominees can vary. Once a nominee has responded to a committee's questionnaires, the chair is required to notify the Executive Clerk in writing that the appropriate information has been received. This requirement is fulfilled, in practice, when the committee returns the notification form to the Executive Clerk's office. When a committee has affirmed receipt of the requested information from a nominee, that date is recorded under the "Requested Information Received" column in the Privileged Nominations section of the Executive Calendar . Senators have 10 session days from this date (and any time prior to this point, starting from the day the nomination was received in the Senate) to request that the nomination be referred to its committee of jurisdiction. After 10 session days have passed, the nomination is then moved to the "Nominations" section of the Executive Calendar and is eligible to be called up for consideration on the Senate floor (after lying over for one day or, by unanimous consent, immediately). Privileged nominations that have been considered under these procedures are to appear in the Nominations section of the Executive Calendar with the designation "Placed on the Calendar pursuant to S.Res. 116 , 112 th Congress" under the "Reported By" column, along with the date it first appeared there. <1.1.3. Final Consideration Under Regular Procedures> Once a privileged nomination has moved to the Nominations section of the Executive Calendar , there is no expedited process under which the Senate can proceed to consider or vote on it. Instead, these nominations are equally eligible for consideration as any other found on the Nominations section of the Executive Calendar . As a result, even privileged nominations that may have moved quickly through the expedited committee process could face lengthy wait periods before being brought up for consideration by the full Senate. Some privileged nominations never receive a vote on the Senate floor and are returned to the President when the Senate adjourns sine die at the end of the first or second session of a Congress or when it recesses for more than 30 days. <1.1.4. Referral of a Privileged Nomination to Committee> As noted earlier, pursuant to Section 1(d) of S.Res. 116 , any Senator may trigger, on his or her own behalf or the behalf of any identified Senator, that a privileged nomination be referred to its committee of jurisdiction for consideration under normal procedures. Any such request compels the referral of the nomination to committee. Senators do not need to obtain recognition on the floor to make such a request, nor are they required to provide a reason for their request. Instead, a form for this purpose is available at the dais on the Senate floor. A Senator's request is then to be reflected in that day's Congressional Record , and the nomination is to be referred to its committee of jurisdiction. Additional data on requests for the referral of a privileged nomination can be found in Table 1 . Senators may make such requests for a variety of reasons. Senators may have concerns over the qualifications or fitness of an individual to serve in the position to which he or she was nominated. Referring the nomination to committee ensures that it will need the support of a majority of the committee to be reported to the Senate a higher threshold than under the procedures of S.Res. 116 , which require only that the committee's chair affirm that the requested biographical and financial information has been received. Alternatively, a Senator may desire more time for individual meetings with Senators or a public hearing where a nominee's credentials can be extolled, perhaps increasing the chances of a favorable floor vote. <2. Legislative History on the Creation of Privileged Nominations> <2.1. S.Res. 116, 112th Congress> The creation of privileged nominations and the special procedures applied to them were part of a larger effort to reform the confirmation process in the Senate during the 112 th Congress (2011-2012). On January 5, 2011, Majority Leader Harry Reid and Minority Leader Mitch McConnell engaged in a brief colloquy to discuss the pace of processing nominations in the Senate, noting the increasing volume of Senate-confirmed positions and the need for reform. Connecting the oftentimes laborious confirmation process with difficulty in finding capable nominees, Majority Leader Reid said: Clearly, all Presidents are entitled to choose well-qualified individuals to serve in their administration. In the vast majority of instances, the individuals nominated by the President are not controversial, but many have faced delays before assuming their positions. These delays mean critical decision-makers are not in place. And, the delays make it harder to find qualified people many great nominees simply cannot wait around for months as the stress and uncertainty affects their families and careers. We need to do better in the 112 th Congress. The two leaders agreed to form a bipartisan nominations reform working group, consisting of Senators Chuck Schumer and Lamar Alexander, the chair and ranking minority member of the Committee on Rules and Administration; Senators Joe Lieberman and Susan Collins, the chair and ranking minority member of the Committee on Homeland Security and Governmental Affairs; and the floor leaders themselves. By the end of March, members of the group had introduced two measures: S. 679 , the Presidential Appointment Efficiency and Streamlining Act of 2011, and, S.Res. 116 , a resolution to provide for expedited Senate consideration of certain nominations subject to advice and consent. S.Res. 116 was submitted on March 30, 2011, by Senator Schumer on behalf of himself and 14 other Senators including all members of the nominations reform working group and was referred to the Committee on Rules and Administration. The Rules Committee met on May 11 and ordered the resolution reported favorably by voice vote without amendment. The Senate took up S.Res. 116 for consideration on June 29. Three amendments to the resolution were proposed and considered, with a package of negotiated and technical changes referred to as a "managers' amendment" ultimately being agreed to. The first amendment, proposed by Senator Tom Coburn, contained language requiring reporting requirements on legislation creating new federal programs. The amendment was not agreed to, 63-34, after failing to achieve a two-thirds threshold for adoption, pursuant to an earlier unanimous consent agreement. A second amendment, proposed by Senator Tom Harkin on behalf of Senator Tom Udall, would have amended Senate Rule XXII to establish a majority-vote threshold for invoking cloture on executive branch nominees. This amendment was ruled out of order by the chair. The final amendment, offered by Senator Schumer, included provisions that expanded the positions to be considered as privileged nominations (including several full-time chief financial officers and certain assistant secretaries) and required that future legislation proposing new presidentially appointed positions be accompanied by a justification report. The amendment was adopted by unanimous consent. The Senate agreed to S.Res. 116 , as amended, by a vote of 89-8, on June 29, 2011. <2.2. Terrorism Risk Insurance Program Reauthorization Act of 2015> H.R. 26 , the Terrorism Risk Insurance Program Reauthorization Act of 2015, during the 114 th Congress (2015-2016), created a new 13-member Board of Directors for the National Association of Registered Agents and Brokers and designated these positions as privileged nominations established by S.Res. 116 (112 th Congress). To date, this legislation marks the first and only expansion of the privileged nominations category. The language establishing these new privileged nominations first appeared in the 113 th Congress (2013-2014) with the introduction of S. 534 , the National Association of Registered Agents and Brokers Reform Act of 2013. The legislative history of S. 534 offers no additional comment on the designating of these 13 positions as privileged nominations. Nonetheless, these positions fit the general profile of the type of nominations for which expedited consideration was designed (e.g., part-time boards and commissions). <3. Privileged Nominations Referred to Committee> The Senate has considered 467 privileged nominations since S.Res. 116 was agreed to on June 29, 2011. Of those 467, 22 (4.7%) have been referred to committee at the request of a Senator. This rate of referral suggests that Senators are generally deferential to the expedited committee consideration of privileged nominations. Table 1 provides data on these 22 instances of requested referrals. Each entry contains identifying information about the nomination, including the Congress when the nomination was submitted, the name of the nominee, the position to which he or she was nominated, and the final disposition of the nomination by the Senate. Table entries also note the committee of jurisdiction for each nomination and a column indicating whether the Senator requesting referral was a member and/or leader of that committee at the time he or she made the request. As previously discussed, under the provisions of S.Res. 116 , any Senator has the right to request that a privileged nomination be referred to its committee of jurisdiction. The vast majority of these requests have been by a Senator on the nomination's committee of jurisdiction. Of the 22 instances where a privileged nomination has been referred, 20 have been made by a Senator from the committee of jurisdiction. Furthermore, 14 of those 20 requests were made by either the chair or ranking member of the committee of jurisdiction. <3.1. Appendix. Privileged Nominations>

Privileged nominations are a subset of presidentially appointed and Senate-confirmed positions that are eligible for consideration under procedures established by S.Res. 116 (112 th Congress, 2011-2012). The vast majority of the 285 nominations designated as privileged are part-time positions to various boards and commissions, though some full-time positions are privileged as well (e.g., chief financial officers and certain assistant secretaries in Cabinet-level agencies). The procedures for privileged nominations may reduce the workload of committees of jurisdiction in processing these appointments for consideration by the Senate. The creation of privileged nominations and the special procedures for their consideration were part of a larger effort at reforming the confirmation process in the Senate during the 112 th Congress. At the outset of the 112 th Congress, a bipartisan working group was formed and ultimately produced both S.Res. 116 , "A resolution to provide for expedited Senate consideration of certain nominations subject to advice and consent," and S. 679 , the "Presidential Appointment Efficiency and Streamlining Act of 2011" ( P.L. 112-166 ). The list of privileged nominations, first established in 2012, was expanded in 2015 by P.L. 114-1 , the Terrorism Risk Insurance Program Reauthorization Act of 2015, to include 13 members of the Board of Directors for the National Association of Registered Agents and Brokers. Unlike a typical nomination, a privileged nomination is not referred to committee unless requested by any Senator. Instead, it is entered into the "Privileged Nominations" section of the Senate Executive Calendar . Committees are required to request biographical and financial information from these nominees, typically in the form of committee questionnaires. Upon receipt of the requested information, the committee chair notifies the Executive Clerk in writing. The nomination then remains in the "Privileged Nominations" section of the Executive Calendar for 10 days of session before moving to the "Nominations" section, where it is eligible to be brought up for consideration on the floor of the Senate. This process allows a nomination to become eligible for floor consideration even though the committee did not hold a formal markup meeting to vote to report it. There are no expedited floor procedures for privileged nominations, and they are brought up and considered under the same procedures as any nomination reported by a committee. Any Senator may request on his or her own behalf, or on behalf of any identified Senator, that a privileged nomination be referred to committee. Such a request automatically triggers the referral of a privileged nomination. If a nomination is referred in this way, it must be reported by the committee (or the Senate must discharge the committee of the nomination) before the full Senate can consider it. The vast majority of privileged nominations considered on the Senate floor were not subject to a request for referral to committee. As of the end of 2019, the Senate has considered 467 privileged nominations, and there have been 22 instances of privileged nominations being referred to a committee at the request of a Senator. Such requests for referral are usually initiated by a Member on the committee with jurisdiction over the nomination and oftentimes originate with the committee's chair or ranking member.

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<1. Introduction> By late February and early March 2020, the global outbreak of Coronavirus Disease 2019 (COVID-19), a viral respiratory illness caused by a novel coronavirus, had entered a new phase, with community spread occurring in many countries and several U.S. states. Concerns grew over the potential for the disease to spread widely, leading to increased hospitalizations and deaths. On March 6, 2020, Congress and the President enacted the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 ), to provide emergency supplemental appropriations to prevent, prepare for, and respond to the coronavirus outbreak. This report provides an overview of appropriations in Division A and relevant policies and requirements pursuant to the supplemental. Funding in Division A is designated as being provided as an emergency requirement. For the purposes of the supplemental, the term "coronavirus" refers to SARS-CoV-2, the virus that causes COVID-2019, or another coronavirus with pandemic potential. For an overview of congressional reporting requirements in the act, see CRS Insight IN11236, Oversight Provisions in H.R. 6074, the Coronavirus Preparedness and Response Supplemental Appropriations Act , by Ben Wilhelm. <1.1. Lead-Up to Enactment> Prior to the enactment of P.L. 116-123 , domestic health coronavirus preparedness and response activities were primarily supported by the U.S. Department of Health and Human Services (HHS) using certain existing funding streams and transfer authorities. For instance, on January 25, 2020, the HHS Secretary determined that COVID-19 response activities would be supported by an allotment of $105 million from existing balances in the Infectious Disease Rapid Response Reserve Fund (IDRRRF; see the " Centers for Disease Control and Prevention (CDC) " section of this report). In addition, on February 2, 2020, HHS reportedly notified Congress of its intention to transfer up to $136 million to COVID-19 response efforts from other existing HHS accounts. On February 24, 2020, the Administration asked Congress for emergency supplemental appropriations of $1.25 billion for the HHS Public Health and Social Services Emergency Fund (PHSSEF) to support COVID-19 response efforts. The Administration's request included a number of other proposals, mostly related to repurposing existing funds from across the government, including HHS funds for current Ebola response activities. All told, the Administration estimated needing to allocate about $2.5 billion toward COVID-19 repose efforts. The supplemental appropriations bill, H.R. 6074 , was introduced and passed in the House on March 4, 2020; passed in the Senate on March 5, 2020; and signed into law ( P.L. 116-123 ) by the President on March 6, 2020. <1.2. Overview of the Supplemental> Division A of P.L. 116-123 provides a total of $7.767 billion in supplemental appropriations to aid in the U.S. and global coronavirus preparedness and response. This total includes $6.497 billion for the HHS (including contingent amounts), $20 million for the Small Business Administration, and $1.250 billion for foreign operations activities provided across several agencies and funding mechanisms. The funding is largely intended to aid in the domestic public health response to the outbreak, with limited amounts available for global health, diplomatic programs, and domestic and international economic assistance activities. Division B, which addresses telehealth services, is covered in CRS Report R46239, Telehealth and Telemedicine: Frequently Asked Questions . Table 1 displays funds appropriated in Division A. The table is organized by each federal department or agency, with funds further broken down by account, program, or activity. The text below the table is organized in the same order and includes more detailed information on the purposes and specified uses of these funds. <2. Health and Human Services (HHS)> Titles I and III of P.L. 116-123 provide a total of about $6.5 billion in appropriations to the Department of Health Human Services (HHS) for health emergency response activities related to COVID-19. The funds in these titles are provided to "prevent, prepare for, and respond to coronavirus, domestically or internationally." Funds largely support domestic activities, but certain accounts have available funding for HHS global health activities. (For information on additional international funding, see the " Foreign Operations " section of this report.) <2.1. Food and Drug Administration (FDA)> Title I provides $61 million to FDA for domestic and international efforts "to prevent, prepare for, and respond to coronavirus" to be used for activities such as development of medical countermeasures (e.g., therapeutics, vaccines, and diagnostics), advanced manufacturing for medical products, monitoring of medical product supply chains, and related administrative activities. <2.2. Centers for Disease Control and Prevention (CDC)> Title III makes $2.2 billion available to CDC for domestic and international preparedness and response activities, including the following: Not less than $950 million is for grants or cooperative agreements to "States, localities, territories, tribes, tribal organizations, urban Indian health organizations, or health service providers." (The bill calls for HHS to allocate at least half of these funds within 30 days of enactment.) The funds are for core public health functions, including surveillance, laboratory capacity, infection control, and other activities. Per the bill, each grantee that received a Public Health Emergency Preparedness (PHEP) grant for FY2019 shall receive 90% of that amount (totaling $561 million). In addition, not less than $40 million shall be allocated to tribes and tribal organizations. The bill requires certain grantees receiving these funds to submit a spend plan to the CDC not later than 45 days after the date of enactment. Several days after enactment, on March 11, 2020, CDC announced almost $600 million in awards to state and local PHEP grantees, additional funding to the cities of Houston and Philadelphia, and $750,000 to the Cherokee Nation, for a total of $605 million. On March 20, HHS announced that the CDC was preparing to provide an additional $80 million in funding to tribes, tribal organizations, and urban Indian organizations for response activities. In total, the $81 million to tribes and tribal organizations exceeds the required allocation in the supplemental. Based on these initial reports, CRS estimates that, as of the date of this report, about $265 million remains to be used at the CDC Director's discretion to target funds for certain jurisdictions or organizations, research, public health activities, and administrative functions. Not less than $300 million is for global disease detection and emergency response. $300 million shall be transferred to the CDC Infectious Disease Rapid Response Reserve Fund (IDRRRF). Amounts in the IDRRRF may be used to prevent, prepare for, and respond to an infectious disease emergency, as authorized by several titles of the Public Health Service Act, and may be transferred by the CDC Director between CDC, the National Institutes of Health (NIH), and the Public Health and Social Services Emergency Fund (PHSSEF) accounts. Funds may be used for domestic and global activities. In addition to the activities detailed above, the supplemental specifies that the funds appropriated to the CDC may be used for grants for the construction, alteration, or renovation of nonfederally owned facilities to improve preparedness and response capability at the state and local level. <2.3. National Institutes of Health (NIH)> Title III makes $836 million available to the National Institute of Allergy and Infectious Diseases (NIAID) at NIH. These funds are for preparedness and response to COVID-19. NIAID supports scientific research on COVID-19 and other coronaviruses, as well as product development for medical countermeasures (e.g., vaccines) that could be used to curb the spread of the virus and/or to lessen its health impact. The bill specifies that of the total provided to NIAID, not less than $10 million is to be transferred to National Institute of Environmental Health Sciences (NIEHS) for worker-based training to prevent and reduce exposure of hospital employees, emergency first responders, and other workers who are at risk of exposure to coronavirus through their work duties. NIEHS is the primary NIH institute for environmental health research. <2.4. Public Health and Social Services Emergency Fund (PHSSEF)> The Public Health and Social Services Emergency Fund is an account used in appropriations acts to provide the HHS Secretary with one-time or emergency funding, as well as annual funding for the office of the HHS Assistance Secretary for Preparedness and Response (ASPR). Title III of P.L. 116-123 makes $3.1 billion available to the PHSSEF for domestic and international coronavirus preparedness and response. PHSSEF funds may support a variety of activities, including product development and manufacturing for medical countermeasures (vaccines, diagnostics, and therapeutics) prioritizing platform-based technologies with U.S.-based manufacturing capabilities; the development of manufacturing platforms for such products; the purchase of medical countermeasures and medical supplies; the expansion of medical surge capacity; grants to improve nonfederally owned facilities to improve preparedness and response capabilities at the state and local level; and grants to improve nonfederally owned facilities for the production of medical countermeasures. Title III also states that the HHS Secretary may take actions authorized under current law to ensure that products developed with provided funding will be affordable in the commercial market; however, the Secretary cannot take actions that delay the development of such products. The bill specifies that, out of the $3.1 billion: $100 million is to be transferred to the Health Resources and Services Administration (HRSA) Bureau of Primary Health Care for grants under the Health Centers Program. Up to $2 million is to be transferred to, and merged with, funding for the HHS Office of Inspector General for the oversight of the activities supported with funds appropriated to HHS in titles I and III. An unspecified amount may be transferred to, and merged with, the Covered Countermeasure Process Fund. This fund may compensate eligible individuals who suffer injuries as a result of a medical countermeasure administered or used under a declaration of the Public Readiness and Emergency Preparedness Act (PREP Act). In addition to the $3.1 billion appropriation to the PHSSEF, the supplemental provides another $300 million in PHSSEF appropriations that are contingent upon future actions by HHS. The contingent funds may be used to purchase medical products (e.g., vaccines, therapeutics, and diagnostics). However, in order for the additional $300 million to become available, HHS must certify to the House and Senate Appropriations Committees that (1) funds from the initial $3.1 billion that had been allotted for purchase of such products will be obligated imminently and (2) the additional funds are necessary to purchase vaccines, therapeutics, or diagnostics in quantities that will adequately address the public health need. <2.5. HHS General and Other Provisions> Title III contains a number of general and other provisions that provide further guidance or additional requirements associated with the supplemental funds. For example, these provisions give HHS certain hiring and contract flexibilities. In addition, they authorize HHS to use funds to restore certain prior obligations, and they establish certain expectations with respect to spend plans, transfers, and reporting and notifications to Congress. <2.5.1. Use of Funds to Restore Prior Obligations> Title III includes general provisions authorizing HHS to use amounts appropriated in this title to restore certain obligations incurred by HHS prior to the date of enactment for activities related to coronavirus preparedness and response. In some cases, HHS is required to reverse these actions. Specifically, HHS is directed to restore any amounts that had been transferred or reprogrammed for these purposes pursuant to a notice to appropriations committees on February 2, 2020. Title III general provisions also specify that funds for certain grant awards or cooperative agreements to states, localities, and other entities are to include amounts to reimburse those entities for costs incurred for relevant public health and other preparedness and response activities between January 20, 2020, and the date of enactment. <2.5.2. HHS Spend Plans, Transfers, and Reporting and Notification Requirements> Titles III includes the following reporting and notification requirements for HHS, generally, and for specific HHS agencies: Spend Plan: HHS must provide a spend plan to the House and Senate Appropriations Committees not later than 30 days after the date of enactment. The spend plan must address anticipated uses of all funds made available to HHS in the supplemental. The spend plan must be updated and submitted to these committees every 60 days until September 30, 2024, and must include a list of each contract obligation in excess of $5 million that has not previously been reported. Transfer Authority: HHS must notify the House and Senate Appropriations Committees 10 days in advance of a transfer made between CDC, NIH, and PHSSEF accounts. HHS may transfer nearly all amounts appropriated in Title III to these specified agencies and accounts, provided the transfers are made to prevent, prepare for, and respond to coronavirus, domestically or internationally. Contracting: HHS must notify the House and Senate Appropriations Committees prior to using funding provided under Title III to enter into contracts with individuals for the provision of personal services to support coronavirus preparedness and response. Infectious Disease Rapid Response Reserve Fund (IDRRRF): The HHS Secretary, in consultation with the CDC Director, shall provide a report to the House and Senate Appropriations Committees every 14 days for a full year after the Secretary has made certain determinations with respect to the IDRRRF. Specifically, these reports must be made if the Secretary, pursuant to Section 231 of P.L. 115-245 , has made IDRRRF funds available (1) after declaring a Public Health Emergency or (2) determining that an infectious disease emergency has significant potential to imminently occur and to affect national security or the health and security of U.S. citizens. In the case of the COVID-19 outbreak, the HHS Secretary issued a determination allowing for the allotment of funds from the IDRRRF on January 25, 2020. The Secretary subsequently declared COVID-19 to be a Public Health Emergency Public Emergency effective January 27, 2020. The report to the appropriations committees must detail IDRRRF commitment and obligation information in excess of $5 million and upon request of the committees. <3. Small Business Administration> Title II of P.L. 116-123 provides the Small Business Administration (SBA) with $20 million until expended for administrative expenses to carry out the SBA Disaster Loan Program. Title II also deems the coronavirus outbreak a disaster under Section 7(b)(2)(D) of the Small Business Act. Prior to the amendment, some questioned whether the coronavirus outbreak would meet the Small Business Act's legal definition of a disaster. The amendment addresses this question and clarifies that SBA Economic Injury Disaster Loans (EIDL) can be made available. Title II does not provide additional funding to the SBA for disaster loans, including SBA EIDL. Instead, SBA EIDL loan funding in response to the coronavirus outbreak (as well as SBA disaster loan funding for other incidents) is to be funded by roughly $1.2 billion in disaster loan credit subsidy, which includes just over $1.1 billion in disaster loan credit subsidy carried over from previous years. This is possible because the Disaster Loan Account is a "no-year" account. No-year funding does not lapse at the end of the fiscal year. Rather, it is carried over to the next fiscal year. A summary of the supplemental released by the House Appropriations Committee noted that the SBA is expected to make $1 billion in credit subsidy available to support the cost of anticipated defaults and related expenses of about $7 billion in EIDL loans. Still, the $1.2 billion in loan subsidy may be of concern to some if EIDL assistance in response to the outbreak becomes significant, if there is an uptick in 2020 disasters, or both. Consequently, Congress could consider providing additional supplemental funding through another appropriations package. In addition, though the coronavirus outbreak is now considered by the SBA to be a disaster, SBA EIDL is not being made automatically available to businesses. Instead, EIDL must be requested by the state or territory governor by requesting one of the following types of declarations: (1) a major disaster declaration under the under the Robert T. Stafford Disaster Relief and Emergency Assistance Act ( P.L. 93-288 , as amended); (2) an SBA EIDL declaration under the Small Business Act (P.L. 83-163); (3) an SBA EIDL declaration under the Small Business Act based on the determination of a natural disaster by the Secretary of Agriculture; or (4) an SBA EIDL declaration based on the determination of the Secretary of Commerce that a fishery resource disaster has occurred. <4. Foreign Operations> Title IV of P.L. 116-123 provides a total of $1.25 billion for Department of State, Foreign Operations, and Related Programs (SFOPS) appropriations accounts, $264 million of which is to be managed by the Department of State and $971 million of which is to be managed by the U.S. Agency for International Development (USAID). <4.1. Department of State> Title IV designates $264 million for the Department of State's Diplomatic Programs account, which is the department's principal operating account. Generally, the account provides for human resources functions, overseas programs, security programs, and diplomatic policy and support. P.L. 116-123 indicates that the emergency funds for Diplomatic Programs are meant to support consular operations, reimburse evacuation expenses, and bolster emergency preparedness measures. <4.2. Bilateral Assistance> The act specified the provision of $971 million across a number of bilateral assistance appropriations accounts. These include the following: Office of Inspector General. $1 million to USAID's Office of Inspector General to support oversight of COVID-19-related programming. Global Health Programs. $435 million to the Global Health Programs (GHP) account, with which USAID intends to prioritize the following interventions in developing countries affected by and at-risk of COVID-19: screening at points of entry and exit; the purchase of key health commodities (e.g., diagnostics, personal protective equipment, and disinfectants); the prevention and control of infections in critical health facilities; readiness to identify, diagnose, manage, and treat cases rapidly; the identification and follow-up of contacts; awareness-raising in populations through risk-communication and community-engagement; the implementation of health measures for travelers; logistics and supply-chain management; global and regional coordination; and country-level readiness and response. According to USAID, the "funding will help address the threat of COVID-19 in the following high-priority countries: The Islamic Republic of Afghanistan; the Republics of Angola, Indonesia, Iraq, Kazakhstan, Kenya, South Africa, Tajikistan, The Philippines, Turkmenistan, Uzbekistan, Zambia, and Zimbabwe; the People's Republic of Bangladesh; Burma; the Kingdom of Cambodia; the Federal Democratic Republic of Ethiopia; the Kyrgyz Republic; the Lao People's Democratic Republic; Mongolia; the Federal Republic of Nepal; the Federal Republic of Nigeria; the Islamic Republic of Pakistan; the Kingdom of Thailand; and the Socialist Republic of Vietnam." The supplemental specifies that, out of the total appropriated to the GHP account, $200 million is to be transferred into USAID's Emergency Reserve Fund (ERF) to support coronavirus-related programs, including pandemic prevention, preparedness, and control. The ERF was established under the GHP account within final FY2017 appropriations ( P.L. 115-31 ) "to enable the United States and the international public health community to respond rapidly to emerging health threats." International Disaster Assistance. $300 million for coronavirus response efforts through the International Disaster Assistance (IDA) account. Broadly, the account is used for relief and recovery efforts in the wake of disasters both natural and human-induced. Economic Support Fund. $250 million in emergency funds for addressing coronavirus-related "economic, security, and stabilization requirements" through the Economic Support Fund (ESF). The ESF account supports myriad objectives, ranging from more traditional development activities to those that advance U.S. political and strategic goals. <4.3. Foreign Operations General Provisions> In the general provisions of Title IV of P.L. 116-123 , Congress primarily offers guidance and requirements on transfer authorities, the Administration's strategy for fighting COVID-19 on an international scale, and the intervals in which Congress requires reporting. Transfer Authorities. The act provides broad transfer authorities across GHP, IDA, and ESF, in an effort to grant flexibility to USAID in its COVID-19 response. However, five days prior to transferring funds, the Secretary of State or USAID Administrator must notify the House and Senate Appropriations Committees of the transfer's details. Strategy. The act requires the Secretary of State and USAID Administrator to issue a joint strategy to "prevent, prepare for, and respond to coronavirus abroad" within 15 days of the supplemental's enactment. Reporting. In addition to regular reporting requirements for each appropriations account, the act includes a provision that requires additional reporting for the supplemental funds. The act requires the Secretary of State and USAID Administrator to jointly submit to the House and Senate Appropriations Committees a report detailing the use of the supplemental funds within 30 days of enactment. Following submission of the report, it is required to be updated every 60 days until September 30, 2022, and then every 180 days after that until all funds have been expended. This reporting structure is relatively consistent with other SFOPS supplemental appropriations measures that have been enacted in the past decade. Use of Funds to Restore Prior Obligations. The act specifies that supplemental funds appropriated to certain accounts (Diplomatic Programs, GHP, IDA, and ESF) may be used to reimburse accounts administered by the Department of State and the USAID for obligations incurred prior to enactment for activities to prevent, prepare for, and respond to coronavirus. (Certain limitations are placed on use of these funds for certain obligations previously incurred by ESF.)

In the early months of 2020, the federal government began to express concern over the global outbreak of Coronavirus Disease 2019 (COVID-19). COVID-19 is a viral respiratory illness caused by a novel coronavirus. By late January, the Secretary of the U.S. Department of Health and Human Services (HHS) had invoked certain authorities to direct existing funds to respond to the COVID-19 outbreak. The HHS Secretary declared COVID-19 to be a Public Health Emergency, effective January 27, 2020. On February 24, 2020, the Trump Administration submitted an initial emergency supplemental appropriations request to Congress. The Administration requested $1.25 billion in new funds for the HHS Public Health and Social Services Emergency Fund (PHSSEF) to support COVID-19 response efforts. The request included a number of other proposals, mostly related to repurposing existing funds from across the government toward response activities. All told, the Administration estimated needing to allocate about $2.5 billion toward COVID-19 response efforts. On March 4, 2020, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( H.R. 6074 ), was introduced in the House. The bill was passed by the House (415-2) on March 4 and by the Senate (96-1) on March 5. The bill was signed into law ( P.L. 116-123 ) on March 6. This supplemental appropriations act is the first such act to be enacted in the aftermath of the COVID-19 outbreak. Any subsequent such actions are beyond the scope of the report. According to the Congressional Budget Office (CBO), Division A of P.L. 116-123 provides roughly $7.8 billion in discretionary supplemental appropriations. (CBO estimates that provisions in Division B will cost roughly $490 million, but those provisions are not the focus of this report.) The funds in Division A of P.L. 116-123 are primarily intended to prevent, prepare for, and respond to the coronavirus. (For purposes of the bill, the term coronavirus refers to SARS-CoV-2, the virus that causes COVID-2019, or another coronavirus with pandemic potential.) The majority of the funds in Division A are appropriated to HHS agencies and accounts. In total, the bill appropriates $6.5 billion to HHS, representing 84% of all funds in the bill. In general, these funds are for health emergency prevention, preparedness, and response activities related to COVID-19. Funds largely support domestic activities, but certain accounts include funds that may be allocated for global health activities. The HHS funds are distributed as follows: The PHSSEF receives almost half of all funds in Division A, with appropriations totaling $3.4 billion when including $300 million in appropriations that are contingent upon future actions by HHS. PHSSEF funds are provided for the development of countermeasures and vaccines, as well as for the purchase of vaccines, therapeutics, diagnostics, necessary medical supplies, medical surge capacity, and administrative activities. The Centers for Disease Control and Prevention (CDC) receives the next-largest share of all funds in the supplemental: $2.8 billion, accounting for more than a quarter of all funds in Division A. In general, these funds are intended to support core public health functions, including surveillance, laboratory capacity, infection control, and other activities. The funds are also for global disease detection and emergency response, as well as for activities carried out using the Infectious Diseases Rapid Response Reserve Fund (IDRRRF). Remaining HHS funds are appropriated to the Food and Drug Administration ($61 million) and the National Institutes of Health ($836 million). In addition to amounts appropriated to HHS, the supplemental provides $20 million in administrative funds for the Disaster Loans Program Account within the Small Business Administration (SBA). The supplemental also includes provisions clarifying that SBA disaster loans and economic injury disaster loans may be made in response to COVID-19. Finally, the supplemental provides nearly $1.3 billion (about 16% of all funds in Division A) to support foreign operations activities across several agencies and funding mechanisms. This includes funding to help the Department of State maintain consular operations, reimburse for evacuation expenses, and support emergency preparedness. Additional funds are provided for global health, international disaster assistance, economic support, and certain oversight activities.

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<1. Background> This report discusses issues related to providing employment services targeted at noncustodial parents (NCPs) within the context of the Child Support Enforcement (CSE) program. The CSE program is a federal-state partnership that currently operates in all 50 states; the District of Columbia (DC); the territories of Guam, Puerto Rico, and the U.S. Virgin Islands; and 60 tribal nations. The program seeks to promote parental responsibility and ensure children receive support from both parents, notably through financial income transferred from an NCP to a child's primary caretaker (usually a custodial parent). In FY2018, the CSE program provided services on behalf of 14.7 million children, about 20% of children in the United States. One analysis estimated that nearly two-thirds of families receiving CSE services in 2015 had income below 200% of the poverty threshold. The CSE program collected 66% of the current support that was due in FY2018, continuing the program's record of slow but steady improvement in recent years. However, $11.5 billion in current support that was due went uncollected, becoming arrears (i.e., past due support). A number of observers have concluded that some NCPs have a currently limited ability to pay that restricts how much support is collected, and that those NCPs would benefit from employment services being offered in the context of the CSE program. NCP employment and earnings, particularly through stable, formal employment, are positively linked to child support payment compliance. This association is likely because NCPs with higher earnings have a better ability to pay, but also because formal employment facilitates the use of income withholding, a particularly effective CSE tool. Also, many low-income NCPs face one or more significant barriers to having consistent employment and sufficient income to pay child support, including low wages and benefits, irregular and unsteady jobs, limited education or marketable skills, health conditions (e.g., substance use), lack of transportation or housing, discrimination, and history with the criminal justice system. Proponents of CSE employment programs argue that they respond to the concern that NCPs need help securing employment, but might be less likely than other populations to access employment services through the workforce development system or public benefit programs. In addition, they posit that the CSE program is a unique platform for providing employment services in that it already reaches NCPs in practice, has a strong interest in improving NCPs' earnings and child support payments, and can leverage CSE policies so that they act as employment incentives and not barriers for NCPs. Although CSE employment programs are fairly widespread, they are not found everywhere and appear to serve a relatively small proportion of NCPs who struggle to secure adequate employment and regularly pay their obligations in full. To explain why CSE employment programs operate on a limited scale, CSE officials and observers have primarily cited a lack of sufficient and sustainable funding. (The federal government normally reimburses each state for 66% of all allowable expenditures on CSE activities, but employment services are currently not an allowable activity and funding through other mechanisms within the program is limited. ) Many of those same observers have proposed that legislation be enacted to address this issue. This report first reviews how CSE-led employment programs may be designed with regard to NCP eligibility and recruitment, as well as services provided. This is followed by an explanation of the current federal funding options for these programs. The next section reviews the available evidence on the effectiveness of employment programs that have been led by or conducted in cooperation with CSE. The report concludes by highlighting recent proposals to dedicate federal funding for CSE employment programs. <2. Program Eligibility and Recruitment> CSE employment programs must establish criteria to determine eligibility for services. Unemployed, or underemployed, low-income NCPs who are struggling to meet their obligations are the population that most frequently qualifies for services. Programs may also serve additional types of NCPs, like those who are in the process of paternity or order establishment, to facilitate recruitment or expand their reach. Alternatively, CSE employment programs may narrowly target services to conserve resources and prioritize certain cases (e.g., those owing current support versus those owing arrears only). Eligibility criteria can also help limit duplication with other public programs or risks of supplanting their funding. Another important decision CSE employment programs make is whether to rely on mandatory or voluntary recruitment policies, or both. Courts can issue mandatory orders for NCPs to participate in a work program. When NCPs fail to pay child support, states may issue contempt citations or file criminal nonsupport charges that bring parents before a court. (The required administrative and court processes can be expensive for the CSE program and state. ) At this point, the court may give NCPs the choice to seek work as an alternative to incarceration, or order them to do so. Depending on the jurisdiction and court, NCPs may be left to their own discretion for how to secure employment, or they may be firmly connected to or ordered into an employment program that can provide relevant services and assistance. As a result, among the population presented with the choice of participating in a mandatory work program versus incarceration, enrollment and engagement rates are usually fairly high. Alternatively, or additionally, CSE employment programs can focus on voluntary recruitment. This approach allows programs to serve more NCPs than just those who have been brought into court. Program referrals can be made by staff from CSE agencies, courts, community organizations, and probation or parole offices. Even when programs are voluntary, court referrals and the consequences of nonpayment (e.g., license suspensions, interest charged on debt, the risk of eventually being incarcerated) give NCPs strong incentives to participate. Still, several voluntary programs report that recruitment and retention is challenging in that many NCPs referred to or made aware of the programs decline to participate voluntarily or stay engaged. In response, programs have developed several strategies for boosting recruitment and retention, including expansive program eligibility rules, incentives (e.g., removal of CSE-initiated driver's license suspensions, forgiveness of state-owed arrears), intensive case management, co-locating services, and aggressive and multifaceted outreach. <3. Program Services> CSE employment programs typically provide a wide range of services, which can require the involvement of many partner organizations. Intensive case management is generally considered critical for engaging NCPs, assessing their needs holistically, coordinating service receipt, and monitoring participant progress. CSE agencies may handle this general case management or make arrangements (e.g., contract) with other organizations to do so. Case managers and other program staff may refer NCPs to external resources for issues such as housing, mental health, substance use, legal aid, and financial education, although services may be limited in many communities. CSE employment programs may also provide NCPs with access to parenting and fatherhood services, including classes and referrals to resources for addressing parenting time (child access and visitation), co-parent mediation, and other legal concerns related to parenthood. Providing employment services is often contracted or delegated to partnering government workforce agencies or community organizations with relevant expertise. These entities typically provide NCPs with traditional services such as employment-focused case management, job search assistance, employment assessments, job readiness, basic or remedial education, short-term job skills training, job development and placement, and job retention. These services may be provided in both individual and group settings. Employment programs may also provide work supports including transportation assistance, small incentives to promote program engagement, and specialized services for those with criminal records such as records expungement or voluntary drug testing. Less commonly, NCPs may participate in subsidized employment, on-the-job training, vocational training and education, and other, more intensive employment services. <4. Federal Funding> Under current law, federal funds that can be used by CSE programs to fund employment services are fairly limited. The funding streams that are available may be uncertain from year-to-year, of short duration, or limited in amount relative to the potential demand for these services. The largest source of federal funding for state CSE administration is the previously mentioned 66% reimbursement rate for state and local expenditures on allowable CSE activities, with no ceiling on the total amount of federal reimbursement. Federal matching payments on net totaled more than $3.5 billion in FY2018, and accounted for approximately 90% of federal CSE funding for states in recent years. However, spending on work activities has not been allowed as a federally reimbursable cost. Alternatively, states can apply for a waiver under Section 1115 of the Social Security Act to receive federal matching payments for the purposes of a demonstration project designed to promote program objectives. With respect to waiver projects, states have to invest new funds (not redirect funding), they are time limited (typically two to five years) and must be evaluated, and total federal reimbursement must not exceed $2 million. The second largest CSE funding stream is incentive payments, which are designed to reward states for strong program performance and were estimated to exceed $510 million in FY2018. Incentive payments must be reinvested back into the program on activities that are eligible for reimbursement. However, states can request authorization to use incentive payments for activities that are not eligible for federal reimbursement but may contribute to improving the effectiveness or efficiency of child support, such as employment programs. Incentive spending must supplement and not supplant other state CSE funding, states can determine how much of their incentive payment to allocate toward an approved activity, and the program does not have to be formally evaluated. There are also non-CSE federal funding streams that can support NCP employment activities, although they may not be directly under the control of the program or available on a consistent basis. For example, Temporary Assistance for Needy Families (TANF) funding can support employment programs for NCPs. States can include NCPs as members of TANF-eligible family units and provide assistance and other services funded by TANF or separate state maintenance-of-effort (MOE) programs, even when no other family member is receiving assistance. States can also use TANF or state MOE funding to provide non-assistance services and benefits, such as employment services, to needy individuals such as NCPs when doing so is consistent with TANF goals. The TANF block grant provides states with considerable flexibility in the use of its funds, so NCP employment programs have to compete with many other potential expenditure options. Similarly, funding for the Workforce Innovation and Opportunity Act's adult and dislocated worker programs and the Supplemental Nutrition Assistance Program's Employment & Training programs can be used to provide employment services to NCPs who meet these programs' respective eligibility criteria. In addition, the Wagner-Peyser Act Employment Service (ES) makes labor exchange services (e.g., counseling, job search and placement assistance) universally available to all individuals. States and localities have also used a variety of other public and private funding to support CSE employment pilots, including competitive grants from the Department of Health and Human Services' (HHS') Office of Child Support Enforcement (OCSE) and Office of Family Assistance (OFA). <5. Research Evidence on Program Effectiveness> The effectiveness of CSE-led or CSE-supported employment programs has been analyzed by a few rigorous evaluations. While many agencies and partner organizations providing employment services note that NCPs who participate in employment programs show improvement when measured on the basis of comparing pre- and post-participation outcomes such as earnings and child support payments, this kind of analysis cannot address what would have occurred if NCPs had not participated in those particular services. For example, NCPs might have secured employment without assistance, received employment services through another program, or benefited from changes in the economy over time. Rigorous research designs such as random assignment use valid comparison groups to isolate impacts , which are the changes in outcomes causally attributable to a program or policy. This report focuses on statistically significant employment, earnings, and child support payment findings from random assignment experiments and other research designs that can plausibly identify program impacts. In social policy, new or alternative interventions are often compared to a services-as-usual condition developed through many years of trial and error, sometimes including previous rounds of rigorous evaluation. Research in disciplines as varied as social policy, education, medicine, and business has found that the most common pattern of results when interventions undergo rigorous evaluation is "weak" or "no effects." A similar pattern of results has been observed for employment and training programs serving low-income populations other than NCPs. Studies that do not find large positive impacts may still identify potentially promising changes for intervention implementation, design, or strategy. Employment programs for NCPs have not shown consistent impacts on employment, earnings, and child support compliance when subjected to rigorous evaluation. Cross-site variation from two rigorous evaluations suggests that robust involvement from CSE in employment programs might be beneficial for generating impacts, relative to less CSE involvement. However, there is no rigorous evidence on the relative effectiveness of spending on employment programs versus alternative CSE program activities. The combination of these points also means there is no rigorous evidence that spending on employment services is less effective than alternative collection strategies, and many CSE practitioners believe from experience that these programs are a more effective tool for NCPs with a limited ability to pay. Rigorous evidence with NCPs is available for two employment program models: traditional employment services and transitional jobs. Alternative employment services that are more common with other low-income populations (e.g., substantive occupational skills training) have typically not been rigorously evaluated with NCPs and therefore are not discussed in this report. Earnings supplements such as the Earned Income Tax Credit, which provide monetary payments to individuals who work in an effort to increase employment and promote other policy objectives, are not regularly included as a service by CSE employment programs and are also not covered here. <5.1. Traditional Employment Services> Evidence on the effectiveness of providing traditional employment services to NCPs is mixed. Commonly provided employment services include job search assistance, job readiness training, employment-related assessments, job development services, job retention services, rapid re-employment, employment planning, and work supports. The National Child Support Noncustodial Parent Employment Demonstration (CSPED) was a large-scale random assignment study that enrolled more than 10,000 NCPs across sites in eight states between October 2013 and September 2016. Participants were randomly assigned to either a group eligible for CSPED services, or a group receiving CSE agencies' regular services. CSPED increased the receipt of a combination of case management, employment, parenting, and enhanced child support services, although the level of additional service receipt has been characterized as a "fairly light-touch" for such a hard-to-employ population. More intensive services such as subsidized employment or on-the-job training were rarely accessed. Overall, CSPED did not consistently increase employment, earnings, or child support compliance relative to CSE agencies' usual services. While context, population served, program features, and service receipt varied somewhat in the participating states, there were few differences in impacts by state. Several earlier, single-state evaluations of CSE-employment programs providing similar employment or more comprehensive services reported more promising impacts, although these studies used research designs that make their results subject to greater uncertainty. An older, multi-state random assignment demonstration also found that an employment program (predominantly providing traditional employment services, peer support groups, and enhanced child support services) did not increase NCPs' employment or earnings, although it did increase the likelihood of formal child support payments, and there was some evidence suggesting impacts for earnings and employment among harder-to-employ subgroups. The evaluated demonstrations varied somewhat in their target populations, although all served highly disadvantaged populations. They also varied in whether they evaluated programs using mandatory, voluntary, or mixed-recruitment strategies, and the research designs and pattern of results do not provide clear evidence as to whether any approach is more likely to produce stronger impacts. The programs provided typical or even fairly robust levels of service, relative to the field of CSE-led employment programs. Rigorous evaluations of programs providing analogous services to fatherhood and prisoner reentry populations with large proportions of NCPs have also infrequently reported impacts on employment, earnings, or child support outcomes. <5.2. Transitional Jobs> Another strategy that has been tested with NCPs, and shown more promising medium and longer-term effects, is transitional jobs, which are short-term subsidized public, nonprofit, or private employment opportunities designed to increase participants' income while helping them to "learn to work by working." The end goal is to increase NCPs' ability to secure and retain unsubsidized employment. A large-scale random assignment study found that a recent collection of programs generated substantial increases in employment, earnings, and the likelihood of child support payment while NCPs were in subsidized employment. These short-term employment impacts demonstrate that such programs can successfully target individuals who want to work but would otherwise struggle to secure consistent employment. The subsidized employment provides these individuals with meaningful work and income. For the period immediately after the transitional jobs ended, participants had modestly higher earnings and employment. However, for most programs the earnings and employment impacts faded away over time, although the increased likelihood of child support payment more often persisted. These findings are similar to those from transitional jobs programs serving other low-income populations (e.g., formerly incarcerated individuals, TANF recipients). Transitional jobs programs are more expensive and challenging to implement than traditional employment services, as programs need to secure work opportunities for participants and pay a portion of their wages for a period of time. <6. Recent Policy Proposals> Two notable, recent executive branch proposals have recommended increasing federal funding for CSE employment programs, though neither has been adopted. The Obama Administration proposed allowing federal reimbursement of state CSE program expenditures to fund certain job services offered to eligible NCPs (Notice of Proposed Rulemaking, November 17, 2014). The Trump Administration, in its FY2021 budget submission, proposed allowing federal reimbursement of state CSE program expenditures for mandatory work activities, capped at 2% of the total federal reimbursement of that state's CSE expenditures. Legislation related to employment services for NCPs has also been introduced in the 116 th Congress. The Julia Carson Responsible Fatherhood and Healthy Families Act of 2019 ( H.R. 3507 ) proposes allowing federal reimbursement of state CSE program expenditures to fund certain job services (a more expansive set of services than in the Obama Administration proposal) offered to eligible NCPs. Other legislation would try to encourage states to focus more TANF funding on employment services, which might benefit some NCPs (typically, a parent of a child receiving TANF assistance). The Jobs and Opportunity with Benefits and Services for Success Act ( H.R. 1753 / S. 802 ) would require that state TANF plans detail how low-income NCPs will be able to access employment services through TANF. The Accelerating Individuals into the Workforce Act ( H.R. 4571 ) would redirect funding from the TANF contingency fund to support subsidized employment opportunities for eligible individuals, including NCPs of minor children receiving TANF assistance. Policymakers have also proposed funding new programs, separate from CSE and TANF, for providing employment services. The ELEVATE Act of 2019 ( H.R. 556 / S. 136 ) would provide funding for public and private subsidized employment programs that could serve NCPs and other populations. The Pandemic TANF Assistance Act ( S. 3672 ) also would provide funding that could be used for, among other purposes, certain subsidized employment opportunities for low-income populations (which could include NCPs).

The Child Support Enforcement (CSE) program is a federal-state partnership that seeks to ensure child support is a regular source of income for families. The program transfers financial support from a noncustodial parent (NCP) to a child's primary caretaker (usually a custodial parent). Nearly two-thirds of participating custodial families report having incomes below 200% of the federal poverty threshold. The CSE program collects about two-thirds of the current support that is due each year, with the remainder that is unpaid becoming arrears (i.e., past-due support). Many NCPs who do not pay their obligations in full struggle with finding consistent and sufficient employment. Employment programs within the context of CSE are designed to increase NCP employment and child support collections. Many states have CSE-led employment programs and a number of practitioners report that, in their experience, these services are a more effective tool for NCPs with limited ability to pay than other enforcement strategies. CSE employment programs only serve a small proportion of NCPs making zero or partial payments; many observers primarily attribute this to a lack of sustainable funding. In response, some policymakers have proposed dedicating federal funding for CSE-led employment services. CSE employment programs use varied eligibility criteria, but they typically focus on low-income NCPs. Programs also vary in their reliance on mandatory or voluntary recruitment policies, or both. Mandatory recruitment involves courts ordering parents who are behind in their payments to participate or risk incarceration. Voluntary recruitment relies on NCP interest and referrals from CSE staff, courts, and partner organizations. CSE employment programs usually provide a wide range of services, including intensive case management, employment, child support, parenting/fatherhood, and other support services. Service provision is often contracted to partner agencies or community organizations. In terms of employment services, programs traditionally provide services such as job readiness, job search, and job development. Participants are less likely to participate in transitional jobs (short-term subsidized employment) or more intensive vocational education and training services. Under current law, federal funds that can be used by CSE programs to support employment services are fairly limited. Although the federal government normally reimburses each state at 66% of all allowable expenditures on CSE activities—financing that totaled more than $3.5 billion in FY2018—employment services are currently not a reimbursable activity. Similarly, the second largest CSE funding stream, incentive payments (expected to exceed $510 million for FY2018), cannot be automatically used to support employment services. States can pursue Section 1115 waiver demonstrations as a means to receive federal matching payments or request authorization to spend incentive funds on employment services, but both approaches come with restrictions. States can also tap non-CSE federal funding to support employment services for NCPs, such as the Temporary Assistance for Needy Families (TANF) block grant, but this use must compete with other potential uses for the funding. Several rigorous evaluations have been conducted on two employment service models with NCPs: traditional employment services and transitional jobs. Evidence on the effectiveness of traditional employment services for NCPs is mixed, with the most recent federally funded, large-scale random assignment study on this model finding little or no impacts. Earlier evaluations reported more promising effects. Transitional jobs programs are more expensive and challenging to implement, but a recent federally funded, large-scale random assignment evaluation on this model reported stronger impacts than traditional employment services. The effects were substantial while participants were in subsidized jobs, modest for a period after the transitional jobs ended, but then usually continued to fade over time.

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<1. Introduction> The long-term objective of the World Trade Organization's (WTO's) Agreement on Agriculture (AoA) is to establish a fair and market-oriented agricultural trading system. The principal approach for achieving this goal is, first, to achieve specific binding commitments by all WTO members in each of the three pillars of agricultural trade policy reform market access, domestic support, and export subsidies and second, to provide for substantial progressive reductions in domestic agricultural support and border protection from foreign products. As a signatory member of the WTO agreements, the United States has committed to abide by WTO rules and disciplines, including those that govern domestic farm policy as spelled out in the AoA. Since the WTO was established on January 1, 1995, the United States has generally met its WTO commitments, including spending limits on market-distorting types of farm program outlays. <1.1. What Is the Issue?> Direct payments to producers under U.S. farm support programs are cumulative, and compliance with WTO commitments is based on annual spending levels. The addition of large, ad hoc trade assistance payments to producers in 2018 and 2019, on top of existing farm program support, has raised concerns by some U.S. trading partners, as well as market watchers and policymakers, that U.S. domestic farm subsidy outlays in those two years might exceed the annual spending limit of $19.1 billion agreed to as part of U.S. commitments to the WTO. <1.2. Report Objectives> This report examines whether the United States might exceed its WTO spending limit. As background, this report briefly reviews the WTO rules and disciplines on farm program spending. Then, it reviews the types of U.S. farm programs that are subject to WTO disciplines in particular, it focuses on programs that make direct payments to producers based on agricultural production activities. The review of farm programs includes a discussion of how U.S. compliance may be affected by changes made to U.S. farm programs under the 2018 farm bill (the Agricultural Improvement Act of 2018, P.L. 115-334 ), as well as by the two rounds of ad hoc direct payments made under the Market Facilitation Program initiated by the Secretary of Agriculture in 2018 and 2019 under other statutory authorities. The nature and timing of U.S. farm support program outlays are discussed in the context of relevant WTO commitments in particular, how different types of program outlays are notified to the WTO and how they might count against the aggregate U.S. spending limit. Finally, this report examines current projections about farm program outlays for 2018-2019 and assesses the possibility of whether U.S. farm program spending might exceed the $19.1 billion spending limit in those years. <2. WTO Disciplines on Farm Program Spending> Farm support programs can violate WTO commitments in two principal ways: first, by exceeding spending limits on certain market-distorting programs, or second, by generating market distortions that spill over into the international marketplace and cause significant adverse effects for other market participants. In general, U.S. farm support outlays should be evaluated against both of these criteria for a potential violation of WTO commitments. However, this report focuses on the first potential pathway for a violation: excessive spending. <2.1. AoA Defines Spending Disciplines> WTO member nations have agreed to limit spending on their most market-distorting farm policies. The WTO's AoA spells out the rules for countries to determine whether their policies are potentially trade-distorting, how to calculate the costs of any distortion, and how to report those costs to the WTO in a public and transparent manner. (See the text box "WTO Classification of Domestic Support" below. More detail on WTO classifications of domestic support is provided in two appendices to this report: Appendix A , "WTO Domestic Support Commitments," and Appendix B , "U.S. Domestic Support Notifications.") Domestic farm subsidies under the AoA are measured using a specially defined indicator, the "Aggregate Measure of Support" (AMS). AMS encompasses two types of support provided as a benefit to agricultural producers: product-specific support (that is, benefits linked to a specific commodity) and non-product-specific support (general benefits not linked to a specific commodity). This distinction is important for evaluating compliance, as discussed below. In addition, some types of programs are not subject to spending limits under WTO commitments. The United States, along with 27 other original members of the WTO, agreed to establish ceilings for their non-exempt AMS, referred to as the amber box. The U.S. ceiling for amber box spending has been fixed at $19.1 billion since 2000. If the United States were to exceed its WTO annual spending limit, then U.S. farm support programs could be vulnerable to challenge by another WTO member under the WTO's dispute settlement rules. <2.2. Some Program Spending May Be Exempt from Disciplines> Not all farm support program outlays count against amber box spending limits. Certain domestic support outlays may be exempt from counting against the amber box spending limit if they meet one of four possible conditions ( Appendix A ). First, if a program's outlays are considered to be minimally or non-trade distorting (in accordance with specific criteria listed in Annex 2 of the AoA), then they may qualify as green box programs and not be included in the AMS. Second, if program spending is market-distorting but has offsetting features that limit the production associated with support payments, then they may qualify as blue box programs and not be included in the AMS. Finally, if AMS outlays are sufficiently small relative to the value of the output measured as a share of either product-specific or non-product-specific output then they are not included in the amber box. In addition to these exemptions, the timing of outlays across crop, calendar, or marketing years may also influence the calculation of total AMS spending for any given year and help avoid exceeding the amber box spending limit during a particular time period. <3. U.S. Farm Support Programs> The U.S. Department of Agriculture (USDA) implements four general types of farm programs that provide payments (classified as AMS) directly to individual producers: Traditional farm p rograms authorized under Title I of the 2018 farm bill ( P.L. 115-334 ). These include the Market Assistance Loan (MAL), Agricultural Risk Coverage (ARC), Price Loss Coverage (PLC), Dairy Margin Coverage (DMC), and sugar programs. Payments under these programs during crop years 2014-2018 were authorized by the 2014 farm bill ( P.L. 113-79 ). These programs were modified by the 2018 farm bill and include payments made for crop years 2019-2023. Because of the way their payments are triggered, outlays under the MAL, DMC, and sugar programs are notified as product-specific AMS, whereas ARC and PLC payments are notified as non-product-specific AMS. Permanent disaster assistance programs include the Livestock Forage Disaster Program (LFP), Livestock Indemnity Program (LIP), Tree Assistance Program (TAP), and Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP). Payments under all of these permanent disaster assistance programs are coupled to producer choices and notified as product-specific AMS. The federal crop insurance program provides premium subsidies to producers. Premium subsidies are statutorily defined as a percentage of a policy's total premium, and premiums vary with insured units, coverage levels, and crop values. Since 2012, USDA has notified crop insurance premium subsidies to the WTO as product-specific AMS, since they are coupled to producer crop choices. A d hoc programs may be authorized by the Secretary of Agriculture, outside of Congress, using authority under the Commodity Credit Corporation (CCC) Charter Act to make payments in support of U.S. agriculture. Two such programs are the trade assistance programs of 2018 and 2019. USDA has not yet notified any trade assistance payments to the WTO, nor has USDA announced the WTO classification it intends to use for such payments. Payments under U.S. conservation programs are generally deemed non-market-distorting and are notified as green box, where they are not subject to any spending limit. The traditional revenue support programs, as well as the disaster assistance and ad hoc payment programs, are implemented by USDA's Farm Service Agency (FSA) using mandatory CCC funding. The federal crop insurance program is implemented by USDA's Risk Management Agency (RMA) using mandatory funding from the Federal Crop Insurance Corporation. <3.1. Farm Program Changes Under the 2018 Farm Bill> The United States has instituted several farm program changes since early 2018 that could bring increased scrutiny from other WTO members. With respect to the current incarnation of traditional farm support programs, most were established under previous farm bills. They were reauthorized by the 2018 farm bill but with some modifications that might alter their treatment under WTO disciplines. In general, the 2018 farm bill incrementally shifts farm safety net outlays away from decoupled programs and toward coupled (and more market-distorting) programs. This was done by raising support levels for certain existing coupled programs, removing several of the coupled programs from individual farm payment limit requirements, and expanding the potential pool of family-farm payment recipients, thus weakening payment limit restrictions. Similarly, federal crop insurance coverage was expanded under the 2018 farm bill, thus increasing the potential for greater premium subsidy outlays. <3.1.1. Coupled, Product-Specific Support Levels Raised for Selected Commodities> The 2018 farm bill increased statutory, product-specific MAL rates for several program crops. MAL payments are coupled directly to actual harvested production (subject to a producer's participation choice). MAL payments may be triggered when the local market price for a MAL commodity falls below its statutory MAL rate. Raising the MAL loan rate has two effects: It increases the probability of triggering a coupled MAL payment when market prices are declining, but it decreases the maximum potential payment under the decoupled PLC program associated with that commodity. The potential for increased MAL payments has become more relevant under the 2018 farm bill, because all MAL benefits were removed from counting against annual USDA producer payment limits. Furthermore, the 2018 farm bill raised support levels for participating dairy producers under the DMC program. DMC payments are triggered when the monthly average of a formula-determined margin, between milk prices and feed costs per unit, falls below a producer-selected margin coverage level. DMC payments are made on a farm-level historical milk production base. Milk producers must participate in the DMC to be eligible for payments. Thus, DMC payments are treated as coupled. DMC, like its predecessor the Margin Protection Program operates without any limit on payments received. Coupled payments can influence producer production choices in favor of those farm activities expected to receive larger support payments. If such payments represent a significant share of a commodity's farm value and result in surplus production that moves into international markets, then they could attract the attention of competitor nations. Such spillovers, if measurably harmful to foreign export competitors or producers, could lead to challenges under the WTO's dispute settlement process. <3.1.2. Decoupled, Non-Product-Specific Support Potentially Expanded Under ARC and PLC> Of the direct payment programs, the ARC and PLC programs are partially decoupled from producer behavior: Payments are made to a portion (85%) of historical base acres irrespective of current-year plantings. However, ARC and PLC payment calculations use current market-year prices to determine if a payment has been triggered, thus partially coupling them to market conditions. The partial decoupling of both ARC and PLC is in deference to WTO rules that view decoupled payments as less distorting of markets than coupled payments. Furthermore, ARC's use of a moving average formula based on historical prices and yields is also in response to a WTO panel finding (under dispute settlement) to consider market conditions in setting program support levels. In contrast, PLC's use of a statutorily fixed reference price ignores market conditions. Similarly, ARC's revenue formula uses the PLC reference price as a floor price. Thus, ARC only reflects market conditions when prices are above PLC reference prices. As a result, both ARC and PLC could be market distorting when market prices are below the statutory reference prices for prolonged periods. By basing ARC and PLC payments on historical acres rather than current planted acres (i.e., current crop choices), the payments are partially decoupled, and USDA notified them as non-product-specific. As a result, ARC and PLC payments have been excluded from counting against amber box spending limits in the WTO since their origin in 2014 under the non-product-specific de minimis exclusion. <3.1.2.1. PLC Program Changes That Expand Potential Payments> Two changes to the PLC program under the 2018 farm bill include the option for producers to update their program yields (used in the PLC payment formula) and an escalator provision that could potentially raise a covered commodity's effective reference price (used in both the PLC and ARC payment rate) by as much as 115% of the statutory PLC reference price based on 85% of the five-year Olympic average of farm prices. Both of these options would likely be used by producers only when they offer the potential to expand program payments. <3.1.2.2. ARC Program Changes That Expand Potential Payments> The 2018 farm bill also specifies several changes to the ARC program. Among the changes, ARC will use a trend-adjusted yield to calculate its revenue guarantee. In addition, the five-year Olympic average county yield calculations will increase the yield floor (substituted into the formula for each year where the actual county yield is lower) to 80%, up from 70%, of the transitional county yield. This yield calculation is used to calculate the ARC benchmark county revenue guarantee. Both of these yield modifications have the potential to raise ARC revenue guarantees for producers, thus increasing the potential for payments when actual current-year yields or prices turn downward. <3.1.2.3. Joint ARC and PLC Changes> The 2018 farm bill offers producers the option in 2019 of switching between ARC and PLC coverage, on a commodity-by-commodity basis, effective for both 2019 and 2020. Beginning in 2021, producers again have the option to switch between ARC and PLC but on an annual basis for each of 2021, 2022, and 2023. This flexibility could allow producers to benefit from current market information to select the program, ARC or PLC, that offers the greatest potential to make payments. Both ARC and PLC payments are subject to annual USDA farm payment limits under the 2018 farm bill (unchanged from the 2014 farm bill). <3.1.3. Several Product-Specific Payment Programs Exempted from Payment Limits> In a change from previous farm policy, the 2018 farm bill removed several coupled, direct payment programs from annual farm payment limit requirements. These include benefits under MAL and the three permanent disaster assistance programs: LIP, TAP, and ELAP. DMC, like its predecessor the Margin Protection Program operates without any farm payment limit. All of these programs make product-specific amber box payments. The absence of a limit on benefits received by an individual farmer under these programs represents the potential for unlimited, fully coupled outlays that count against the U.S. amber box limit unless exempted under the PS de minimis exemption. Higher DMC and MAL support levels increase the potential for higher program payments during a market downturn when prices are lower. Weak market conditions and relatively low commodity prices (below MAL loan rates) would be needed to trigger payments under MAL. DMC payments are triggered by weak farm milk prices relative to feed costs. In contrast, disaster payments are triggered by natural disasters or other qualifying perils occurring at the farm level. <3.1.4. Potential Pool of Payment Beneficiaries Expanded> The 2018 farm bill made no changes to the "actively engaged in farming" criteria used to determine whether an individual is eligible for farm program payments. However, it modified the criteria for farm program eligibility. The definition of family farm is expanded to include first cousins, nieces, and nephews, thus increasing the potential pool of individuals eligible for individual payment limits on family farming operations. With respect to payment limits and the adjusted gross income (AGI) criteria, the 2018 farm bill left both the payment limit of $125,000 per individual ($250,000 per married couple) and the AGI threshold of $900,000 unchanged. <3.1.5. Minor Increase to Sugar MAL Rate> The U.S. sugar program does not rely on direct payments from USDA, and no changes were made to this status under the 2018 farm bill. Instead, USDA provides indirect price support via MAL loans to processors at statutorily fixed prices (which were raised 5% by the 2018 farm bill), while limiting both the amount of sugar supplied for food use in the U.S. market and the amount of sugar that may enter the United States under a series of tariff rate quotas. In its 2016 notification of domestic support to the WTO (the most recent notification year), USDA notified the implicit cost of the sugar program at $1.5 billion in market price support. The change in the sugar MAL rate is not expected to influence the United States' implicit sugar cost notification. <3.1.6. Federal Crop Insurance Direct Support Expanded> Federally subsidized crop insurance is available for over 100 agricultural commodities including both program commodities and others. Federal crop insurance is permanently authorized by the Federal Crop Insurance Act (7 U.S.C. 1501 et seq. ) but is periodically modified by new farm legislation. The principal subsidy component of federal crop insurance is a premium subsidy that has paid for an average of 63% of the cost of buying crop insurance since 2014. Premiums (and premium subsidies) vary with the type of policy, insured unit, and coverage level selected. Thus, both the premium and its subsidy component are coupled to producer behavior. In its annual notifications to the WTO of domestic support outlays, USDA has declared the premium subsidies as product-specific direct payments to producers (i.e., product-specific AMS). The 2018 farm bill expanded the federally subsidized crop insurance program. In addition, the 2018 farm bill extended the authority for catastrophic policies to forage and grazing crops and grasses. It allows producers to purchase separate crop insurance policies for crops that can be both grazed and mechanically harvested on the same acres and to receive independent indemnities for each intended use. Annual USDA premium subsidies which have averaged $6.2 billion per year since 2014 count against the U.S. amber box spending limit of $19.1 billion but are subject to potential exclusion at the commodity level under the product-specific de minimis exemption. <3.2. Large Payments Expected Under Ad Hoc Trade Aid Programs> During 2018 and 2019, the Secretary of Agriculture has used his authority under the CCC Charter Act to initiate two ad hoc trade assistance programs. USDA initiated the trade aid packages as part of the Administration's effort to provide short-term assistance to farmers in response to foreign trade retaliation targeting U.S. agricultural products. The first trade aid package was announced on July 24, 2018. It targeted production for selected agricultural commodities in 2018 and was valued at up to $12 billion. The second trade aid package was announced on May 23, 2019. It targeted production for an expanded list of commodities and was valued at up to an additional $16 billion. According to USDA, the two trade aid packages are structured in a similar manner and include three principal components ( Table 1 ): The Market F acilitation P rogram (MFP) provides direct payments to producers of certain USDA-specified commodities. MFP payments are administered by FSA. The Food P urchase and D istribution P rogram (FPDP) is intended to purchase unexpected surpluses of affected commodities such as fruits, nuts, rice, legumes, beef, pork, milk, and other specified products for redistribution through federal nutrition assistance programs. It is administered by USDA's Agricultural Marketing Service. The Agricultural Trade P romotion (ATP) program provides funding to assist in developing new export markets for affected U.S. farm products. It is administered by the USDA's Foreign Agriculture Service in conjunction with the private sector. The two years of trade assistance are valued at a combined $28 billion ( Table 1 ). The largest part of the aid is two years of MFP payments valued at a combined $24.5 billion. The United States has yet to notify spending to the WTO under any of the trade assistance programs, so the exact WTO spending classification is currently unknown. However, past practice can serve as a useful guide for the likely notification. The FPDP and ATP programs for 2018 and 2019 are expected to be implemented in a similar manner during both years. USDA outlays under food purchase and distribution programs have historically been notified to the WTO as green box compliant and thus not subject to any spending limit. Trade promotion programs, such as ATP, are not notified under domestic support, because they do not involve direct payments to producers. Thus, the FPDP and ATP programs are not expected to affect the United States' ability to meet its WTO commitments. However, the anticipated large outlays under the MFP programs have raised questions. Payments under the two MFP programs are structured differently during 2018 and 2019. As a result, they are likely to be notified under different WTO classifications. The specific manner of determining how payments are made to individual producers is likely to determine their WTO status. <3.2.1. 2018 MFP Payments Are Likely to Be Notified as Product-Specific AMS> USDA's MFP payments for 2018 are based on each farm's harvested production of eligible crops during 2018 times a fixed per-unit payment rate. Payments to dairy are based on historical production, while hog payments use midyear inventory data. Under this specification, 2018 MFP payments are likely to be notified as coupled, product-specific AMS and count against the U.S. annual spending limit of $19.1 billion (unless they are exempted under the product-specific de minimis exemption). USDA initially announced potential 2018 MFP payments of up to $10 billion. As of August 22, 2019, USDA reported that $8.59 billion in MFP payments had already been distributed to producers, including $7.07 billion to soybean producers, $483 million to cotton, $245 million to sorghum, $241 million to wheat, $182 million to dairy, $156 million to hogs, $133 million to corn, $42 million to fresh sweet cherries, and $20 million to shelled almonds. These MFP payments have to be added to all other non-exempt, product-specific payments for each of these commodities and then be evaluated against their individual product-specific de minimis exemptions. Both MFP payment caps and AGI criteria are relevant. However, the FY2019 Supplemental Appropriations for Disaster Relief Act ( P.L. 116-20 ) altered the AGI requirement as it applies to MFP payments such that it may be waived if at least 75% of AGI is from farming, ranching, or forestry-related activities. To the extent that producers expect similar MFP payments to occur in future years, product-specific payments can become market distorting in favor of those commodities with higher per-unit payments and subject to potential WTO challenge. <3.2.2. 2019 MFP Payments Are Likely to Be Notified as Non-Product-Specific AMS> USDA is making MFP payments for the 2019 trade assistance program under a different formulation that avoids identifying payments with a specific crop. Instead, the underlying product-specific MFP payment rates are weighted at the county level by historical planted acres and yields to produce a single per-acre MFP payment rate for the entire county. This county-specific rate is then applied to each producer's total planted acres for all eligible commodities within that county, irrespective of the share of planted acres for any particular crop. Thus, payments are coupled to a producer's having planted at least one eligible commodity within the county, but they are independent of which commodity or commodities were planted. Under this specification, the 2019 MFP payments would appear to be coupled to planted acres a producer has to plant an eligible crop to get a payment but non-product-specific, thus possibly notifiable as non-product-specific AMS. <4. Will U.S. Farm Spending Comply with WTO Limits in 2018 and 2019?> The United States has notified its farm program support outlays through the crop year 2016. Under a normal timeline, USDA would notify spending for the crop year 2017 in the fall of 2019. Notification of domestic support for crop year 2018 would not be expected before 2020. Similarly, notification of domestic support outlays for crop year 2019 is not expected before 2021. U.S. compliance with WTO spending limits for 2018 and 2019 cannot be definitively known until notifications for those crop years have been released. As a result, the delay in notification may inhibit or deter another WTO member from bringing a case, assuming that MFP payments are not extended beyond 2019. This section analyzes available data on U.S. farm program payments for crop years 2017, 2018, and 2019 to evaluate the potential for the United States to remain in compliance with its amber box spending limit of $19.1 billion, particularly with the addition of large MFP payments in 2018 and 2019. There are several questions that will largely determine whether the United States remains in compliance with its amber box spending limit. 1. How will USDA classify the MFP payments for 2018 and 2019 in its notifications to the WTO? 2. How will market conditions and commodity prices evolve in 2019 with respect to final crop values and product-specific de minimis exemptions? 3. What will be the final value of total U.S. farm output in 2019 for evaluating the 5% non-product-specific de minimis exemption threshold against total non-product-specific AMS outlays? 4. How will market conditions affect decoupled ARC and PLC payments and total non-product-specific outlays in 2019? 5. Will the U.S.-China trade dispute continue into 2020, and if so, will a third year of trade assistance be in the offing? In response to the first question, the 2018 MFP payments appear to be coupled, product-specific AMS, whereas 2019 MFP payments appear to be non-product-specific AMS. Thus, different de minimis exemptions will be important for these two programs when evaluating compliance in 2018 and 2019. <4.1. Sources for Farm Program Outlay Data for 2018 and 2019> To conduct an analysis of the potential WTO compliance of U.S. farm program spending for 2017, 2018, and 2019, data are drawn from several sources. Whenever available, actual USDA program outlays are used. For example, FSA estimates DMC outlays for 2019 at approximately $300 million. Federal crop insurance premium subsidy outlays are available for the 2018 and 2019 crop years from USDA's RMA. When actual data are unavailable for any major farm program (most notably under ARC and PLC), then the projected spending data from the Congressional Budget Office (CBO) baseline for farm programs are used. Wherever values are not available from either USDA or CBO, then the 2017 value is repeated for 2018 and 2019. With respect to MFP program outlays, USDA has not released any official payment data on outlays under the 2018 or 2019 MFP programs, although some information has been released episodically to various news media (for example, see footnote 42 ). CRS relies on those media reports for information on 2018 MFP payments. Final MFP payments for 2018 are projected by CRS at $8.7 billion. The full $14.5 billion for 2019 MFP payments is incorporated into the WTO notification projection for 2019. <4.2. Compliance Hinges on the Non-Product-Specific De Minimis Threshold> According to this analysis, U.S. amber box spending for 2018, projected at over $14 billion, fits within the U.S. spending limit of $19.1 billion ( Table 2 ). However, if realized, this would be the largest U.S. amber box notification since 2001 ( Figure 1 ). Large product-specific outlays to soybeans (projected at $8.275 billion), wheat ($1.153 billion), cotton ($990 million), and peanuts ($231 million) in particular exceed their product-specific de minimis exemptions and contribute to the large amber box projection for 2018. A more uncertain result is found for 2019. The expansion of MFP payments to $14.5 billion in 2019, and their shift to a non-product-specific WTO classification, suggests that the United States may potentially approach or exceed its $19.1 billion amber box spending limit. In this analysis, U.S. compliance with WTO spending limits in 2019 depends on how eventual aggregate non-product-specific outlays compare with the final 5% non-product-specific de minimis threshold as evidenced by the two scenarios presented in Table 2 and discussed below. <4.2.1. Scenario 1: Non-Product-Specific Outlays Not Exempted Under De Minimis> Under scenario 1, the value of total U.S. farm output for 2019 is projected at $378 billion ( Figure 1 ). This is roughly equivalent to a three-year average of $377.954 billion for crop years 2014-2016. If realized, the $378 billion in total farm output would yield a 5% non-product-specific de minimis threshold of $18.9 billion. Total non-product-specific outlays for 2019 are projected at $18.92 billion just in excess of the non-product-specific de minimis exemption threshold. As a result, the full $18.92 billion of non-product-specific AMS would count against the amber box spending limit. When combined with the projected $5.119 billion in product-specific, non-exempt AMS outlays, total U.S. amber box outlays in 2019 would be a projected $24.039 billion in excess of the $19.1 billion spending limit. <4.2.2. Scenario 2: Non-Product-Specific Outlays Exempted Under De Minimis> Under scenario 2, an entirely different result is produced with only a minor increase in the projected value of total U.S. farm output at $380 billion ( Figure 2 ), up $2 billion from scenario 1. The choice of $380 billion in the total output value in scenario 2 highlights the sensitivity between compliance and noncompliance based on a small (0.53%) change in total output value between the two scenarios. In this scenario, the 5% non-product-specific de minimis threshold is $19 billion, and the entire projected non-product-specific AMS total of $18.92 billion would be exempted from counting against the amber box spending limit. As a result, total U.S. amber box outlays under scenario 2 would be equal to the projected product-specific, non-exempt AMS total of $5.119 billion within the amber box spending limit. <4.2.3. Other Potentially Influential Factors> Other factors that could alter this analysis are the final realized 2019 market year average farm prices and county revenue values used to determine outlays for major program crops under the MAL, PLC, and ARC programs. Also, crop yields for corn and soybeans in 2019 are still uncertain due to the delayed planting and late crop progress in several important growing regions. Better-than-expected yields or higher-than-expected harvests could push market prices lower, whereas lower yield or harvest estimates could help to raise farm prices. Also, a continuation or possibly a deepening of the U.S.-China trade dispute could keep downward pressure on commodity markets. If the final price and revenue values are lower than currently projected, then program payments under ARC and PLC could be larger than those used in this analysis. This could increase aggregate non-product-specific outlays and increase the possibility of exceeding the 2019 amber box spending limit. At the same time, lower market values, if realized, would contribute to a lower total valuation for U.S. farm output and a subsequent lower 5% non-product-specific de minimis threshold for aggregate non-product-specific outlays to surpass, thus affecting the potential non-product-specific de minimis exemption status. In contrast, resolution of the U.S.-China trade dispute and an improved demand outlook could have the opposite effect of raising prices and commodity output values while lowering payments under countercyclical farm programs such as MAL, PLC, and ARC. <5. Conclusion> According to the scenarios developed in this analysis, including a projected set of market conditions, the United States may potentially exceed its cumulative amber box spending limit of $19.1 billion in 2019. Excessive amber box payments in 2019 could result from the addition of large MFP payments to the traditional decoupled revenue support programs ARC and PLC. However, this analysis found that U.S. compliance with WTO amber box spending limits was very sensitive to a change in market conditions and market valuations. Noncompliance hinges on many key market factors that are currently unknown but would have to occur in such a manner as to broadly depress commodity prices through the 2019 marketing year (which extends through August 31, 2020, for corn and soybeans). Another crucial uncertainty is how the U.S.-China trade dispute with its deleterious effects on U.S. agricultural markets will evolve. Resolution of the U.S.-China trade dispute and an improved demand outlook could lead to higher commodity prices and output values while lowering payments under countercyclical farm programs such as MAL, PLC, and ARC. Such a turn of events could help facilitate U.S. compliance with its WTO spending limits. Appendix A. WTO Domestic Support Commitments WTO member nations have agreed to limit spending on their market-distorting farm policies. With respect to farm program outlays, the AoA spells out the rules for countries to determine whether their policies are potentially trade-distorting, how to calculate the costs of any distortion, and how to report those costs to the WTO in a public and transparent manner. Aggregate Measure of Support (AMS) Domestic support is measured in monetary terms and expressed as the AMS. Domestic support includes both direct and indirect support in favor of agricultural producers in other words, it includes any government measure that benefits producers, including revenue support, input subsidies, and marketing-cost reductions. Domestic subsidies include both budgetary outlays and revenue forgone by governments. Such support is measured at both the national and subnational level (i.e., state, county, or other local level). Producer-paid fees are deducted from the AMS. Domestic support should be calculated as closely as practical to the point of first sale of the basic agricultural product concerned preferably at the farm gate. Support measures directed at processors should be included to the extent that such measures benefit producers. AMS encompasses two types of support provided as a benefit to agricultural producers: product-specific support (that is, benefits linked to a specific commodity) and non-product-specific support (a general benefit not linked to a specific commodity). Certain AMS outlays may be exempt from counting against any WTO spending limit if they comply with criteria defined under either the green or blue box or if their sum is sufficiently small as to be deemed benign under the de minimis exemption. (Exemptions are described below.) Amber Box Outlays Non-exempt AMS outlays are referred to (or classified) as "amber box" spending and subject to a strict spending limit. Under WTO commitments, cumulative U.S. amber box outlays are limited to $19.1 billion annually. Goal of AMS Exemptions By leaving no constraint on green or blue box compliant spending, while imposing limits on amber box spending, the WTO's AoA classification structure encourages countries to design their domestic farm support programs to be more green and blue box compliant and less market-distorting. Green Box Exemptions Green box programs are minimally or non-trade-distorting and are not included in the AMS thus they are not subject to any spending limits. Examples of green box programs include domestic food assistance programs, conservation and environmental programs, and general services such as research, inspection services, and extension activities. In its most recent notification to the WTO, the United States declared $119.5 billion in outlays for programs that met green box criteria during the 2016 crop year. A key to evaluating whether a program's annual outlays qualify for the green box exemption is to assess how payments are triggered. If payments are fully decoupled from producer behavior and market conditions and instead are based on some other independent criteria such as historical planted acres, then they could potentially be excluded from the AMS under the green box criteria. For example, Direct Payment outlays under the 1996, 2002, and 2008 farm bills were fully decoupled and thus exempted from the AMS under green box criteria. If, instead, payments are coupled to current producer behavior (such as planted acres or harvested output) or to market conditions (such as price movements or trade levels), then they likely are not eligible for exemption from the AMS under green box criteria. Blue Box Exemptions Blue box programs are described as market-distorting but production-limiting. Blue box programs generally have a supply-control feature that partially offsets their trade-distorting effects. For example, payments may be based on either a fixed area or yield or a fixed number of livestock or are made on less than 85% of base production. As such, blue box programs are not included in the AMS thus they are not subject to any spending limits. The United States has not notified any program spending under the blue box criteria since 1995. De Minimis Exemptions from AMS Programs outlays that fail to meet green or blue box criteria are part of the AMS. However, there are two additional exemptions that may prevent AMS outlays for certain programs from counting against the amber box spending limit. If AMS spending is sufficiently small (as described below), then it is deemed to be benign and excluded from counting under the AMS's amber box. There are two types of de minimis exemptions: product-specific and non-product-specific. Product-specific outlays include all coupled outlays that are linked to the current planting or production of a specific commodity. Under the product-specific de minimis exemption, if total product-specific program outlays for a commodity are less than 5% of the value of production for that commodity, then such spending may be excluded from the country's AMS. Product-specific outlays are evaluated on a commodity-by-commodity basis against the 5% de minimis threshold. N on- product -specific outlays include all AMS outlays that are decoupled from the specific commodities that are actually produced but are coupled to a non-commodity-specific measure such as market conditions or national average prices. All non-commodity-specific AMS outlays are aggregated and evaluated against 5% of the total value of U.S. agricultural output. Coupled, Product-Specific Payments If the payment is based on the planted or harvested area or output of a specific commodity during the crop year, then program payments would be coupled directly to farmer behavior. Such payments would likely be notified as product-specific AMS spending and would count against the amber box ceiling. However, product-specific payments could potentially be excluded from counting against the AMS total by the product-specific de minimis exclusion if they are less than 5% of the value of that specific commodity's output during that crop year. Coupled or Partially Coupled, Non-Product-Specific Payments If the payment is based on a formula that pools the planted or harvested area or output of several commodities for example, as a single county-level payment but where the farmer need only have produced at least one of the pooled commodities to be eligible for the full county payment, then the payment could potentially be notified as coupled, non-product-specific AMS. Both ARC and PLC outlays on base acres are notified this way. However, ARC and PLC payments made on generic base under the 2014 farm bill were notified as commodity-specific payments, since the farmer had to plant the specific crop to receive a payment. If the payment is based on a historical measure such as planted or harvested acres or output for some past period of time, but where some production of an eligible crop must occur during the current crop year to be eligible for a payment, then the payments would likely be notified as partially decoupled, non-product-specific payments. Annual Notification of Compliance To provide for monitoring and compliance of WTO policy commitments, each WTO member is expected to submit annual notification reports of domestic support program spending within the context of the agreed-to WTO commitments. However, there is no enforcement mechanism or penalty for late notifications. The annual period used by each WTO member calendar, fiscal, or marketing year is specified in the "schedule of concessions" (also referred to as the country schedule). The WTO's Committee on Agriculture reviews the annual notifications. However, the notification reports are public documents they are posted online by the WTO where they are available for review (and possible challenge) by any other member or third party. Appendix B. U.S. Domestic Support Notifications The most recent U.S. notification to the WTO of domestic support outlays (made on October 31, 2018) is for the 2016 crop year. The majority of U.S. domestic agricultural program outlays have been categorized as indirect support that adhere to green box criteria ($119.5 billion) and thus have not been subject to any payment limit. In addition, the United States has traditionally relied on the de minimis exemptions to exempt substantial program outlays from counting against the amber box spending limit. In 2016, the United States notified $16 billion in AMS outlays (prior to applying eligible exemptions), including $8.6 billion of product-specific spending and $7.4 billion of non-product-specific spending. However, the United States notified $12.2 billion in de minimis exemptions, thus reducing the original $16 billion AMS to just $3.8 billion in amber box spending to count against the $19.1 billion spending limit. With respect to the non-product-specific de minimis exemption, the total value of U.S. national agricultural output in 2016 was $355.5 billion. As a result, the 5% de minimis non-product-specific threshold was $17.8 billion. Since non-product-specific outlays of $7.4 billion were well below this threshold, they were exempted in total from counting against the amber box spending limit. In addition, the United States notified $4.8 billion in product-specific de minimis exemptions. An example of a product-specific de minimis exemption is corn. In 2016, U.S. corn production was valued at $51.3 billion. Thus the product-specific 5% value threshold for corn was $2.565 billion. The United States notified $2.345 billion in AMS for corn in 2016, but since it was less than the 5% threshold, the entire amount was exempted from counting against the amber box limit. Similarly, product-specific exemptions for other crops made up the difference for the $4.8 billion in total product-specific exemptions. The De Minimis Exemption Aids U.S. Compliance Since 1995, the United States has stayed within its amber box spending limits ( Figure B-1 ), but this compliance has hinged on use of the de minimis exemptions in a number of years (e.g., 1999-2001 and 2005) to exclude substantial AMS spending from counting against the amber box limit. Since the 2002 farm bill ( P.L. 107-171 ), the United States has designed several of its major farm revenue support programs to meet non-product-specific criteria. Since the non-product-specific de minimis exemption threshold is measured as a share of the total value of U.S. agricultural output, it is associated with a very large exemption threshold. From 2010 to 2016, the value of total U.S. agricultural output has averaged $376.8 billion, which implies an average non-product-specific 5% de minimis threshold of $18.8 billion. The manner by which the United States has notified its amber box outlays that is, non-product-specific versus product-specific has changed over the years (particularly for federal crop insurance subsidies) in such a way as to facilitate compliance with the amber box spending limit. Generally, non-product-specific de minimis exemptions are much larger than product-specific de minimis exemptions ( Figure B-1 ). Since 201 0, non-product-specific de minimis exclusions have averaged $4.8 billion annually, compared with average product-specific exclusions of $3.8 billion. The largest non-product-specific exemption was reached in 2011, when $7.5 billion in net crop insurance indemnities was exempted. In 2011, U.S. agricultural output value was $380.8 billion, which, in turn, yielded a non-product-specific 5% value threshold of $19.0 billion. Starting in 2012, USDA switched to notifying crop insurance premium subsidies for each individual insured commodity as product-specific. Since then, crop insurance premiums are evaluated at the individual crop level and eligible to be exempted under the product-specific de minimis exemption if they do not exceed 5% of the value of that commodity's output when combined with other PS outlays for that commodity. Since 2012, over $5 billion in product-specific crop insurance premium subsidies have been exempted each year. As a result of this crop insurance notification switch, coupled with relatively high farm prices during 2012 and 2013 that reduced payments on the non-product-specific revenue support programs, product-specific de minimis exemptions surpassed non-product-specific exemptions during those two years. Then, starting in 2014, under program changes authorized by the 2014 farm bill ( P.L. 113-79 ), the value of non-product-specific exemptions again surpassed product-specific exemptions. This was driven by large non-product-specific outlays under the new, decoupled revenue support programs ARC (which incorporated high farm prices into its payment formula) and PLC. Annual ARC and PLC outlays averaged a combined $6.7 billion during 2014-2016, including $4.7 billion for ARC and $2.0 billion for PLC.

As a member of the World Trade Organization (WTO) agreements, the United States has committed to abide by WTO rules and disciplines, including those that govern domestic farm policy as spelled out in the Agreement on Agriculture (AoA). Since establishment of the WTO on January 1, 1995, the United States has complied with its WTO spending limits on market-distorting types of farm program outlays (referred to as amber box spending). However, the addition of large, new trade assistance payments to producers in 2018 and 2019, on top of existing farm program support, has raised concerns by some U.S. trading partners, as well as market watchers and policymakers, that U.S. domestic farm subsidy outlays might exceed the annual spending limit of $19.1 billion agreed to as part of U.S. commitments to WTO member countries. CRS analysis indicates that the United States probably did not violate its WTO spending limit in 2018 but could potentially exceed it in 2019. A farm support program can violate WTO commitments in two principal ways: first, by exceeding spending limits on certain market-distorting programs, and second, by generating distortions that spill over into the international marketplace and cause significant adverse effects. Program outlays are cumulative, and compliance with WTO commitments is based on annual aggregate spending levels. Under the WTO's AoA, total U.S. amber box outlays (that is, those outlays deemed market distorting) are limited to $19.1 billion annually, subject to de minimis exemptions. De minimis exemptions are spending that is sufficiently small (less than 5% of the value of production)—relative to either the value of a specific product or total production—to be deemed benign. Since 1995, the United States has apparently stayed within its amber box limits. However, U.S. compliance has hinged on judicious use of the de minimis exemptions in a number of years to exclude certain amber box spending from counting against the amber box limit. These exemptions have never been challenged by another WTO member. According to CRS analysis, projected U.S. amber box spending for 2018 (inclusive of $8.7 billion in product-specific outlays under the 2018 trade assistance package) could exceed $14 billion. This would be the largest U.S. amber box notification since 2001. However, despite its magnitude, it still would fit within the U.S. spending limit of $19.1 billion. A more ambiguous result is projected for 2019. The expansion of direct payments under a second trade assistance package to $14.5 billion in 2019 and their shift to a non-product-specific WTO classification—when combined with currently projected spending under other non-product-specific programs such as the Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) programs—could push U.S. amber box outlays above $24 billion. This would be in excess of the U.S. amber box spending limit of $19.1 billion. However, this projection hinges on several as-yet-unknown factors, including market prices, output values, and program outlays under traditional countercyclical ARC and PLC programs. If the final price and revenue values are higher than currently projected, then program payments under ARC and PLC could be smaller than those used in this analysis. This could decrease both aggregate non-product-specific outlays and the possibility of exceeding the amber box spending limit. If cumulative payments in any year were to exceed the agreed-upon spending limit, then the United States would be in violation of its commitments and could be vulnerable to a challenge under the WTO's dispute settlement mechanism. Furthermore, to the extent that such program outlays might induce surplus production and depress market prices, they could also result in potential challenges under the WTO.

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The Agriculture appropriations bill formally called the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act funds all of the U.S. Department of Agriculture (USDA), excluding the U.S. Forest Service. For FY2020, the House Appropriations Committee reported H.R. 3164 on June 6, 2019 (including H.Rept. 116-107 ). Funding for USDA was included in a five-bill minibus appropriations bill ( H.R. 3055 ) that passed the House on June 25, 2019. The Senate Appropriations Committee reported S. 2522 on September 19, 2019 (including S.Rept. 116-110 ). The full Senate did not act on this bill by October 1, 2019, so FY2020 began without a full-year appropriation. To avoid a lapse in funding, Congress and the President approved two consecutive continuing resolutions to fund federal agencies at the FY2019 level ( P.L. 116-59 and P.L. 116-69 , respectively). The Senate passed a four-bill minibus appropriations bill ( H.R. 3055 ) on October 31, 2019, setting up negotiations with the House for a final bill. On December 20, 2019, Congress passed and the President signed the FY2020 Further Consolidated Appropriations Act ( P.L. 116-94 ), which includes agriculture and related agencies under Division B. This report provides a brief overview of the conservation-related provisions in the FY2020 Agriculture appropriations acts. For a general analysis of the FY2020 appropriations for agriculture, see CRS Report R45974, Agriculture and Related Agencies: FY2020 Appropriations . <1. Conservation Appropriations> USDA administers a number of agricultural conservation programs that assist private landowners with natural resource concerns. These include working lands programs, land retirement and easement programs, watershed programs, technical assistance, and other programs. The two lead agricultural conservation agencies within USDA are the Natural Resources Conservation Service (NRCS), which provides technical assistance and administers most conservation programs, and the Farm Service Agency (FSA), which administers the Conservation Reserve Program (CRP). Most conservation program funding is mandatory, obtained through the Commodity Credit Corporation (CCC) and authorized in omnibus farm bills (about $6.4 billion of CCC budget authority for conservation in FY2020). The Agriculture Improvement Act of 2018 (2018 farm bill; P.L. 115-334 ) reauthorized most mandatory conservation programs through FY2023. Other conservation programs mostly providing technical assistance operate with discretionary funding provided in annual appropriations (about $1 billion annually). The FY2020 appropriation included an increase from FY2019 levels for discretionary conservation programs. The Administration's FY2020 request proposed a decrease for discretionary conservation funding from the FY2019 enacted levels and reductions in funding for mandatory conservation programs. The FY2020 appropriation does not generally include these proposed reductions and would continue to redirect some conservation funding to the Farm Production and Conservation (FPAC) Business Center. <2. Discretionary Conservation Programs> <2.1. Conservation Operations> NRCS administers all discretionary conservation programs. The largest program and the account that funds most NRCS activities is Conservation Operations (CO). The CO account primarily funds Conservation Technical Assistance (CTA), which provides conservation planning and implementation assistance from field staff placed in almost all counties within the United States and its territories. Other components of CO include the Soil Survey, Snow Survey and Water Supply Forecasting, and Plant Materials Centers ( Figure 1 ). Technical assistance for conservation is currently funded through both mandatory and discretionary sources, with CO being the primary account receiving discretionary funding from annual appropriations. The Trump Administration's FY2020 budget requested $755.0 million for CO, $64.5 million less than the amount enacted for FY2019, in part due to a proposed consolidation of mandatory and discretionary accounts to pay for conservation technical assistance. USDA has proposed consolidating funding through multiple Administrations, but Congress has never adopted this approach (see " Funding for Technical Assistance " section below). The FY2020 appropriation increases CO funding in FY2020 by $10.1 million from FY2019 and directs CO funding for a number of conservation programs ( Table 1 ). Report language further directs funding to selected activities ( Table 4 ). <2.1.1. Funding for Technical Assistance> NRCS is the current federal provider of technical assistance for agriculture conservation. NRCS provides technical assistance at the request of the landowner to conserve and improve natural resources. The assistance includes technical expertise combined with knowledge of local conditions and is provided through a network of federal staff located throughout the United States. Much of the conservation technical assistance provided by NRCS is funded through the CTA program within CO. Funds are used to support salaries and expenses for NRCS staff, technology development, conservation system design, compliance reviews, grants to partners for additional technical assistance capacity, and resource assessment reports. Total funding for CO has fluctu ated in recent years. In some cases, such fluctuation is the result of an Administration's request. In other cases, funding changes reflect national budget dynamics that are not unique to CO (e.g., reductions caused by sequestration in FY2013, and funding increases through budget agreements in FY2014-FY2020). In inflation-adjusted dollars, CO has declined over the past 20 years (see Figure 2 ). The other side of agricultural conservation assistance is financial assistance. Financial assistance provides direct payments to landowners to implement certain conservation practices or to conserve and protect natural resources on private land. Most programs that provide financial assistance are authorized through omnibus farm bills and receive funding from mandatory sources, and thus do not require an annual appropriation. In addition to technical assistance provided through CTA and CO, technical assistance is also part of farm bill conservation programs, which are funded through a program's mandatory authorization. Most technical assistance activities within mandatory programs support the delivery of some level of financial assistance as part of a contract or agreement. These activities could include providing designs, standards, and specifications needed to install approved conservation practices and activities. Generally, technical assistance prior to a producer entering into a contract for financial assistance is considered to be part of CTA. It is not until after a producer signs a contract for financial assistance that technical assistance is funded from the individual mandatory program rather than CTA. Once the financial assistance contract is complete, most mandatory program funds are no longer available to support ongoing assistance in maintaining the conservation plans, practices, and activities implemented under the financial assistance program. Since the mid-1990s, Congress and various Administrations have proposed changes to how technical assistance is funded. The Administration's FY2020 budget request proposed to transfer funding from mandatory conservation programs and discretionary appropriations to a consolidated account dedicated to technical assistance for farm bill conservation programs. This concept is not new. A similar proposal was included in the FY2018-FY2019 (Trump) and FY2014-FY2017 (Obama) presidential budget requests. <2.1.2. NRCS Staffing Levels> The CO account funds more than half of NRCS staff, with other, smaller discretionary programs and mandatory conservation programs accounting for the remainder. A decline in CO funding, therefore, correlates to a decline in the number of NRCS staff. Total, actual, permanent positions at NRCS that are funded by CO have generally declined through FY2018. This reduction in staff has been further magnified by a growing number of unfilled positions at the agency (see Figure 3 ). The FPAC Business Center has also impacted NRCS staffing and funding levels (for more information on the Business Center, see the " Farm Production and Conservation Business Center " section). The FY2020 appropriation provides the Administration's requested level of $206.5 million in discretionary funding for the FPAC Business Center. This is $10 million less than Congress provided in FY2019. This appropriation is separate from the transfer of funds from the three FPAC agencies. In FY2019, Congress realigned funding and staff to the Business Center, including funding from NRCS discretionary accounts and $60.2 million from mandatory farm bill conservation program accounts. The FY2019 realignment of funds and staff included the transfer of approximately 882 staff years from NRCS to the Business Center (over 9% of effective NRCS staff years). The transfer of funding and functions are a part of the Business Center's goal of achieving efficiencies within the FPAC mission area. Given the decline in CO-funded technical assistance staff years, it is difficult to evaluate how the transfer of NRCS positions to the FPAC Business Center has impacted the agency's overall operations and ability to provide technical assistance to farmers and ranchers. Also unclear is the extent to which the Business Center's realignment of staff may have contributed to the decrease in NRCS staffing levels and to the increase in total unfilled NRCS positions. <2.2. Watershed Programs> The FY2020 appropriation includes funding for watershed activities, including Watershed and Flood Prevention Operations (WFPO) a program that assists state and local organizations with planning and installing measures to prevent erosion, sedimentation, and flood damage. The appropriation increases WFPO funding to $175 million, $25 million more than the FY2019 level of $150 million. The FY2020 Administration request proposed that no funding be provided for the program. Since FY2014, Congress has directed a portion of CO funds to select WFPO activities. The enacted appropriation includes similar directive language ($5.6 million; see Table 1 ), in addition to the $175 million for the program as a whole. This is less than the $11.2 million proposed in the Senate-passed bill. Neither the House-passed bill nor the Administration's request included such directive language. The FY2020 appropriation also includes $10 million for the Watershed Rehabilitation Program the same as the FY2019 level. The Watershed Rehabilitation Program repairs aging dams previously built by USDA under WFPO. The Administration's request included no funding for FY2020. The 2018 farm bill provides $50 million annually in permanent mandatory funding for WFPO and Watershed Rehabilitation activities. The mandatory funding is in addition to discretionary funding provided through annual appropriations. <3. Mandatory Conservation Programs> Mandatory conservation programs are generally authorized in omnibus farm bills and receive funding from the CCC and thus do not require an annual appropriation. The 2018 farm bill reauthorized mandatory funding for many of the agricultural conservation programs through FY2023. Because most of these programs are classified as mandatory, nonexempt spending, they are reduced annually by sequestration. The President's FY2020 budget requested a reduction of $40 million annually to the Agricultural Conservation Easement Program and the elimination of the Conservation Stewardship Program. Both programs were reauthorized to receive mandatory funding in the 2018 farm bill through FY20203. The FY2020 appropriation does not reduce these or other mandatory farm bill conservation programs. <4. Farm Production and Conservation Business Center> The Farm Production and Conservation (FPAC) mission area was created in 2017 as part of a larger departmental reorganization. FPAC includes NRCS, FSA, the Risk Management Agency (RMA), and a new FPAC Business Center. The FPAC Business Center is responsible for financial management, budgeting, human resources, information technology, acquisitions/procurement, strategic planning, and other customer-oriented operations of three agencies NRCS, FSA, and RMA. Congress reduced funding for NRCS, FSA, and RMA in FY2019 to realign funding and staff to the FPAC Business Center. The FY2020 appropriation includes the Administration's requested level of $206.5 million for the Business Center. This is $9.8 million less than the enacted FY2019 appropriation (see Table 2 ). According to the Administration's FY2020 request, the proposed reduction is the result of "realizing efficiency improvements." The proposed reduction for FY2020 to the FPAC Business Center's appropriation could affect the implementation of conservation programs if efficiencies are not realized. The explanatory statement of the FY2020 appropriation directs USDA to produce a report to the Appropriations Committees within 60 days of enactment on the center's efficiency gains, the metrics by which such gains are measured, and its hiring acceleration and reorganization plans. Similar language was included in the Senate committee report ( S.Rept. 116-110 ), which also cited concerns related to the Business Center's delays in filling critical vacancies, potentially resulting in delayed deployment of conservation and commodity programs. The Senate committee report expressed concern that additional functions and staff positions affiliated with NRCS state offices are being moved to the FPAC Business Center. The FY2020 appropriation directs a transfer of funds to the FPAC Business Center from other accounts, including mandatory conservation programs and farm loan accounts. This transfer could result in NRCS effectively receiving less in total funding if the amount shifted would have been used for NRCS administrative or technical assistance had the Business Center not been created. In total, the direct appropriation and transfer of funds would provide the FPAC Business Center with $282.8 million in FY2020 (see Table 2 ). <5. Policy-Related Provisions> In addition to setting budgetary amounts, the Agriculture appropriations bill may also include policy-related provisions that direct how the executive branch should carry out an appropriation. These provisions may have the force of law if they are included in the text of an appropriations act, but their effect is generally limited to the current fiscal year (see Table 3 ). Policy-related provisions generally do not amend the U.S. Code or have long-standing effects. For example, the WFPO program has historically been called the "small watershed program," because no project may exceed 250,000 acres, and no structure may exceed 12,500 acre-feet of floodwater detention capacity or 25,000 acre-feet of total capacity. The FY2020 enacted appropriation includes a policy provision that waives the 250,000-acre project limit when the project's primary purpose is something other than flood prevention. This provision does not amend the WFPO authorization and therefore is effective only for the funds provided during the current appropriation year. Table 3 compares some of the policy provisions in the Farm Production and Conservation Programs (Title II) and General Provisions (Title VII) titles of the FY2019 and FY2020 Agriculture appropriations bills related to conservation. Many of these provisions were also included in past years' appropriations acts. The table is divided by agency and account according to their location within the FY2019 and FY2020 acts. The explanatory statement that accompanies the final appropriations and the House and Senate report language that accompanies the committee-reported bills may also provide policy instructions. These documents do not have the force of law but often explain congressional intent, which Congress expects the agencies to follow (see Table 4 ). The committee reports and explanatory statement may need to be read together to capture all of the congressional intent for a given fiscal year. Many of these provisions have been included in past years' appropriations acts. Some provisions in report language and bill text address conservation programs that are not authorized or funded within the annual appropriations (i.e., mandatory spending for farm-bill-authorized programs). Table 4 is divided by the administering agency and by account according to the location of each provision within the two reports.

The Agriculture appropriations bill funds the U.S. Department of Agriculture (USDA) except for the Forest Service. The FY2020 Further Consolidated Appropriations Act ( P.L. 116-94 , Division B) includes funding for conservation programs and activities at USDA, among other departments. Agricultural conservation programs include both mandatory and discretionary spending. Most conservation program funding is mandatory and is authorized in omnibus farm bills. Other conservation programs—mostly technical assistance—are discretionary spending funded through annual appropriations. The FY2020 appropriation includes an increase from FY2019 levels for discretionary conservation programs and generally rejects the Administration's proposed reductions to discretionary and mandatory conservation programs. The largest discretionary conservation program is the Conservation Operations (CO) account, which funds conservation planning and implementation assistance on private agricultural lands across the country. The CO account is administered by the Natural Resources Conservation Service (NRCS) and funds more than half of the agency's total staff positions. The FY2020 enacted appropriation increases funding for CO by $10.1 million above FY2019 levels to $829.6 million. A decline in funding for CO over time has resulted in declining NRCS staffing levels. Much of the conservation technical assistance provided by NRCS is funded through the Conservation Technical Assistance program within CO. Funds are used to support salaries and expenses for NRCS staff, technology development, conservation system design, compliance reviews, grants to partners for additional technical assistance capacity, and resource assessment reports. Reduced staff could impact NRCS's ability to provide technical assistance and administer farm bill conservation programs to farmers and ranchers. The recently created Farm Production and Conservation (FPAC) Business Center receives $206.5 million in the FY2020 appropriation—$9.8 million less than in FY2019. The FPAC Business Center is responsible for various administrative services for three USDA agencies, including NRCS. In FY2019, Congress realigned funding from NRCS discretionary and mandatory program accounts and NRCS staff to the Business Center. It is unclear how the transfer of NRCS positions and funding to the FPAC Business Center has impacted the agency's overall operations relative to the decline in CO funding. The FY2020 explanatory statement directs USDA to report to Congress on the efficiencies gained through the Business Center's creation, along with other staffing plans. Other discretionary spending is primarily for watershed programs. The largest—Watershed and Flood Prevention Operations (WFPO)—is funded at $175 million in FY2020. This is an increase in WFPO funding from FY2019 levels of $150 million. The FY2020 appropriation also funds other discretionary water-related programs, such as the Watershed Rehabilitation Program ($10 million), Water Bank program ($4 million), and wetland mitigation banking ($5 million). Most mandatory conservation programs are authorized in omnibus farm bills and do not require an annual appropriation. However, previous Congresses have reduced mandatory conservation program funding through Changes in Mandatory Program Spending (CHIMPS) in the annual agricultural appropriations law every year between FY2003 and FY2018. The Trump Administration requested CHIMPS to two mandatory conservation programs for FY2020, but neither of these proposed reductions to mandatory conservation programs is included in the enacted FY2020 appropriation. Agriculture appropriations bills may also include policy-related provisions that direct how the executive branch should carry out the appropriations. In the FY2020 appropriations act, these range from waiving specific programmatic requirements to requiring reports to Congress.

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<1. Introduction> The substantial burden of opioid abuse related to the current opioid epidemic in the United States has resulted in a disparity between the need for substance abuse treatment and the current capacity of the health care delivery system to meet that need. In 2017, over 47,600 people died of opioid-related drug overdoses in the United States. In that same year, an estimated 11.4 million people aged 12 and older misused opioids, including 11.1 million misusers of prescription pain relievers and 886,000 heroin users. The majority of individuals in need of treatment do not receive it. In 2016, one-fifth (21.1%) of those with any opioid use disorder (OUD) received specialty substance abuse treatment, including 37.5% of those with heroin use disorder and 17.5% of those with prescription pain reliever use disorders. <2. Opioid Agonist Medication-Assisted Treatment> Medication-assisted treatment (MAT) is the combined use of medication and other services to treat addiction. MAT is widely accepted as the most effective treatment for opioid use disorder. Three medications are currently used in MAT for opioid addiction: methadone, buprenorphine, and naltrexone (naloxone, a medication used to reverse opioid overdose, is not used to treat opioid use disorders). Methadone and buprenorphine are both opioids; their use to treat opioid use disorders is often called opioid agonist treatment (OAT), opioid agonist MAT , opioid substitution therapy , or opioid replacement therapy . Methadone or buprenorphine may be used both in the short term to mitigate the immediate withdrawal symptoms associated with discontinuing use of the opioid of abuse and over extended periods to maintain abstinence and prevent relapse. Descriptions of medication-assisted treatments for opioid use disorder and commonly used acronyms are included in the textbox below. As controlled substances, methadone and buprenorphine are regulated under the Controlled Substances Act (CSA; 21 U.S.C. 801 et seq.). Under the CSA, methadone may be used to treat opioid addiction within an inpatient setting, such as a hospital, or in a federally certified opioid treatment program (OTP). Federally certified OTPs often referred to as methadone clinics offer opioid medications, counseling, and other services for individuals addicted to heroin or other opioids. With few exceptions, the use of methadone to treat opioid addiction is limited to OTPs. Treatment within an OTP may be in an inpatient or outpatient capacity, though typically it occurs on an outpatient basis. There are no federal limits on the number of patients that can be treated at an OTP. However, in 2016 HHS determined through SAMHSA survey data that an OTP could manage, on average, 262 to 334 patients at any given time. For more information on federal regulations regarding opioid treatments, see CRS In Focus IF10219, Opioid Treatment Programs and Related Federal Regulations , by Johnathan H. Duff. Buprenorphine may be used to treat opioid use disorder in two settings: (1) within an OTP and (2) outside an OTP pursuant to a waiver. A physician or other practitioner (e.g., physician assistant or nurse practitioner) may obtain a waiver to administer, dispense, or prescribe buprenorphine outside an OTP. This is commonly known as a DATA waiver, drawing its name from the law that established the waiver authority: the Drug Addiction Treatment Act of 2000 (DATA 2000). To qualify for a waiver, a practitioner must notify the Health and Human Services (HHS) Secretary of the intent to use buprenorphine to treat opioid use disorders and must certify that he or she is a qualifying practitioner; can refer patients for appropriate counseling and other services; and will comply with statutory limits on the number of patients that may be treated at one time. The patient limit is 30 individuals during the first year and may increase to 100 after one year or immediately if the practitioner holds additional credentialing or operates in a qualified practice setting. The patient limit may increase to 275 after one year under certain conditions specified in regulation. Practitioners are subject to state laws and regulations regarding prescribing privileges and therefore may not be eligible in all states. Similar to methadone treatment, MAT with buprenorphine typically takes place in an outpatient setting. For a more detailed account of the federal regulations related to buprenorphine, see CRS Report R45279, Buprenorphine and the Opioid Crisis: A Primer for Congress , by Johnathan H. Duff. <3. Policy Considerations> The federal government has taken steps to increase the availability of opioid agonist MAT in response to the escalation of opioid overdoses and deaths in recent years. Both Congress and the Administration have implemented policies intended to increase access to methadone and buprenorphine, such as changes to the DATA waivers. The Comprehensive Addiction and Recovery Act of 2016 (CARA; P.L. 114-198 ), for instance, provided qualifying nurse practitioners and physician assistants temporary eligibility to obtain DATA waivers. The SUPPORT for Patients and Communities Act ( P.L. 115-271 ), enacted in 2018, made the authority for qualifying nurse practitioners and physician assistants to obtain DATA waivers permanent and expanded the definition of "qualifying other practitioners" to include other midlevel providers such as clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives. The law also authorized programs to establish additional comprehensive opioid recovery centers that offer a "full continuum of treatment services" including all FDA-approved medications used in MAT as well as "regional centers of excellence in substance use disorder education" that would aim to improve health professional training in substance abuse treatment. Policy efforts to address the opioid epidemic have corresponded with increased MAT availability. The percentage of substance abuse treatment facilities providing buprenorphine treatment increased from 14% in 2007 to 29% of all facilities in 2017. Additionally, the number of DATA-waived physicians with a 30-patient limit increased nine-fold from 2003 to 2012 from 1,800 physicians to 16,095. Physicians with a 100-patient limit tripled in the latter half of that span from 1,937 in 2007 to 6,103 in 2012. Despite this increase, access to substance abuse treatment has not kept pace with the mounting rates of opioid addiction in the United States. Additionally, while the capability to treat patients with buprenorphine has expanded through an increase in DATA waivers, practitioners with these waivers are not treating to capacity. A 2018 study by SAMHSA leadership found that the number of patients being treated by DATA-waived providers included in their study was substantially lower than the authorized waiver patient limit. The percentage of clinicians prescribing buprenorphine at or near the patient limit in the month prior to the study was 13.1%. <4. Geographical Analysis> Geography is essential to accurately evaluating opioid agonist MAT capacity. Treatment location may be especially relevant to understanding any discrepancy between need and capacity: where services are located may be more important than how many patients a practitioner is allowed to treat. According to the 2018 study on DATA-waived clinicians, the top reason practitioners cited for not prescribing buprenorphine was lack of patient demand. This suggests a discrepancy between OAT practitioners and patients in need. DATA-waived practitioners may not be in the areas with the most need for treatment, for instance. Other barriers may also exist that prevent patients from accessing services. Factors affecting the treatment gap may include health insurance coverage, reimbursement for treatment services, transportation, stigma, awareness of treatment options and availability, and motivation for recovery, among others. The current report identifies the geographic location of opioid agonist treatment providers in the United States. The analysis uses SAMHSA data to identify the number and location of (1) federally certified opioid treatment programs and (2) practitioners with DATA waivers. Data are displayed nationally as well as by county. The location of opioid agonist MAT providers does not necessarily equate to availability of treatment. Other aforementioned factors, such as treatment costs, demand for services, wait times, and awareness of options also affect treatment availability. The current report does not attempt to evaluate the availability, accessibility, or total capacity for treatment of any area. It also does not assess need for treatment services an essential factor in classifying discrepancies between demand for treatment and capacity of services. <4.1. Methodology> The Substance Abuse and Mental Health Services Administration, a branch of HHS which oversees the certification of opioid treatment programs and the buprenorphine waiver program, provides the number and location of OTPs and daily updates on the number and location of DATA-waived practitioners. Using these data, CRS plotted 99% of OTP locations (1,652 OTPs) and 99% of publicly-available DATA-waived practitioner locations (40,016 practitioners) using the geospatial software ArcGIS. As of June 1, 2019, the number of federally certified OTPs in the United States was 1,674. The total number of DATA-waived providers with a 30-patient limit exceeded 50,000 and those with a 100-patient limit exceeded 12,000. The number of practitioners with a 275-patient limit totaled over 4,800. This provides the capacity for at least 4 million patients to be treated with buprenorphine through DATA-waived providers. CRS generated a series of maps to depict the distribution of DATA-waived providers and neighboring OTPs in 2018. There are two maps at the national level in Figure 1 and Figure 2 , and two for the Northeast and parts of the Midwest in Figure 3 . The latter maps shade in each county based on the number of DATA-waived providers in that county and demarcate each OTP with a purple dot. The shading of each county was determined using Jenks natural breaks optimization, a statistical method used to create "fair" categories. As a result, each level of shading does not follow a consistent range. The smallest shading category (1-32 DATA-waived practitioners in a county) is much smaller in range than the largest (446-871 DATA-waived practitioners in a county) on account of this method. The Northeast region of the United States is displayed in a separate map for greater visibility of the high number of OTPs within a relatively small geographic area. (Other areas experiencing highly clustered OTPs, such as California and Florida, are more easily discerned on the national map and are therefore not displayed in additional maps.) Parts of the Midwest are displayed in a regional map for greater visibility of areas disproportionately affected by the opioid crisis. These maps present location of OAT providers only. Geography is one indication of adequacy of treatment capacity but other factors such as population density and the size of the affected populations in the area are also relevant. This analysis only examines the geographic location of OAT providers. <4.2. Results> Results depicted in Figure 1 , Figure 2 , and Figure 3 show that opioid agonist medication-assisted treatment services are not evenly distributed across the country. The maps in Figure 2 and Figure 3 depict the location of federally certified OTPs and the number of DATA-waived practitioners in each county. Results from this analysis indicated that: 1,217 counties (39% of counties nationally) populated by an estimated 17.5 million people (of 321 million nationally, or 5.5% of the population) had no DATA-waived practitioners. Nearly 2,500 counties (80% nationally), populated by an estimated 77.5 million people (24% of the population), had no OTPs and 1,202 counties (38%), populated by 16.8 million people (5.2%), had neither an OTP nor a DATA-waived practitioner. Of the over 1,200 counties with no OAT providers, nearly half (45%) are classified as rural according to the U.S. Census. These counties are primarily located in the Midwest and South; Texas (13% of counties with no OTPs or DATA-waived practitioners), Georgia (6%), Kansas (6%), Nebraska (5%), Iowa (5%), and Missouri (5%) have the highest percentages of counties with no OTPs or DATA-waived providers. Twenty-five counties with no OTPs or DATA-waived practitioners had more than 50,000 residents. It is important to consider that county size and population are not necessarily indicators of substance abuse treatment need. Counties are also not equivalent in geographic area, shape, and popula tion size and therefore comparisons on treatment availability strictly across the county level may not be appropriate. Additionally, the absence of OAT providers does not necessarily equate to lack of access (adjacent counties may offer treatment for instance and patients may travel for inpatient treatment). Similarly, the presence of providers does not necessarily equate to treatment availability, particularly within counties that encompass large geographic areas. <4.3. Policy Implications> Federal lawmakers have sought to increase the capacity for opioid use disorder treatment with MAT to address the ongoing opioid epidemic. Thus far in the 116 th Congress, policymakers have introduced nearly a dozen bills explicitly pertaining to opioid use disorder treatment expansion. For example, one bill would remove some requirements for health providers to receive DATA waivers to administer buprenorphine, with the intention that more practitioners would then pursue these waivers. Identifying the location of OAT providers may be essential to increasing accessibility to treatment. Simply increasing capacity for treatment may not effectively increase availability (or decrease opioid-related overdoses) if treatment providers are not located in areas of need. While the current analysis does not evaluate need by locating opioid-related overdose hospital admissions and deaths for instance it does provide an initial step in assessing how treatment providers are dispersed geographically. Other factors, such as substance use treatment financing, may also affect OAT availability. Practitioners are also subject to state laws and regulations regarding prescribing privileges which affect the eligibility of providers for DATA waivers and, in turn, the availability of treatment. Congress may consider incorporating geographic factors in strategies designed to increase capacity and availability of treatment. For instance, policymakers may acknowledge the dispersion of treatment providers within small geographic units and the proximity of OTPs to DATA-waived practitioners when drafting legislation. Rural areas may not have the same volume of need for substance use disorder treatment as urban areas, yet they may possess additional barriers to care that make accessibility to treatment challenging. For example, patients traveling long distances to receive daily methadone at an OTP may face obstacles related to transportation or infrastructure that make continuity of treatment difficult. Additionally, DATA-waived providers alone may not have the resources to provide complementary services such as counseling and behavioral therapies, or housing and vocational services. Some individual states have sought to address geographical obstacles to care through treatment and policy strategies. Vermont, for example, operates a "hub-and-spoke" system, in which patients seeking treatment for OUD establish care at an OTP (the "hub") where they receive more intensive services, often during their initial entry to treatment when such concentration of services is more necessary. Once patients are stabilized, they transition to a DATA-waived provider in their community for maintenance treatment with buprenorphine (the "spoke"), and other services. If patients relapse, they may return to the OTP until they are ready to transition back to outpatient buprenorphine, and the cycle continues. Throughout their treatment, patients are followed by the same care management team who assist them in finding and accessing appropriate services. Vermont officials sought to ensure OTPs were distributed throughout the state (see Figure 3 ). A part of Vermont's hub and spoke strategy has been to divide resources geographically throughout the state to reduce the number of areas without treatment. Other states, such as New Jersey and Washington, addressed geographic barriers by operating mobile methadone units, known as "methadone vans," which travelled from OTPs to provide daily methadone medication to rural and other hard-to-reach patients. Other states have offered similar mobile services with buprenorphine. Increasing the quantity of treatment providers may only be effective in addressing the opioid epidemic if access to treatment is also addressed. Both examples provided above, for instance, seek to not only expand treatment capacity, but also enhance accessibility by attending to location of services in relation to the patient population. Geography alone is not the only barrier; stigma, financing, and patient willingness may also influence the amount and utilization of services. Congress may explore additional solutions, such as the use of telemedicine services where possible. Nevertheless, identifying the location of providers may be an important step for policymakers seeking to increase availability of treatment for opioid use disorder.

The substantial burden of opioid abuse related to the current opioid epidemic in the United States has resulted in a disparity between the need for substance abuse treatment and the current capacity. Methadone and buprenorphine are two medications used in medication-assisted treatment (MAT) for opioid use disorder (OUD). Methadone and buprenorphine are both opioids; their use to treat opioid use disorders is often called opioid agonist treatment or therapy (OAT) or opioid agonist MAT . As controlled substances, methadone and buprenorphine are subject to additional regulations. Methadone may be used to treat opioid addiction within federally certified opioid treatment programs (OTP)—often referred to as methadone clinics. Buprenorphine may be used to treat opioid use disorder in two settings: (1) within an OTP and (2) outside an OTP pursuant to a Drug Addiction Treatment Act (DATA) waiver. The federal government has taken steps to increase the availability of MAT in response to the escalation of opioid overdoses and deaths in recent years. Policy efforts to address the opioid epidemic have corresponded with increased treatment availability, yet access to substance abuse treatment has not kept pace with the increasing rates of opioid addiction in the United States. Geographic information is important in accurately evaluating treatment capacity. Treatment location may be especially relevant to understanding the discrepancy between need and capacity. The current report identifies the geographic location of MAT providers using methadone and buprenorphine (opioid agonist treatment) in the United States. The analysis uses Substance Abuse and Mental Health Services Administration (SAMHSA) data to identify the number and location of (1) federally certified opioid treatment programs and (2) practitioners with DATA waivers. The geographic location of OTPs and DATA-waived practitioners are displayed in several national and regional maps. Identifying the location of OAT providers may have utility in increasing accessibility to treatment. However, simply increasing capacity for treatment may not effectively increase availability (or decrease opioid-related overdoses) if treatment providers are not located in areas of need. The current analysis does not evaluate need—by locating opioid-related overdose hospital admissions and deaths for instance. It does, however, provide an initial step in assessing how treatment providers are dispersed geographically. Other factors, such as substance use treatment financing, stigma, and waiting periods for services may also affect OAT availability. Practitioners are subject to state laws and regulations regarding prescribing privileges which affect their eligibility for DATA waivers and, in turn, the availability of treatment. Congress may incorporate geographic factors in strategies designed to increase capacity and availability of treatment.